Stages of Cost Estimating

STAGES OF COST ESTIMATING

1.      Briefing / Feasibility Stage

Two types of costing are dealt with at this stage namely:

 a.  Cost of conducting feasibility studies  b. Cost estimate of the whole planned or proposed project including (a) above.

• Cost Estimate for conducting Feasibility Studies when the work is to be done by the Ministry,   Regional or District Water Department, or Water Authority. Main components are:-

a.          a . Manpower:

                                                              i.      Skilled allowance / night

                                                            ii.      Unskilled allowance / night

                                                          iii.      Laborers daily pay

b.      Tools / Equipment: to be specified

c.       Transport: Hire and fare charges or oil, lubricant and minor repair when transport is provides by the office.

d.      Preparation of Report: This is a lump sum cost of stationeries, lunch allowances, etc.

e.       Contingencies @ 15%.

•   When feasibility studies and designs are to be done by a consulting firm his cost estimate shall be prepared according to Terms of Reference for the project.

2.       Preliminary Design Stage

At this stage a fully picture of the project is perceived. Cost estimates are often done against major components.

For a Water Supply Project for Example:

Construction Works

Ø  Mobilization – lump sum

Ø  Intake structure – lump sum

Ø  Suction pipe (…. m long) - lump sum

Ø  Pumping station (if any)

Ø  Water treatment (if any) - lump sum

Ø  Sump (…..m3) - lump sum

Ø  Pump house (if any) - lump sum

Ø  Raising main / gravity main (…m long) - lump sum

Ø  Reservoir (…m3) - lump sum

Ø  Distribution mains (….m long) - lump sum

                    Attendants quarters (…. m2) - lump sum

Operation and Maintenance costs

Ø  Administration costs - lump sum

Ø  Chemicals - lump sum

Ø  Manpower - lump sum

Ø  Cost of repairs and servicing of material equipment - lump sum

An alternative is to develop cost curves for each major element of a project in which cost is plotted against size or volume. The appropriate cost can then be quickly read off. However it does require a sufficient number of recent historic examples brought to a present cost value to develop such curves and is therefore more likely to be a costing tool available to a firm of consultants.

3.      Detailed Design and Preparation of Tender Dossier Stage

Preparation of tender documents shall be done if and only if the project is to be executed by a contractor. For this reason, a tender dossier shall be prepared according to the constitutions of contract procedures. Specifications and bill of quantities of the tender dossier shall be prepared in accordance with the detailed designs of the project, the quantity survey and the Method of Measurement opted for. Based on the detailed designs, major components in item 8.3.2 above are split into classes, and divisions or minor items to allow for identification of required materials and more accurate cost estimate of the project.

A cost estimate for borehole drilling and measurement of general construction items are worked as follows:-

(a) Cost estimate for borehole drilling

(b) Measurement of general construction items,

and can follow the following layout:

COST ESTIMATE FOR BOREHOLE DRILLING

	COST ESTIMATE FOR BOREHOLE DRILLING Item Description	Unit
1	Mobilization and Demobilization	Lump sum
2	Drilling	m
3	Drilling mud (bentonite & cement)	Lump sum
4	PVC casings	m
5	PVC screen	m
6	Gravel	m3
7	Installation of PVC pipes, Screen and gravel	Hr
8	Development and cleaning	Hr
9	Pump test for 24hrs	Hr
10	Sub total
	Add 30% for replacement of equipment
	Add 30% for labour wages, inspection and allowance to driller
	Add 10% for contingencies
	GRAND TOTAL

Preliminary and General Items

Preliminary and General Items can be included in a Cost Estimate as a % of the total Construction Costs in which case it is recommended that 14% be added onto to the estimated Construction Costs.

In the Bills of Quantities, two methods are possible, the preferred one being to include a totally separate Bill, Bill One for this purpose. This then enables a clear costing to be established and understood and provides both Client and Contractor with a clear understanding of what is expected and when. The alternative, which is not recommended is to provider a detailed list of requirements and then get Bidders to spread these costs throughout the Works items. Unfortunately this seemingly simple method then often results in disputes, especially where the scope of works changes or there are time over-runs that are beyond the Contractor to control.

Estimating and Including the Cost of Labour

In some cases labour is taken as percentage (% age) of cost of materials (i.e. 20-30%). This method is used but it gives a rough estimate because there are some materials which have very high price but need very little labour to fix in position (e.g. water pumps, etc.) Some items do not have materials to be purchased but need only labour (e.g. excavation). The best method is to identify manpower required at each category (e.g. skilled, unskilled etc.) for each item for a specified period. Labour productivity is essential for estimation of man-days. Total man-days of each category is incorporated as a cost into the bill of quantities cost estimate as deemed most appropriate.-

Estimating and Including the Cost of Transport

       Cost of transport shall be worked out in accordance with established hiring rates within the area        concerned and again incorporated into the bill of quantities cost estimate as deemed most appropriate.