What is construction estimating and what do estimators do ?
Estimating construction work
Precision guesswork based on unreliable data provided by those with questionable knowledge.
Estimating, like measurement is one of the core skills of construction professionals and success as an estimator relies, among other things, on a sound knowledge of the relevant technologies.
However, over the recent years when main contractors have become, in the main, managing contractors relying heavily if not totally on sub-contractors to price work sections, estimating from basic principles, like measurement, has tended to be left out of university courses and training programmes.
Not only are estimating skills required for preparing bids, but also during the post-contract phase they are essential when negotiating rates and prices for settling final accounts and claims.
When times are hard and work scarce, then the estimator’s role becomes even more crucial as they are the people within a contracting organisation who win work and keep the cash flow flowing.
In 2020 major UK contractors declared profit margins of less than 1% and with such little wiggle room it is even more important for estimating to be accurate and a true reflection of the cost of the works.
Where to estimator's work?
Estimators are to be found in a wide range of organisations across the building, civil engineering and mechanical and electrical sectors working for main contractors, sub-contractors and component manufactures.
Fifty years or so ago the majority of work was based on a fully detailed bill of quantities, prepared by a quantity surveyor employed by the client, typically the tender would have been based on a detailed bill of quantities.
In the modern construction market bids are now based on a variety of formats; including work packages, cost plans and drawings and specification requiring contractors and sub-contractors to be flexible in their approaches to formulating a bid and identifying risk.
An important part of preparing a successful bid is the correct management of the process and in particular pre-tender planning. Pre-tender planning seeks to;
highlight any critical or unusual activities; much of what is built is bespoke, that’s to say it has a degree of uniqueness and therefore it is important at an early stage in the estimating process to analyse what is to be built and identify the extent of the uniqueness and any unusual details,
examine alternative sequences and phasing requirements; site constraints or client requirements may require site works to be carried out in a non-standard sequence which may impact on costs. In addition it may be a worthwhile exercise for the contractor / sub-contractor to examine alternative approaches to site operations to save time and cost,
calculate the optimum duration for temporary works and plant to remain in place. Items such as scaffolding can be an expensive item and therefore should be left in place for the shortest possible time and taken down and removed when no longer required,
check whether the completion time is realistic in relation to the complexity of the project as non-completion may render the contractor / sub-contractor liable for damages.
In addition to the above there are a number of external factors that can impact on approaches to pricing; these are best considered by addressing the following questions;
What are we building on – what are the likely site conditions, topography water table?
What is to be built – what is the specification of the new project and new and untried materials and components going to be used?
Are there any special design factors – is the proposed project a signature building or a straight forward convention building?
What impact will regulation, building regulations and health and safety for example, have on the project?
There are two main approaches to estimating
1. Resource based estimating
The resources on which resource estimating unit rates are based are, depending on the item being priced, some or all the following;
Labour costs – the all-in labour rate. This is built up from operative’s wages plus obligatory statutory on costs such as; national insurance, etc. Labour costs include the costs of employing both skilled (tradesman) and unskilled (general) operatives together with the additional payments set down in nationally negotiated agreements.
Material costs – the basic costs of materials plus the costs of delivery, unloading and storage and allowances for wastage.
Plant costs – the hire cost of mechanical plant, such as excavators, dumper, etc. plus delivery to site, operating costs (drivers and fuel), etc. Some items of plant can be included in the Preliminaries section of the bill of quantities or work package, under the appropriate clause, while other plant costs associated directly with a specific trade or element are included with that item.
Overheads – overheads include such items as; head office costs, etc. As with plant costs, NRM2 gives the estimator the opportunity to include these costs in the Preliminaries pricing schedule at the front of the bill of quantities or work package. Overheads are of two categories;
Project overheads, that is costs associated with a specific project or,
General overheads, also referred to as Establishment charges that is costs associated with meeting the general expenses of the contractor or sub-contractor and to which every contract must contribute. General overheads / Establishment charges do not relate to a specific project.
Profit - the profit margin will vary according to a number of external factors, including market conditions and the perceived risk. In the UK the profit margin for many general contractors and sub-contractors is surprisingly low and the level of profit recovery is usually determined by the directors during the adjudication process.
2. Operational estimating
Operational estimating is widely used when pricing civil engineering works when it is necessary to consider the overall duration of an operation / operations and the interaction with other trades. One of the fundamental differences between the civil engineering and building contract documentation is that a typical Bill of Quantities, prepared in accordance with NRM 2, will be a detailed schedule of items presented in either elemental or trade format. Civil engineering projects, which are always based on approximate bill of quantities that have to be re-measured, tend to have fewer but larger items of say bulk excavation or concrete work and for this reason, from a measurement and estimating perspective, civil engineering has concentrated on operations rather than individual work (bill of quantities) items. Civil engineering project can be so large that it is unrealistic to concentrate on individual items and therefore this approach is thought to be more realistic.
Estimating video tutorials
Duncan Cartlidge Online gives 24/7 access to a series of clear video tutorials from the author of the best-selling pocketbooks.
Each video explains the process of producing estimates and cost plans from basic principles based on the Building Cost Information Service guidance. The advantages and disadvantages of the various approaches to cost advice at a variety of stages is explained as well as how to prepare approximate quantities.
Videos demonstrate how to approach resource estimating from basic principles to the preparation of a unit rate for a range of work sections including the approach to calculating preliminary and overhead costs.
Extensive experience both in practice and in education allows Duncan Cartlidge to address the common problems encountered when giving cost advice and unit rate estimating. Each video contains a set of self-assessment questions to gauge progress and a question and answer facility is available to subscribers.