Scribd
Upload
81 views38 pages

Estimates & Values Engineering: Khent Alfred B. Derecho Zahir M. Dagadas

This document discusses construction cost estimating and value engineering. It defines construction cost estimating as forecasting the cost of completing a project with a defined scope. Key components of a cost estimate include direct costs associated with a project and indirect costs shared across projects. Common types of expenses are also outlined. The document then discusses different types of construction cost estimates and factors that can influence costs. Value engineering is defined as a process that identifies necessary functions at the lowest cost without reducing quality. The value engineering process involves information gathering, creative idea generation, evaluation, development and presentation phases.

Uploaded by

Khent Alfred B. Derecho
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PPTX, PDF, TXT or read online on Scribd
81 views38 pages

Estimates & Values Engineering: Khent Alfred B. Derecho Zahir M. Dagadas

This document discusses construction cost estimating and value engineering. It defines construction cost estimating as forecasting the cost of completing a project with a defined scope. Key components of a cost estimate include direct costs associated with a project and indirect costs shared across projects. Common types of expenses are also outlined. The document then discusses different types of construction cost estimates and factors that can influence costs. Value engineering is defined as a process that identifies necessary functions at the lowest cost without reducing quality. The value engineering process involves information gathering, creative idea generation, evaluation, development and presentation phases.

Uploaded by

Khent Alfred B. Derecho
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PPTX, PDF, TXT or read online on Scribd
You are on page 1/ 38

Estimates

&
Values
Engineering

Khent Alfred B. Derecho


Zahir M. Dagadas
BSCE-5A
What is Construction
Cost Estimate?
o Cost Estimate is the practice of forecasting the cost of
completing a project with a defined scope. It is the primary
element of project cost management, a knowledge area that
involves planning, monitoring, and controlling a project’s
monetary costs.
o Project cost management has been practiced since the 1950s.
o The approximate total project cost, called the cost estimate, is
used to authorize a project’s budget and manage its costs.
o Cost estimates are typically revised and updated as the project’s
scope becomes more precise and as project risks are realized.
Key Components of a
Cost Estimate
A cost estimate is a summation of all the costs involved in successfully finishing a project, from inception to
completion (project duration). These project costs can be categorized in a number of ways and levels of
detail, but the simplest classification divides costs into two main categories: direct costs and indirect costs.

o Direct Costs are broadly classified as those directly associated with a single
area (such as a department or a project). In project management, direct costs
are expenses billed exclusively to a specific project.
o Indirect Costs on the other hand, cannot be associated with a specific cost
center and are instead incurred by a number of projects simultaneously,
sometimes in varying amounts. In project management, quality control,
security costs, and utilities are usually classified as indirect costs since they
are shared across a number of projects and are not directly billable to any one
project.
Common Types of
Expenses
Beyond the broad classifications of direct and indirect costs, project expenses fall into more specific categories.
Common types of expenses include:
1. Labor: The cost of human effort expended towards project objectives.
2. Materials: The cost of resources needed to create products.
3. Equipment: The cost of buying and maintaining equipment used in project work.
4. Services: The cost of external work that a company seeks for any given project
(vendors, contractors, etc.).
5. Software: Non-physical computer resources.
6. Hardware: Physical computer resources.
7. Facilities: The cost of renting or using specialized equipment, services, or locations.
8. Contingency costs: Costs added to the project budget to address specific risks.
Main Types of
Construction Cost
Estimates
A simpler system of classifying estimates features just three primary categories: design estimates, bid estimates,
and control estimates. These category names reflect the way in which you use the estimates.
1. Design Estimates: These estimates, prepared during a project’s pre-design and design phases,
start with an order of magnitude estimate, or screening estimate, which determines which
construction methods and types are most feasible. Next comes the preliminary estimate, or
conceptual estimate, which you base on the schematic design. Then comes the detailed
estimate, or definitive estimate, which you base on design development. The last of the design
estimates is the engineer’s estimate, which you base on the construction documents.
2. Bid Estimates: The contractor then goes to their suppliers to get quotes for the raw materials,
which they use to calculate the estimate. An estimate may also include an accounting of taxes,
overhead, subcontracts, and equipment costs. Contractors generally work up estimates before
or during the process of drafting a bid or proposal.
3. Control Estimates: Prepared after one signs a contractor agreement and before construction
gets under way, the control estimate functions as a baseline by which you assess and control
actual construction costs. The control estimate also allows contractors to plan ahead to meet
upcoming costs and determine the project’s cost to completion.
Influences on
Construction Costs
Naturally, the costs we’ve detailed in the previous section are anything but
consistent from project to project. In fact, so many factors can influence these
costs, that cost estimators recognize that every project is unique.

o BUILDING SITE
o TIME-RELATED ASPECTS
o SIZE AND COMPLEXITY OF THE PROJECT
Common Pitfalls for
Construction Cost
Estimators
Experienced cost estimators say you can often avoid common pitfalls by consistently following standard
procedures.

oFailure to read the project documents


carefully.
oFailure to visit the site and the inability to
fully understand the site conditions.
What Makes A Good
Cost Estimate?
The usefulness of a cost estimate depends
on how well it performs. There are several
characteristics for judging cost estimate
quality. These include: Accuracy, Credibility,
Documentation, Reliability, Risk detailing
and Verification.
What is Value
Engineering?
o “The process of reducing cost of producing a product without
reducing its quality or how effective it is.” – Cambridge English
Dictionary
o “The systematic application of recognized techniques that identify the
functions of the facility, establish the worth of those functions, and
provide the necessary functions to meet the required performance at
the lowest overall cost.” – Architects Handbook of Professional
Practice
o Used in many industries to improve projects/product quality, reduce
project/product cost, and maximize cost-benefit ratio for the
stakeholders.
Why Use Value
Engineering?
oFocuses on essential functions of a project
oUses creativity and out of the box thinking
oUses life-cycle cost analysis for decision-making
oProvides and organize, multi-disciplinary framework
for creative alternative development
oUses a combination of creative and analytical
techniques to identify ways to achieve objectives
What is Value?
o“The regard that something is held to deserve; the
importance, worth or usefulness of something”
o“The material or monetary worth of something”
o“The worth of something compared to the price
paid or asked for it.”

– Oxford Dictionary
What Are The Types
of Value?
o Cost Value
- How much will be spent to produce an item or to complete a project?
o Exchange Value
- How much can the item be bought for on the open market?
o Use Value
- What is the value of the owner of the item or project resulting from the
function it provides?
- Use value is the key to value engineering.
When To Use Value
Engineering?
oThe earlier the project, the better.
oPotential cost savings and functional
impact decrease with each
progressive phase of a project.
What Value
Engineering IS NOT?
oValue Engineering is not a method of cost
cutting.
o Cost cutting often sacrifices function or quality.
oValue Engineering is not a design peer review.
oValue Engineering is not function innovation.
oValue Engineering is not an individual’s task
(always done as a team).
Value Engineering
Process and
Methodology
INFORMATION PHASE

– Sometimes called the investigation phase.


– Evaluate the project or products function criteria and design concepts.
– Define function as generally as possible to allow for highest amount of possible
options.
– Identify the project’s high-cost elements.
– Conduct a functional analysis of the high-cost elements.
– Assess their cost-worth relationships
– During this phase, the owner’s project objectives and definition of value are
established.
INFORMATION PHASE :
5 QUESTIONS

– What is it?
– What does it do? (What is the function?)
– What must it do? (Is its function basic?)
– What is it worth?
– What does it cost?
CREATIVE PHASE

– Sometimes called the “brainstorming phase” or


“speculation phase”
– Team applies brainstorming methods to develop realistic
alternatives to conventional or current design.
– Team applies creativity to evaluate all possible solutions
to the problem presented in each function identified in
the uniform phase.
EVALUATION PHASE

– Team evaluates the ideas created in the creative phase.


– Team uses highly structured method to evaluate and rank ideas
subjectively.
– Ideas are evaluated on cost and how well they address functions
identified in the information phase.
– Ideas with the greatest potential savings and function
improvement (not function addition) are selected to be developed
in the next phase.
DEVELOPMENT PHASE

– Team further develops the highest ranking


options from evaluation phase.
– Team develops descriptions, sketches and life-
cycle cost estimates for best options.
– Team performs all necessary calculations to
provide a recommendation to stakeholders.
PRESENTATION PHASE

– Team presents recommendations to stakeholders.


– Recommendation includes cost-value analysis, life cycle cost
estimates, sketches, and all documentation and information
necessary for the stakeholder/owner to make an informed
decision on a path forward.
– Recommendation typically done in a report and formal
presentation form.
– Recommendation should include more than one option.
IMPLEMENTATION PHASE

– Value Engineering Method is used to evaluate and


make recommendations during construction,
manufacturing or production phase.
– Cost-benefit of Value Engineering decreases as
project progresses, but on large projects it can
still be highly beneficial to use.
Value Engineering
in Review
o Value Engineering is a creative, structured method
of reaching an outcome of highest quality at the
lowest cost.
o Value Engineering focuses on function.
o Value Engineering is best executed early in a
project.
o Value is the ratio of function to cost.
o Value Engineering is not cost cutting.

You might also like

pFad - Phonifier reborn

Pfad - The Proxy pFad of © 2024 Garber Painting. All rights reserved.

Note: This service is not intended for secure transactions such as banking, social media, email, or purchasing. Use at your own risk. We assume no liability whatsoever for broken pages.


Alternative Proxies:

Alternative Proxy

pFad Proxy

pFad v3 Proxy

pFad v4 Proxy