Welcome to section 2 where we'll focus on cost estimating

Let's understand the fundamentals of cost estimating and how to accurately estimate the cost required to deliver a construction project.

Let's define what estimating is

Learn about the different types of estimating including bottom-up, top-down, and parabolic.

Let's look at the different types of construction costs we will need to quantify.

Let's go over the estimating process in detail. This is the process followed to accurately quantify the costs to deliver a construction project.

Estimating is used differently depending on the stage of the project

Direct costs are the construction costs required to complete a specific project deliverable. In this section, we'll learn about what they are and how to quantify them.

The Work Breakdown Structure is a fundamental project management tool used in all facets of construction management. In this section, we'll learn how it's used to decompose the project scope into component pieces we can use to estimate individual construction costs.

There's no way our cost-estimate will be correct if we've missed large portions of scope!

Now we've worked out all the activities we need to complete to complete our project, let's work out how we plan to deliver them.

Understanding how we are going to deliver the works will have a massive impact on our cost estimate

We need a pricing model to collate all the input data, assumptions and calculations used to produce our estimate.

The first step to fill our pricing model is to accurately quantify how much work there is to complete.

We'll then determine the cost to complete a single unit of an activity

We need to determine the costs of the labour to complete the task

Ensuring we understand the labour types and resources we need is critical to accurately calculating our cost estimate

Estimating plant costs requires us to calculate the cost for all plant and machinery needed to complete the task

If we don't know what type of plant we need, our estimate will almost certainly be wrong

Material costs are the costs of all the permanent and temporary materials we need to complete a given construction activity

Sub-contract costs are the costs paid to external companies

To ensure our estimate is accurate, we need to ensure we understand our sub-contract costs

Understanding and managing assumptions is critical to project success

Let's run through a detailed example to ensure this all makes sense

Now we've worked out our direct costs, let's move onto calculating our in-direct costs, the costs not directly applicable to a given construction activity.

Overhead costs are costs for employing the staff required to run the project. In this section, we'll look at how to accurately quantify and estimate these.

Preliminary costs are the set-up, ongoing and de-mobilization costs we incur to keep our site running. These can end up forming a massive proportion of total project costs.

Preliminary costs will vary significantly from project to project

Our head contract will nominate that we are required to hold insurances and security, we need to understand and estimate the costs associated with doing so.

Escalation is costs increases due to inflation and market conditions. We need to allow for this in our estimate.

Now we've calculated our direct and in-direct costs, in this section we'll look at summarising the estimate and getting ready to submit it to the client.

We need to make sure we understand how to budget for things that don't go according to plan and unexpected circumstances, that's what risk and opportunity is for

Making sure we budget for uncertain circumstances is critical to ensuring our estimate is accurate

Maring and corporate overheads covers our profit margin and money returned to the construction business for future tendering and on-going business costs

Ensuring we review the estimate properly is critical to ensure it's accuracy

In this lecture, we briefly look at how to ensure we remain cash positive throughout the project duration

Let's wrap up section 2

Get access to our construction cost estimating worked example:

https://www.udemy.com/course/construction-cost-estimating-example-part-1/?referralCode=47BE1552291BFF01ED69

Welcome to section 3!

Let's look at what we can do during the pre-construction phase to set our project up for success and ensure it's going to come in under budget.

Let's look at how we go from translating the estimate we produced at tender into a budget to deliver the scope of works.

Cost-codes can be a useful tool to manage accountability and drive down project costs

Keeping track of our construction costs during the design phase will be critical to ensuring our project can still be delivered under budget.

Through the procurement process, we find and engage sub-contractors. When we sign contracts with these parties, we are committing to costs. We need to understand what our commitments are and whether they are within our budget.

Now that the pre-construction phase is over, we're ready to begin works on-site and spending massive amounts of money. In this section, we'll focus on understanding how to monitor and control costs.

Earned Value Management is a fundamental project management skill used to assess project performance against the schedule and cost baselines. We need to understand EVM to determine whether our project is on track.

EVM is a useful tool to stay on top of project costs

Cost-codes are used to monitor and control costs for all the different project activities including both direct and indirect costs.

Treatments give us tools to correct sources of over expenditure

Learn about how to monitor and control self-perform costs.

Learn how to monitor and control sub-contract costs.

In the same way we need to manage our cost-codes, we need to manage our risk and opportunity costs

Let's go over our introduction to construction cost estimating and management

Let's go over what we covered in our cost estimating section

Let's go over what we covered in our cost monitoring and control section

Thanks for taking the course and good luck on your journey in construction management!