STEPS IN THE DEVELOPMENT OF A DETAILED ESTIMATE

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STEPS IN THE DEVELOPMENTOFA DETAILED ESTIMATE
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• 1. Study project documents
• 2. Develop Work Breakdown Structure (WBS)
• and Cost Code
• 3. Determine quantity take off
• 4. Price materials, equipment and labor
• 5. Define work done by others and obtain
• quotations

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6. Determine Job Overhead Cost

• Indirect Job Labor
• Project manager and/or Superintendent
• Project engineer
• Draftsman
• Timekeeper
• Office manager and/or secretary
• Safety engineer and/or first aid attendant
• Watchmen
• Indirect Job Equipment
• Project managers vehicle
• Pickup truck
• Site maintenance
• Site Facilities
• Construction Sign
• Job site fence
• Construction access/entrance
• Portable toilets
• Office trailers contractors,engineers, first
  aid, change room and lockers
• Telephone service

• Temporary electric utilities
• Shop or maintenance facility
• Fuel for general job vehicles
• Materials Handling and Storage
• Material storage area bins
• Warehouse facility
• Subcontracted Indirect Cost
• Disposal services
• Soil or rock borings
• Laboratory tests
• Soil samples
• Rock samples
• Concrete samples
• Surveying service
• CPM scheduling services
• Job photographs
• Models
• Artist renderings

• Bonds and Insurance
• Performance bond
• Builders rick Insurance
• Contractors liability insurance
• Permits
• Building
• Site improvement
• Road or entrance
• Additions for Remote Sites
• Communications
• Living quarters for workmen
• Kitchen and food service
• Entertainment
• Transportation
• Temporary power
• Water supply
• Waste disposal

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7. Determination of Markup

• Markup is an allowance for
• a. Home Office overhead
• b. Contingency
• c. Profit
• Markup ranges from 5 to 20 of the total project
  costs

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a. Home Office Overhead

• Salaries
• Executive staff
• marketing staff
• Accounting staff
• Estimating staff
• Legal staff
• Support staff clerical, data processing, etc.
• Facilities
• Office purchase or rental
• Furniture purchase or rental
• Data processing equipment
• Utilities
• Telephone, fax, etc.
• Heating air conditioning
• Illumination
• Water
• Taxes
• Company Income
• Property

• Insurance
• Company policies not chargeable to projects
• Benefits
• Pension retirement program
• Profit sharing bonus plans
• Health insurance plan
• Transportation
• Company aircraft
• Company automobiles
• Company trucks
• Commercial travel
• Marketing
• Advertising
• Estimating
• Other promotional costs
• Maintenance
• Maintenance overhaul, not just chargeable

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b. Contingency

• To cover unexpected risk, error and omission, and
  contract risk

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c. Profit

• Profit varies from 1 to 10 or more
• Factors affecting profit
• Need for work
• Contract type
• Total bid value
• Risk
• Competition
• Economic Condition

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8. Determination of Contract Bond Cost

• The contract document usually requires as a
  minimum a performance bond and a payment
  bond.
• Bond cost ranges from 0.5 to 1 of the total
  contract price.

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Example of Determining Total Contract Price

• Assumptions
• 1. Sales Tax
• 6 of Direct Material Costs
• 2. Job Overhead Labor Costs
• 25 of Direct Labor Costs
• 3. Job Overhead Management Costs
• 10 of Direct Labor Costs
• 4. Markup 20 of Total Project Costs
• Office O.H. 10
• Contingency 2
• Profit 8
• 5. Bond 0.5 of 1 of Total Project Costs

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Example of Determining Total Contract Price
(cont.)

• Estimated Directed Job Costs
• 1. Direct Labor Costs 25,670
• 2. Direct Material Costs 15,000
• 3. Direct Equipment Costs 13,000
• (Owning Operating Costs)
• 4. Subcontract Costs 20,000
• 5. DIRECT COST SUBTOTAL 73,670

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Example of Determining Total Contract Price
(cont.)

• Job Overhead Costs
• 6. Sales Tax 6 of (2) 900
• 7. Job O.H. Labor 25 of (1) 6,418
• 8. Job O.H. Management 2,567
• 10 of (1)
• 9. Total Job Overhead Costs 9,885
• 10. Total Estimated Job Costs 83,555
• (5) (9)
• 11. Total Cost (10) x 1.2 100,266
• 12. Bond 0.005 x (11) 501
• 13. TOTAL CONTRACT COST 100,767
• (11) (12)

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Example of Determining Total Contract Price
(cont.)
TOTAL CONTRACT COST
100,767
Bid Factor


1.368
73,670
DIRECT COST SUBTOTAL

• 14. Markup (11) - (10) 16,621
• Breakdown of Markup
• 14a. Office O.H. 0.10 x (10) 8,356
• 14b. Contingency 0.02 x (10) 1,671
• 14c. Profit 0.08 x (10) 6,684

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Total Components of Cost within a bid