Defining a credible cost estimate is an important step towards improving construction outcomes.
The vast majority of “construction failures”, delays, cost overages, etc., are due to an inadequately defined Scope of Work and an associated lack cost visibility.
A credible cost estimate is one that has been derived using local market granular information.
CONSTRUCTION COST ESTIMATING via Unit costs / Bill of quantities
A unit cost is assigned to each of the facility components or construction tasks as represented by the bill of quantities. The total cost is the summation of the products of the quantities multiplied by the corresponding unit costs. The unit cost method is straightforward and can be greatly aided by purchasing available a current locally researched granular construction cost database. (Note: Individually developing and maintaining a local market line item cost database can be costly and time consuming for many owners and service providers.)
The initial step is to break down or disaggregate a project into a number of discreate tasks (demolition, repair, renovation, maintenance, new construction).
Collectively, these tasks represent all requirements listed in the project’s detailed Scope of Work (SOW) as mutually agree upon by the real property owner and the design-builder.
Once these tasks are defined and quantities representing these tasks are selected, a unit cost is assigned to each and then the total cost is determined by summing the costs incurred in each task. Each unit cost task also must include individual labor, material, equipment, and crew/productivity data sets in order to ensure a high degree of confidence.
The level of detail in decomposing a “construction activity” into individual granular tasks and the validity of the core local market condition dataset jointly determine the level of credibility for the overall cost estimate total.
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