Types of Construction Cost Estimates

Construction cost estimates are viewed in different perspective based on the difference in institutional requirement. Cost estimates are obtained at different stages of a construction project. The required level of accuracy of construction cost estimates varies at different stages of project.

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Also Read: What is a Cost Estimate? ASPE Standards

Generally, construction cost estimates can be classified into three major categories based on their functions as: design estimates, bid estimates and control estimates.

1. Design Estimates

Design estimates are provided for the owner or the design professionals, who are designated for a particular project. The cost estimates under this category run parallel to different stages of planning and design of the project. Hence, this estimate includes:

1.1. Screen Estimates

This estimate is conducted at the very early stage of the project. It is also called as order of magnitude estimate, which is prepared before the design of the facility.  To develop screening estimate, the information and estimates of previously constructed similar facility or project is studied.

1.2. Preliminary estimates

Preliminary estimates or conceptual estimates are developed based on the conceptual design information. It is performed when the basic design information on the particular facility or project is known.

1.3. Detailed estimates

A detailed estimate or definitive estimate is developed when the scope of work of the given project is clearly known and defined. During this stage, the detailed design will be in progress to collect essential information to find the detailed estimate.

1.4. Engineer's estimates

An engineer's estimate is developed based on the completed plans and specifications that are provided to the owner to invite bids from the construction contractors. These estimates also include the amounts for the contractor's overhead and profits.

Example For Design Estimates

Project Detail: Construction of Bridge Across a River

Type of Estimate                      Details Required
1. Screening estimate             Type of bridge 
2. Conceptual estimate            Layout of the bridge, technology used and  design
3. Detailed estimate                 Well defined scope of work
4. Engineer's estimate             Items and quantities of work

2. Bid Estimates

A bid estimate is an estimate submitted by the contractor to the owner either for competitive bidding or for negotiation. The bid estimate consists of direct construction costs. This cost also includes field supervision, general overhead, and profit.

Some contractors have well-defined procedures to estimate the cost, while some others don't. The lowest bidder will be the winner in most bidding contests. 

If subcontractors are involved, general contractors shift the burden of cost estimating to the subcontractors. 

The direct cost of construction for bid estimates is derived from the combination of the following approaches:
  1. Subcontractor quotations
  2. Quantity takeoffs
  3. Construction procedures

3. Control Estimates

A baseline for cost control has to be adopted by the owner and the contractor during the construction. 

For the owner, a budget estimate is adopted early enough for planning the long-term finance of the facility. As the work progresses, the budgeted cost is revised periodically to reflect the estimated cost to completion.

For the contractor, a bid estimate is usually considered as the budget estimate that is used for control purposes, and for planning the construction finance. It is also updated periodically to reflect the estimated cost to completion to ensure sufficient cash flows for the completion of the project.

Read More : Types of Construction Cost Estimation Methods

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