AET 4243
CONSTRUCTION PROJECT MANAGEMENT
Chapter Conclusions - 9
This chapter has discussed why estimates are prepared and how and by whom they are used. An estimate is not static but evolves with the project. When used properly, it provides the owner with a better product. Estimates are first used in the conceptual stage. Because little information is available at this stage, they are only able to provide a rough idea about the projects cost. As the design evolves and more is understood about the project, the estimate becomes progressively more accurate. During design, the estimate can be used to evaluate systems and products and is an integral part of the value engineering process. With the design complete, the estimator is now able to provide a complete and accurate estimate that reflects the true value of the project. This detailed estimate uses unit prices; and when used by the contractor, it is called a bid estimate. The bid estimate is the most important estimate done on a project. This is the cost that the owner agrees to pay for the work and what the contractor agrees is the amount it will cost to do the work. It creates a legal bond between owner and contractor
Every estimate must consider certain basic factors: project size, project quality, location, time, and other market issues. Project size determines the quantities of material, labor, and equipment required for the project. Project quality determines the unit prices used. Location can be treated either by researching local prices or by using specific area cost indices. Project time and market considerations are more difficult to quantify since both depend on economic and local issues and must predict future trends. Projecting past trends to the future is often the best way to handle these factors.
Whenever money is a significant factor in a building project, estimates are essential. A good estimate prepared at the right time gives the owner the information needed to make informed decisions. A bad estimate can cause a project to have serious cost overruns and, if it is a bid estimate, can bankrupt a contractor. Companies invest significant money in preparing good estimates and building data bases of costs. That investment contributes to the long term health of the company.
Class
Index
Dr. Wahby's
Site
School
of Technology
Lumpkin
College of Business & Applied Sciences
Eastern
Illinois University