7 Rules

7 Rules of Construction Estimation

  1. Define the The term ‘estimation’. In the construction industry, it is typically used in relation to the approximate costs associated with a construction project, used, for example to assess the viability or affordability of the project or aspects of it.

  2. Breakdown the construction project in the following categories:

    • Facilitating works

    • Building works

    • Contractor’s preliminaries

    • Contractor’s overheads and profit

    • Construction cost

    • Fees

    • Other development/project costs.

    • Risk allowances

    • Inflation

  3. Once you define and divide the construction project in the above mentioned categories, the next step is to measure and takeoff the building quantities (e.g. excavation, concrete, masonry etc.).

  4. Price all measure works by using rates from other Projects to form a raft estimation of the Construction Costs (if old rates are used, is vital to allow for inflation). Sometimes educated assumptions are made to cover works that are impossible to measured at the time of the estimation. Also, at this point you must include a percentage against the established Construction Cost usually 15% to cover Contractors Preliminaries and Overhead.

  5. Moreover, Professional fees (e.g. Architects, Quantity Surveyor & Other Consultant such as Civil & MEP Engineers) must be included within the estimation and you must include a percentage usually 15% against the established Construction Cost to cover those fees (generally: Architects 9%, Quantity Surveyor 2% & Other Consultant 2% each)

  6. Importantly you should include other costs that are not necessarily directly associated with the cost of constructing the building, but form part of the total cost of the building project to the employer (e.g. land acquisition costs, fees for letting agents, marketing costs and contributions associated with planning permissions).

  7. Cross evaluate the numerous Contract’s available (e.g. Lump Sum vs Design & Build vs Management Contracting) to identify the risk allocation between the Parties and therefore provide an estimated amount to cover any potential risks.