• Good cost estimating is the key to a successful project. You also have to make sure that no major surprises will occur when the project starts.
• Several methods are used for cost estimating purposes and a combination of the methods is used to develop the costs. The percentage of construction documents completed will determine which method should be used:
• Cost per square foot—This method should be used when limited information is known.
• Take off—This should be used when information is available on the construction documents.
• Subcontractors—This is the most accurate method for determining costs.
• Time and material—Used mostly for change order work.
• Component—Can be used when limited information is available. Also, a very good way to check the current estimate as compared to previously constructed similar projects.
• Whichever method is used, it is very important that factors outside the scope of the project be incorporated. This will include inflation, length of schedule, availability of labor and material, weather conditions, and long lead items.
• When the cost of the project exceeds an approved budget, then value engineering may be required. This would involve a review of the components of the project to determine where costs can be reduced.
• Cost estimates can be prepared using computerized spreadsheet programs, estimating programs, and CAD methods.
• The CSI format should be used for outlining the cost estimate so that all anticipated costs are included.
• Tracking of costs after bids have been approved must be done on a constant basis. This will involve keeping the subcontractors costs within the negotiated prices. This also involves managing the contingency assigned to the project.
• Change orders must be submitted to the owner with all the required back-up material.
• If the change order will require an extension of time, then the CM/GC must submit a detailed schedule indicating how the change affects the total schedule.
• The general conditions and overhead costs must be constantly tracked against the approved budgeted amounts. Adjustments may have to be made to keep the cost in line with approved amounts.
(You mean I have to keep records in case of a problem?)
Was this article helpful?
What you need to know about… Project Management Made Easy! Project management consists of more than just a large building project and can encompass small projects as well. No matter what the size of your project, you need to have some sort of project management. How you manage your project has everything to do with its outcome.