Conceptual Cost EstimatingConceptual Cost Estimating

Design

Stage 1 Preconstruction Stage 2: Procurement

Conceptual Planning Stage3: Construction

Stage 4: Project Close-out

Topic 3

Chapter 4

Stage 1:Preconstruction - Conceptual Planning– Conceptual Cost Estimating

Lecture OutlineLecture Outline We are still in the conceptual phase The owner selected the site, the scope, decided on type of

contracts, and hired a Consultant, and or a CM. To take a GO/ NO GO decision, the owner needs a rough

estimate of the cost of the project So far, no design documents are available, not even the

floor area of the structure. Available information is of the type: nice motel of 50

rooms, two story house of such quality, parking garage that can park 400 cars.

A conceptual estimate will provide that rough estimate of cost

Stage 1:Preconstruction - Conceptual Planning– Conceptual Cost Estimating

Estimating FundamentalsEstimating Fundamentals Why and when to estimate

conceptual phase: conceptual estimating schematic and design development phases: square foot

and assemblies estimating procurement phase: detailed estimating.

Stage 1:Preconstruction - Conceptual Planning– Conceptual Cost Estimating

Estimate considerations – project size: larger projects are more expensive. Figure

4-2 and learning curves.

Estimating FundamentalsEstimating Fundamentals

Stage 1:Preconstruction - Conceptual Planning– Conceptual Cost Estimating

– To adjust for size, use table in Figure 5-3 page L7-1, or page 108 of the book• compute the size factor = proposed area/typical area• From the graph, get the cost multiplier at the size

factor• multiply the cost by the cost multiplier.

– project quality: figure 4-4.– location: taken into consideration by location indices.

Figure 5-3 Project size multiplier

– time: cost need to be projected to payment time fig 4.5 page L-68

Present cost at city (X) =

former cost at (X) x present historical index at (X)

former index at (X)

cost at any city at a given time/historical cost index at that city at that time = constant

For example, a building that cost $1,000,000 in Seattle in 1965 will cost in 2003 in Seattle= 1,000,000 (100/16.6) = $ 6,024,096

Historical Cost Index (page L-68)

Pay attention to location factors if needed.– other factors: economic situation, relationship with

owner owner Stage 1:Preconstruction - Conceptual Planning– Conceptual Cost Estimating

Figure 4-5: historical cost index

Conceptual Estimate (ROM)Conceptual Estimate (ROM)• Also called rough order of magnitude (ROM).• Commonly used to determine approximate costs of projects

or subsystems within a project, most commonly in building construction.

• Can be quite general or very detailed, according to the level of details shown in the drawings, if any.

• Similar to any pre-construction estimate, prepared by the owner, designer, and/or CM.

• Can be done in minutes and provide accuracy in the 20% range.

• Can be done in many ways. A base cost is obtained, from guides?, and then modified for location, size, and time if necessary

Cost Estimating Guide BooksCost Estimating Guide Books

• Cost Estimating guides differ in the level of details and cost.

• different guides are available for different specialties and different parts of the country.

• We will use material from R. S. Means Inc.• The estimate covers the cost of construction, plus overhead and

profit, but not the price of land or cost of demolition.

Stage 1:Preconstruction - Conceptual Planning– Conceptual Cost Estimating

Conceptual cost estimating using Means guides

1) Parameter Estimates

It relates the total cost to few physical measures (parameters) that reflect the size or scope of the project.

Examples• Estimate of the cost of a school by multiplying

the area by the unit price based on area.• A parking garage estimate based on the

number of cars

Stage 1:Preconstruction - Conceptual Planning– Conceptual Cost Estimating

ExamplesExamples1) Using Means Assembles Cost Data 2003, Estimate the

cost of constructing a 50 units high quality motel in Pittsburg, Tampa FL, or New York NY in January 2003?

Answera) basic cost: from table K1010 000, figure 5-1 (L-69),

line 590-9000:cost per unit ( high quality-- use column 3/4) = $51,500total base cost = 50 units X $51,500 = $2,575,000

Stage 1:Preconstruction - Conceptual Planning– Conceptual Cost Estimating

Figure 5-1

ExamplesExamplesb) adjustment for size: from table K1010-031 figure 5-2(L-

70):- typical high quality motel unit gross area = 620 SF gross area of the motel = 50 X 620 = 31,000 SF, consider that your “ proposed area”.

Stage 1:Preconstruction - Conceptual Planning– Conceptual Cost Estimating

- from the table in figure 5-3 (L-71)

typical total size of the motel is 40,000 SF

size factor = proposed building area/ typical building area

= 31,000 / 40,000 = 0.775

Figure 5-3 Project size multiplier

from the graph in figure 5-3, cost multiplier at size factor = 0.775 is 1.04.

cost adjusted for size = $2,575,000 X 1.04 = $2,678,000

the cost increased because the unit cost goes up as the project size goes down. The base cost was for a motel of a larger size.

c) adjustment for location: the base cost assumes the national average. City index is obtained from the table in figure 5-4 page L- 72 in general:

adjusted cost for city = estimated cost X city index /100

Stage 1:Preconstruction - Conceptual Planning– Conceptual Cost Estimating

Figure 5-4

city index for New York is 132.6, for Tampa is 80.3, for Pittsburg is 100.2

New York City cost = $3,551,028

cost at Tampa = $2,150,434

cost at Pittsburg = $2,678,535

2) What is the cost to build that motel in NY today?

Answer

Assuming 2.6% per year, what is the cost today?

3) What was the cost to build that motel in NY in 1955?Use “Historical Cost Indexes” Figure (4-5) page L-68 where,

past project cost/index past year = project cost in 2003 /index 2003

project cost in 1955 = $3,551,028 X 12.7/100 = $ 450,980

Stage 1:Preconstruction - Conceptual Planning– Conceptual Cost Estimating

Figure 4-5