ARBAMINCH UNIVERSITY

INSTITUTE OF TECHNOLOGY

Department Of Water Supply & Environmental

Engineering

Contract, Specification and Quantity survey

(CEng-5252)

By: daniel g.
April/2023
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 Lecture-3.1
COST
ESTIMATION
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 Introduction
 It is the process of valuing on monetary expression, including
 the cost of all possible entrants necessary for the planning,

implementing and monitoring stages of the proposed project

under consideration.
 The possible entrants of project cost are:
 Preliminary investigation (project appraisal costs)

 design and supervision (consultancy cost )

 construction works (contractor’s cost )

 land owning cost

 monitoring costs

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 Cont’d…
 Purposes of Estimation
 Know the volume of work in reference to the fund available
 Determine actual cost per unit of item
 Identifying engineering estimate of the work for bidding
purpose
 Work out economical use of materials, labor and equipment's
 In cases of variations to determine the extra cost to be
incurred
 When changes in cost due to legislation happens, to work out
the escalation in cost.

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 Cont’d…
 Factors affecting cost estimation
 Type and documentation of the project
 Construction scheduling
 Bidding environment
 Quality and availability of material and labor
 Strength or grade required. Eg. C15, C20, C25 concrete
 Construction facilities /tools and method of construction
 Location of the site
 Transportation charges
 Proper management
 Land charges (lease)
 Nature of subsurface condition

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Information's required to define cost per unit of work

 Correct information of the market price of the materials

 Correct information of the rates of various categories of skilled
and unskilled laborers
 Output of laborers per day for various types of items
(productivity)
 Correct information of the rates of various categories of
equipment's and tools as rental rates to be used for major items
of rates
 Up-to-date knowledge of the construction methods.

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5.2 Types of costing or estimation
 Estimation can be broadly classified as
 preliminary (approximate) and
 detailed (refined).

 5.2.1 Preliminary /approximate costing

 It is required to know the financial position of the
client before costly detailed designs are carried out.
 Such estimates are based on practical knowledge and
cost of similar previous works.

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 Cost per functional unit
 Hospital =cost per bed,
 Dormitory = cost per student,
 Cinema or theatre = cost per seat,
 road works = cost per kilometer length, etc
 Plinth area method – cost per m2
 Social Buildings – not aesthetic but functional, 1000 – 1500 Br/m2
 Industrial Buildings – Profitable but aesthetics is not the main quality, 1300 –
2000Br/m2
 Monumental Building – Aesthetics is the main quality, eg. Palaces, museums
2000 – 3000Br/m2

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 Cont’d…

 Cubical Content method – cost per m3

of the building
 Elemental/parametric Estimate
 Roughly grouped quantities or elemental bill
 The elemental costs are the summation of

grouped quantities.

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5.2.2 Detailed estimate or item rate method
 This is the most reliable and accurate type of
estimate.
 The quantities of items are carefully prepared from
the drawings and the total cost worked out from up to
date market rates.
 Detailed estimate is accompanied by a detailed report,
detailed specification for the execution of the work,
and detailed drawings, etc.

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 5.2.3 Revised Estimate
 A revised detailed estimate prepared when the original detailed
estimate is beyond an acceptable range.
 It should be accompanied by all the papers as in the case of the
detailed estimate and also should include the comparative
statements of variations in each item of works.

5.2.4 Supplementary Estimate

 When additional works are there, a fresh detailed estimate is
prepared to supplement the original work.

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Rate Analysis
 It is the process of fixing cost per unit of measurement for the
different item of works.
 Cost due to construction (contractor’s cost) is given special
attention here.
 Total cost per unit of work (TC) may be grouped into two
components; direct cost and indirect cost.
TC= DC + IC
 In order to facilitate the estimation material break down is
essential
 We may use the excel or software's to calculate the material
break down (COMNISS)

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 Cont’d.…

 The direct cost (DC) includes

 cost due to material,

 cost due to labor,

 cost due to equipment,

 (IC) cost covers

 Overhead costs are expenses for general office facility, rents,

taxes, electrical light, water, and other miscellaneous items.

 contractor’s profit it is a cost which is assumed for the profit of the
contractor.
 It is almost 30% of the above costs.

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 5.3 Project Valuation
 It is the art of determining the present value of a property such as
buildings, factories, halls….
 It is determined or decided by its selling price
 Valuation of a building depends upon
 The type of a building
 Its structure
 Shape of the structure
 Quality of materials used
 Present day prices of the materials
 Plinth area
 It can also be calculated on its cost of construction at the present
day rate after deducting a suitable depreciation.

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 Methods Of Valuations

 Rent return method; it is based on the net rent value,

capitalized for the future life of the building.
 Valuation on land and building bases; it considers the
cost of land + building cost.
 Valuation on profit basis; suitable for commercial
buildings like hotels, cinemas, etc
 It is by multiplying the net profit by future life of the building.
 Valuation on cost basis; by deducting the depreciation
from the actual cost incureed in construction.

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 Cont’d.…

 Development method of valuation

 In this method it needs renovation by alteration
 Anticipated future net income is renovated and multiplied by
the future life of the property to get the value
 Depreciation method of valuation
 The property value is determined based on the book value for
the year by deducting the depreciation

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Examples
…
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Thank you!!!

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