How To Make Cost Estimates For Civil Engineering Projects?

In carrying out cost management there should be a clearly defined route from feasibility stage through to the placement of a contract. There should be break points, or gateways, when the client can take the decision whether to proceed or not.  This is in line with the recommendations by the Office of Government Commerce in their Gateway Review Process.

One of the benefits of cost management in the pre-contract stage, especially in multicontract projects, is that it helps the project team to better establish the appropriate project contract strategy. That is, which work should be placed in which contract and possibly the form of contract which should be adopted for particular contracts.

Cost management can also help identify possible programme restraints both in contract preparation and execution. The preparation of the first estimate would be based on a variety of techniques, for example, historic data or approximate quantities.

Major projects often have substantial elements that are unique and for which there is no relevant historic data. In these cases it is necessary to analyse the project in as many individual work sections as can be identified, if possible to prepare indicative quantities and consider the resources necessary to carry out the work.

During this indicative stage it is wise to contact potential contractors and manufacturers especially with
regard to order-of-cost estimates for specialist sections.

Other matters that have an effect on cost and need to be addressed at this time include location of project and access thereto, especially with regard to heavy and large loads, availability of labour and the possible need for residential hostels or other accommodation for workmen, off-site construction, temporary works. It will also be necessary to consider allowances for design development, allowances for consultants’ fees and client’s costs, land-acquisition costs and general contingencies.

When the client has accepted the first estimate and instructs that the project proceed to the next stage, then this becomes the first cost plan against which further design developments and changes are monitored.

During the process of design development the main duties of the quantity surveyor as part of the cost management team are as follows: to check and report the cost of design solutions as they are established or refined by the engineers;  to prepare comparative estimates of various design solutions or alternatives and advise the engineer accordingly;  as changes are introduced into the project, to estimate the cost effect of the change and to report;  to prepare a pre-tender estimate based on a bill of quantities (BofQ) or priced activities;  to prepare a financial appraisal.

The monthly issue of the updated cost plan is the vehicle whereby the cost management team is made aware of the current estimated cost of the project. In its simplest form a pre-contract cost plan will set out in tabular form each and every work section, the approved estimate for that section, the estimate for the previous and the current month for the section and a note of the changes that have taken place in the month. The total of all the sections provides the estimated cost of the project.

There should be a continuous dialogue between the designers and the quantity surveyor (QS); ideally both should work together in the same office during the critical stages of design development. Normally, there are so many changes within a month during design development that these are better listed as an appendix to the cost plan.

One national client insists that a separate appendix to the cost plans lists all potential changes and these have to be approved by his project manager before changes can be included in the cost plan. In this way the cost plan represents committed cost only (Shrimpton, 1988).

The extent of detail in the preparation and updating of cost plans is such that it is best handled on a database for transfer to a spreadsheet.

The accepted estimate in the form of priced activities or BofQs becomes the basis for the first post-contract cost plan. This then acts as the client’s design datum for cost management and reporting in the construction stage.

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