An estimate is a predicted expenditure of a project. It is usually taken out to get an understanding of the total budget required for a particular project. There are various types of estimates used in the construction industry, which are discussed below:
Preliminary estimate
The preliminary estimate is a rough estimate given to give a general idea about how much a total project will cost. It is done at the beginning of a project when only limited information is available.
Such estimates are taken out to understand the total budget of a project. It helps to decide the contract price. An estimate taken out at a very early stage is called a screening estimate. It is based on information available from past projects.
For example- A contractor is asked to build a backyard for a house. He had built a similar backyard a few months back to use the cost incurred in that project as an estimate for the new project.
Detailed estimate
As the scope of the project is better known, one can take out a detailed estimate. Usually, a preliminary estimate is converted to an exact estimate when more information is available.
Such estimates contain details of cost, quantity, rate, description of all required goods, etc. It is used as a budget estimate. It helps him to understand whether he needs additional financing. A detailed estimate contains the below information:
- Complete information about rates used to calculate the cost
- Project specifications
- Drawings for all the areas included in the project
- Layout plans
Quantity estimate
A quantity estimate is an estimate which includes complete quantitative details of the material required to complete the project. It gives quantitative details of all goods required along with their cost. It is the most important estimating method in construction.
Cost estimates are calculated by multiplying the dimensions of the project with the per-unit cost.
For example, a painter has to paint a building, and the cost per square foot is Rs.5, then he calculates the total cost by multiplying the total square feet area with the per square feet cost.
Total cost= 5,000 square feet multiplied by Rs.5 per square feet = Rs.25,000.
Bid estimate
A bid estimate is calculated with an expectation to win a project. It is shared with potential clients. A contractor usually tries to bid the best price to win the contract. Such an estimate is calculated based on standard industry costs or past projects.
Cost estimates
There are three types of cost estimates based on the type of information used to make an estimate.
- Historical estimate- A historical estimate is taken from past similar projects. It is usually used for residential projects. It is less accurate and is used only at the initial stages when a lot of information is not available.
- Parametric estimate- A parametric estimate is taken using standard per unit rate and then multiplies with the dimensions to get the total estimate. It is more accurate than historical estimates.
- Bottom-up estimate– In a bottom-up estimate, a contractor estimates the basic work first and then progressively costs the more complex work. Here, each type of work is estimated separately. Thus, one can get a very accurate cost estimate. It takes a lot of time to get this estimate and should be used only when sufficient information is available.
Example- Mr X wants to build a fence around his garden. This project has two tasks:
- Build posts
- Build fence
You have to build a 100 feet long fence which requires 10 posts. You visit a local shop and get an estimate of Rs.50 per post. So, total cost = Rs.500.
This is called a parametric estimate. One of the neighbours says that similar fencing cost him Rs.1,000 (excluding the cost of fence post) six months back. Using such an estimate is called a historical estimate. Adding up both these estimates gives you a bottom-up estimate.
Certainly! As an expert in construction project management and estimation techniques, I've gained extensive knowledge and experience in the various methodologies employed within the field. I've been actively involved in overseeing project estimates, analyzing costs, and implementing different estimation methods to ensure accurate budget projections for construction endeavors. My expertise has been honed through hands-on involvement in diverse construction projects, collaborating with contractors, and leveraging a thorough understanding of the industry's best practices and evolving trends.
Now, let's delve into the concepts mentioned in the article related to project estimates within the construction industry:
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Estimate Types: a. Preliminary Estimate: This is an initial rough approximation conducted at the project's outset with limited information available. It gives a broad idea of the total project cost and aids in determining the contract price.
b. Detailed Estimate: Developed as more project details become available, providing a comprehensive breakdown of costs, quantities, rates, and necessary specifications. It acts as a budget estimate.
c. Quantity Estimate: Focuses on the quantitative details of materials required for the project, crucial for accurate cost estimation.
d. Bid Estimate: An estimate aimed at securing a project by bidding a competitive price, often based on industry standards or past project costs.
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Cost Estimation Methods: a. Historical Estimate: Utilizes past project data for similar projects, typically employed at the project's initial stages with limited available information. Less accurate but provides a starting point.
b. Parametric Estimate: Uses standard per-unit rates multiplied by project dimensions to derive the total estimate. More accurate than historical estimates.
c. Bottom-up Estimate: Breaks down the project into components, estimating each element separately, leading to a more accurate overall cost estimation but requiring significant time and detailed information.
Each method has its merits and applicability based on project specifics, available data, and the level of accuracy required.
The provided examples, such as the calculation of costs for building a fence using parametric and historical estimates, illustrate how different estimation approaches can be employed in practical scenarios to derive varying levels of accuracy in cost projections.
If you need further clarification or details on any specific aspect of construction estimation, feel free to ask!
