1. Each component of Project (scope definition) is quantitively surveyed and realistic unit prices.
2. Requires high degree of efforts from estimating team (based on the known quantities of each of the projects components)
3. High definition of Project Definition (engineering 70% or more completed)- need drawings and specifications for material take-offs.
4. To support final budget authoriztion, Contractor bids, Change Orders etc. (Class 3 to Class 1)

1. As control budget
2. Support Project Manager activities
3. Support Cost Control Activities
4. Support Project Schedule
5. Support and Assist in constructability - construction methodology
6. Costing Project Changes
7. Comparison Base
8. Contractor Bidding

• Owner Team
• Project Manager
• Construction Manager/Superintendent
• Cost Estimators
• Cost Control Group
• Schedulers
• Consultant Team
• Engineering Team
• Cheif Estimator
• Lead Estimator
• Discipline Estimators:
• Earthworks
• Structural
• Mechanical
• Electrical
• Piping
• Various Bulk Material Suppliers
• Various Equipment Manufacturers
• Speciality Contractors/Sub-Contractors

• Plot Plan
• Equipment and Piping Layouts
• PFD's (Class 3)
• Piping and Instrumentation Diagrams
• Single-Line Diagrams
• Equipment and Motor Lists
• Instrumentation Lists
• Piping Isometrics or Piping BOM
• Technical Specifications

• Document of Understanding or Detailed Scope
• Defined and Set WBS
• Project Area Demarcation drawings
• Preliminary Construction Execution Strategy
• Preliminary Contracting Strategy
• Preliminary Schedule
• Estimate Schedule

1. Choose Estimating team
2. Distribute the project scoping document/document of understanding
3. Hold estimate kickoff meeting
4. Prepare/Distribute an estimate preparation plan or schedule
5. Prepare/Distribute and set the WBS and estimate structure
6. Prepare/Distribute BOE (Basis of Estimate)
7. Gather/Distribute engineering data (drawings, specifications, equipment and instrumentation lists, and MTO's)
8. Distribute preliminary construction schedule
9. Distribute construction execution plan and contracting strategy
10. Estimate direct and indirect cost
11. Estimate engineering costs
12. Estimate owners costs (by owner consultant controlled)
13. Estimate reviews - Key Estimating Milestones
14. Updates/Adjustments from reviews
15. Conduct Risk Analysis
16. Determine escalation costs
17. Determine contingency costs
18. Package and deliver completed estimate

1. Construction direct costs: (party responsible for estimate)
2. Construction indirect costs: (party responsible for estimate)
3. Construction Mark-Ups/Fees: Contractor (if bidding) Owner (if tendering)
4. Engineering Cost: Engineering Consultant
5. Owner Costs: Owner
6. Taxes and Duties: All Parties
7. Escalation: Owner
8. Contingency: Owner
9. Total Installed Cost

1. Material Take-Off (MTO)
• Process of identifying, quantifying and listing the components of the project into an estimate sheet
• Done from drawings, lists, and other information provided
• needs to align with the WBS and estimate structure
• Class 3 estimates relies on MTO by engineers (not enough detail for 3rd Party)
2. Labour Rates
• Contractors have very good data of labour productivity
• Owners/Consultants have a hard time deciding on productivity adjustments
• Sources of Productivity Factors - Trade Union Agreements, Historical data (internally)

1. Weather conditions
2. Access to and around site
3. Site storage space
4. Nature of Project, its size and complexity
5. Distance from material and equipment sources
6. Wage and price levels at the job location
7. Quality of supervision
8. Quality of Labour
9. Motovation/Morale of workers
10. Type and quality of tools and equipment
11. Experience and data of similar projects in the past

It’s not a good practice. Base rates should reflect the accurate prices of the item in question. Small tools & consumables, fees, overheads and other miscellaneous construction indirect costs etc.

should be separate headings/line items. Since these costs change dramatically and are very much driven by local factors and the nature of project.

Also, indirect costs are crucial part of the estimate and should be tracked separately, without diluting the base cost.

LABOUR RATES = BASE WAGE + LABOUR BURDEN

1. Base Wage : Amount paid directly to employee (sources previous projects, labour contracts, unit rate supplied by contractor, engineering firms, government labour statistics, published labour databases, estimate publications (RSMeans)
2. Labour Burden (Fringe Benefits): 
1. Staturtory Holidays & Vacation Pay
2. Union Benefits, Fees and Dues
3. Government Burden (CPP, EI, WCB)
4. Overtime (Shift or Spot)

• Estimator needs to consider overtime pay formula
• Overtime varies from straight time to 1.5 to 2 times of regular pay
• Fringe benefits are not included in overtime rate
• CPP & EI will be included

• Owner is employing a person on a contract basis - and is only paid when on the job
• FLR is base salary + all additions for hours worked
• Does not include sick time, holiday or vacation pay
• Base rate is adjusted to reflect this

Piling, concrete, structural steel, piping, insulation, painting, electrical, instrumentation and controls. Some examples:

• Man-Hour Production unit manuals exists for the estimating
• Itemized quantities are individually laboured and priced to form estimate
• Quantity driven (not crew driven like earthworks or mechanical equipment estimate)
• Learning curve is quicker
• Equipment used should be included

• Owners/Engineering Consultats commonly incorrectly estimate
• Extensive experience is needed to estimate earthworks properly and require field experience
• Unit earthworkers cost is different for each estimate because ground conditions, field composition and equipment size impact productivity
• Fleet Production depends on terrain, condition of roads, location of borrow pit

• Outdated Man-Hour Manuals
• technology has changed manufacturing and shipping
• Equipment is coming to site in larger pieces for less field assembly and fit-up
• CM/Superintendent assistance is needed of install and constructability
• Rely on crew type estimate
• Need to know various types of cranes and lifting equipment
• Need to know if any items being shipped need install and assembly

1. Contractor Bulks (purchased by contractor)
2. Tagged Equipment (owner supplied: long delivery items & contractor bulks *if owner receives special pricing)

• Vendors quotes (Class 1,2,3)
• Historical data (Class 3)
• Other considerations:
• Freight
• Hauling Requirements
• Taxes
• Customs Duties
• Material Storage Costs
• Special Storage Requirements
• Double Handling Costs

• Costs that are not directly attributable to the completion of an activity
• Difficult to estimate
• May be referred to overhead costs
• Required for the completion of activity

• Bottom-Up Method
• very accurate but takes time
• calculated on an item by item basis
• considers schedule while estimating costs
• preferred for Class 1&3 estimates
• used by Contractors
• Conceptual Method
• less accurate but quick
• preferred for Class 3 and up
• used by owners/engineering consultants
• high level, no details based on % of direct costs

Make sure that there is a summary created for indirect costs:

• Construction Management Staff: Onsite
• Construction Management Staff: Offsite
• Temporary construction facilities
• Construction services
• Construction Major Equipment
• Construction Minor Equipment
• Construction Small Tools and Consumables
• Other distributable costs

• no set formulae
• Mark-up is calculated based on bidding strategy which depends on a number of factors
• calculated as % of direct and indirect costs

Tagged equipment prices should be excluded from the mark up and fees.

• should be based on the Class of estimate
• % total of total construction costs (Class 3,4&5)
• detailed line by line estimate (Class 3,2&1)
• most estimates use techniques that are bottom-up estimating
• owner's costs represent major components of the costs