Cost estimation is an essential step in construction project management. Cost estimation always set up the bottom line of the project rate at various junctures of the growth of the project. A construction cost estimator (or construction cost software or construction cost calculator) helps an individual at a definite phase of the project to predict the price provided by the cost engineers or estimators from the data available to them. The cost linked with the constructed facility includes two types of costs – initial capital cost and the consequent maintenance and operation cost. Both of these cost categories include various cost components.
Components of the two forms of cost
The capital cost for a production venture comprises of all the expenses connected to the preliminary establishment such as:-
- The engineering and the architectural designs.
- Field supervision.
- Insurance and taxes for the period of construction.
- Planning and viability study.
- Inspection, assessment and testing
- Land acquirement and improvement.
The maintenance and operation cost includes the expenses such as:
- Construction including building materials, labors and equipments.
- Maintenance and repair.
- Periodic renewal and renovation.
- Land rental fee (if applicable).
- Funding costs.
- Other expenses of the owner.
The extent of these price components depends completely on the volume, position and natural surroundings of the project as well as on the executive association. So, the owner has to come up with a construction cost estimator which helps him/ her to reduce the expenses.
Types of construction cost estimates
Although construction cost can be visualized from a different prospective, it is best to divide it under three categories- a) Design estimates, b) Control estimates and c) Bid estimates.
A design estimate reflects the advancement of the designs during the design and planning stages of the project. This estimate includes:-
- Preliminary or conceptual estimates.
- Comprehensive or definitive estimates.
- Screening estimates.
- Estimates based on plans and stipulations.
A control estimate is generally done in order to monitor the project because both the contractor and the owner must control the cost flow during construction. A control estimate is the consequences of the available information to set up:-
- Budget estimate which helps an individual in financing.
- Estimate cost for completion of the project.
A bid estimate is that branch of construction cost estimation which is usually submitted by the contractor to the owner for negotiation. It consists of construction rate together with the field supervision charges plus the overhead profit price.