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outline
LIFE CYCLE COSTING construction + maintenance + operation" ESTIMATION LEVELS investment / accuracy tradeoff
SUMMARY whats the point?
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TOTAL COST
Indirect Cost
Contingency
+ Project Overhead
+ Profit
Subcontractor Price
+ Indirect
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labor costs
Direct Labor Cost
1( 2(
Determined from basic wage and production rates for a given work type
Estimator keeps a comprehensive record of wage and production rates from past projects Difficult to evaluate. . . Most uncertainty in the entire estimate.
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labor costs
Indirect Labor Cost
INCLUDES:
1. Payroll Taxes: State and Federal income taxes 2. Insurance: workers comp, public liability, property damage, social security, and state and disability unemployment insurance 3. Employee fringe benefits: Health insurance, vacation time, pensions, apprenticeship training
material costs
All material either produced or purchased by the contractor
INCLUDES: EXAMPLES:
1( 2(
equipment costs
)(total production units) = labor cost total expense/ total )(equipment hours ) = labor cost hour
INCLUDES:
1. 2. 3. 4. 5.
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Ownership Lease or rental expenses Operation costs Mobilization (move-in, erection) De-mobilization (dismantling, move-out)
EXAMPLES:
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Admin
o
o o
o o
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subcontrator price
1. Include price quotes from all subcontractors involved in the project 2. All price quotes will typically be time-stamped 3. Price quotes will require extensive review by the General Contractors estimator to determine scope
survey, excavation, underground utilities, asphalt, striping, fencing, playground equipment, landscaping, signage, security, concrete, masonry, glazing, kitchen equipment, gym flooring, other flooring, acoustical ceiling tile, dryall, paint, classroom furniture, cabinetry, fire suppression, electrical, heating, ventilation, plumbing, sealants, gym equipment, audio/visual, roofing, sheet metal, carpentry. . .
indirect cost
Project Overhead 1. Costs that do not pertain to any specific construction activity 2. Generally between 5-15% of the total project cost 3. Costs are computed by listing and evaluating eachGeneral Job Mobilization, Project Manager, Superintendent, item of overhead individuallyNonworking Foremen, Heat,
EXAMPLES:
Utilities, Storage Buildings, Field Office Supplies, Job Telephone, Computer Equipment & Software, Computer Networking & Internet Connectivity, Small Tools, Permits & Fees, Special Insurance, Builders Risk Insurance, Security Clearances, Material & Load Tests, Storage Area Rental, Protection of Adjoining Property, Field Offices, Parking Areas, Legal Expenses, Surveys, Engineering Services.
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indirect cost
Project Overhead
EXAMPLE:
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indirect cost
Contingency
1. 2. 3. 4. 5. Set percentage of the construction budget for unforeseen costs or design shortfalls identified after construction begins Less design completed = larger contingency Percentage is negotiated as part of the construction contract Often have contingencies included for multiple parties: owner, designer, contractor What do we do with contingency left over?
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markup
General Overhead costs not associated with a specific project office rent, office insurance, heat, electricity, office supplies, furniture, telephone & internet, legal expenses, donations, advertising, travel, association dues, and the salaries of executives & office employees
INCLUDES:
markup
Profit How do we decide what profit should be?
DBB: based on probability of being lowest bidder DB: based on owner tolerance of contractor profit Project size and complexity Provisions of contract documents Difficulties inherent in the work Identities of owner and designers Overall market climate and outlook
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TOTAL COST
Indirect Cost
Contingency
+ Project Overhead
+ Profit
Subcontractor Price
+ Indirect
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outline
LIFE CYCLE COSTING construction + maintenance + operation" ESTIMATION LEVELS investment / accuracy tradeoff
SUMMARY whats the point?
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% of total LCC
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70
60
30
20
10
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outline
LIFE CYCLE COSTING construction + maintenance + operation" ESTIMATION LEVELS investment / accuracy tradeoff
SUMMARY whats the point?
Young 2011
estimation levels
Less Effort/Expense Less Accurate
3. Preliminary
4. Definitive
5. Engineers/Owners
6. Bid Level
More Effort/Expense More Accurate
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estimation levels
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estimation levels
index methods
1. Show changes of costs over time by upgrading the cost of similar facilities from the past to the present
2. Published periodically by Engineering News Record (ENR) and other publications 3. ENRs Building Cost Index (BCI) is based on material and labor costs over a 20 city average
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estimation levels
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estimation levels
1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009
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2702 2751 2834 2996 3111 3112 3203 3364 3391 3456 3539 3574 3623 3693 3984 4205 4369 4485 4691 4769
estimation levels
ESTIMATING STRATEGY: index methods, cost capacity ratios, comparable projects, industry published data
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estimation levels
estimation levels
component ratios
1. Focus on major equipment (compressors, pumps, furnaces, refrigeration units, belt conveyors, turbine generators, etc)
2. Plant-Cost-Ratio estimates the cost of an entire facility based on size and type of major items of installed equipment 3. Procedure: multiply the purchase cost by empirically documented installation cost factor 4. Total cost will include shipping, erection labor, ancillary fitting, and supplies
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estimation levels
component ratios
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estimation levels
ESTIMATING STRATEGY: vendor quotes, long-lead orders, key quantities defined, labor unit rates
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estimation levels
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estimation levels
estimation levels
We want to estimate the total cost of the windows on the north side of the addition.
North Elevation
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estimation levels
ESTIMATING STRATEGY: delivery terms, detailed evaluation of labor craft & productivity, subcontractor submitted bids, defined indirect costs
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estimation levels
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estimation levels
Less Effort/Expense Less Accurate
3. Preliminary
4. Definitive
5. Engineers/Owners
6. Bid Level
More Effort/Expense More Accurate
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outline
LIFE CYCLE COSTING construction + maintenance + operation" ESTIMATION LEVELS investment / accuracy tradeoff
SUMMARY whats the point?
Young 2011
summary
Bids received for a typical project will sometime show more than
Functions of Estimating
summary
Alternative architecture