MODULE II

ESTIMATING AND COSTING 1

INTRODUCTION

This module involves equipping the trainee with knowledge, skills and attitude in
categories,evaluating building units and components. Upon completion of module, one
can work as an assistant quantity surveyor among other fields of work.
This module unit is designed to equip the trainees with knowledge, skills and attitude
necessaryfor carrying out cost evaluation and price analysis in various building structures.
The trainee should have basic knowledge of mathematics and general building
construction module I work to proceed with this module.

General objectives:

By the end of this module unit, the trainee should be able to:
a) Understand working principles of estimating and costing
b) Carry out research work to provide data for planning, design, in order to plan, analyze
the cost target of a building
c) Apply the evaluation skills to cost control construction works

Module unit summary

TOPIC 1: SITE AND OFFICE PROCEDURE.

- Explain the role of a quantity surveyor.

✓ Pre-contract stage
✓ Construction stage
✓ Post-construction stage
- Explain the role of contractors, sub-contractors, nominated suppliers.

- Explain sums included in the bills of quantities.

✓ Prime cost (PC) sum
✓ Provisional sum
✓ Contingency sum
- Explain types of payment certificates.
✓ Interim
✓ Penultimate
✓ Final certificates
- Explain variations and valuation of variations.

- Explain importance of contract documents.

✓ Working drawings
✓ Specifications
✓ Bill of quantities
✓ Form of tender
✓ Schedule of rate.
 - Tendering Systems

TOPIC 2 – INTRODUCTION TO ESTIMATING

- Explain the role of an estimator during pre-tender.

✓ Build-up rates
✓ Re-measurements
✓ Prepare claims
- Explain sources of cost information.
✓ Priced bills of quantities
✓ Trade journals/magazines
✓ Ministry of Public Works price books
✓ Schedule of rates
✓ Quotations
✓ Build-up of rates
✓ JBC schedule of rates
- Explain terms used in estimating and costing.
✓ Unit rate
✓ Profit
✓ Overheads
✓ All-in labour rates
✓ All-in mechanical rates
✓ Man-hour

TOPIC 3 – APPROXIMATE ESTIMATING

- Explain cubic method

✓ Cubic unit
✓ Cubic capacity
✓ Cubic rate
✓ Extension
✓ Merits and drawbacks
- Functional unit method
- Superficial area method
✓ Unit floor area cost
✓ Total area cost
✓ Merits and demerits
- Superficial enclosure method
✓ Unit storey area cost
✓ Total storey cost
✓ Merits and drawbacks
- Approximate quantities method
✓ Rules
✓ Methods
TEXT BOOKS
1. Elements of Quantities Surveying; S. Lee, W. Trench and A. Willis
2. Building Quantities explained; I. H. Seeley
3. Construction Quantity Surveying; Donald Towey
4. Estimating and Tendering for Construction work; M. Brook
 ROLE OF QUANTITY SURVEYOR
Measurement work undertaken by quantity surveyor is varied and interesting and will include some
of the following;

a) Pre-tender Stage
i. Cost Estimation and Budgeting: A Quantity Surveyor (QS) provides cost estimates and
prepares Bills of Quantities to determine the projected cost of the project. This helps in
establishing a budget for the client or for contractors during the tendering process.
ii. Tender Documentation Preparation: They prepare and organize tender documents,
including the BoQ, specifications, and any other relevant documents required for the
tendering process.
iii. Assistance in Contractor Selection: The QS assists in analyzing and comparing tenders
submitted by contractors, helping the client in the selection process based on cost,
capability, and other relevant criteria.
iv. Value Engineering: They might suggest alternative materials or construction methods to
reduce costs while maintaining quality, which can be beneficial during the pre-tender
stage.

b) Construction Stage:
i. Cost Control and Management: Throughout the construction phase, the Quantity
Surveyor monitors and manages costs. This includes assessing and approving variations,
valuing work done, and providing advice on cost management to ensure the project
stays within budget.
ii. Contract Administration: The QS plays a crucial role in administering the contract,
ensuring that the work is carried out in compliance with the agreed-upon terms,
specifications, and quantities as outlined in the contract.
iii. Progress Payment Certification: They assess the progress of work and certify payments
to the contractor based on the work completed. This ensures that payments are in line
with the actual work progress.
iv. Change Management: Managing and evaluating variations and change orders during
construction to ensure that additional work or changes in scope are properly
documented, costed, and approved.

c) Post-Construction Stage:
i. Final Account and Settlement: The Quantity Surveyor is responsible for assessing and
finalizing the account, reconciling the initial cost plan with the actual costs incurred
during construction.
ii. Defects and Claims Management: Assessing and managing any defects that arise during
the defects liability period and managing any claims or disputes related to costs that
might arise post-construction.
iii. Handover and Closeout: Providing final reports, records, and documentation at the close
of the project, ensuring all final payments, as-built drawings, and other necessary
paperwork are completed.

The Quantity Surveyor's roles and responsibilities evolve as the construction project progresses
through various stages. Their involvement from the pre-tender stage through construction to
post-construction ensures effective cost management, contract administration, and successful
project completion.
CONTRACTOR’S QUANTITY SURVEYOR.
The contractor’s Q.S is employed directly by his company and his duty is entirely to his organization.
Several of his functions overlap or assist those of the Q.S, these include;
(I) Agreeing measurements with the client’s Q.S
(II) Assistance with preparation of valuations with the Q.S
(III) Agreeing value of variations with the Q.S
(IV) Preparing information with regard to fluctuations claims.
(V) Agreeing the final account with the Q.S

In addition, there are tasks which are completely independent of the Q.S;

(a) Cost reconciliation.

This is to compare estimated costs with actual costs as the work progresses. Information can
be feedback for use in estimating on new projects and also to advice management should a
contract be going astray financially.

(b) Contract administration.

- Dealing with claims by nominated sub-contractors/suppliers and labour-only sub-
contractors.
- Prepare precise details of materials required for job in hand.
- Measuring and compiling target figures so that the operatives on site can be
awarded bonus payments.

ROLE OF CONTRACTORS.

Main contractor is a person or a company that is in charge of the entirety of a construction project,
whether commercial or residential. He is employed by the client, on the advice of the architect. His
responsibilities include; -

i. Bidding on the job and obtaining it.

ii.Providing all the materials, labour, equipment and services necessary for the construction of
the project.
iii. Hires specialized sub-contractors to perform all or portions of the construction work.
iv. Supervise all employees and sub-contractors to ensure the project is completed per the
scope and within all building codes, laws and regulations.
v. Other responsibilities may include applying for building permits, securing the property,
providing temporary utilities on site, monitoring schedules and cash flows, and
maintaining accurate records.
SUB-CONTRACTOR

A sub-contractor is a party which agrees to perform part or all of the obligations of the main
contractor under a separate contract with the ultimate employer. There are two types of sub-
contractors; -

(a) Domestic and

(b) Nominated sub-contractors

Domestic sub-contractors are employed directly by the main contractor i.e to supply to supply
materials, labour for the sections given to them.

Nominated sub-contractors are appointed by the client through the architect and is under the main
contractor. They are specialized in nature e.g gas installation, electrical installation, plumbing etc.

The architect may nominate or appoint a sub-contractor or supplier to carry out duties on a project as
long as the contractor makes no reasonable objection to their use.

Nominated suppliers are responsible for supplying goods and materials on behalf of the contractor.
Contracts should be formed between nominated parties and the contractor basically to ensure that the
materials supplied or work executed is of a satisfactory standard.

The following are the main reasons for sub-contracting; -

• Lessen the cost of contractor i.e. work can be done at a lower cost by sub-
contracting. The main contractors’ liability to retain, on a full time basis, all the
specialists necessary for day to day operations is reduced.
• Specialized nature of work that the main contractor cannot undertake using his
labour office can be sub-contracted. Requires additional specialist advice or
expertise.
• Overstretched resources; for instance, when undertaking a particular big job, such as
a multi-site construction project.

Note that in all the cases the sub-contract terms are signed between sub-contractor and the
main contractor being responsible for supervision and payment in accordance with the main
contract conditions.
SUMS IN THE BILLS OF QUANTITIES

(a) Prime Cost sum (PC)

This term is defined in the SMM as the sum provided for work or services to be carried out
by a nominated sub-contractor or a statutory authority or a public undertaking or for
materials or goods to be obtained from a nominated supplier. Such sum shall be deemed to be
exclusive of any profit required by the general contractor and provision shall be made for the
addition thereof.
This term therefore include specialist work carried out by persons other than the general
contractor and for materials and components to be supplied to him. Provisions is to be
allowed to profit the general contractor and for attendance upon sub-contractor etc. where
appropriate.

EX.

Provide the P.C sum of 2 2 M /=

million For the supply of
sanitary appliances.
Add contractors profit = 2%

(b) Provisional sums

This term is defined in the SMM as the sum provided for work or for cost which cannot be
entirely foreseen, defined or detailed at the time the tendering documents are issued.

They are simply sums of money awaiting the architect’s instructions about their expenditure.
They are used where some part of work which is known to be required is uncertain in
character; whereas PC sums may as well be for work that is of known character.

Furthermore, provisional sums have a partial distinction from PC sums in that they may
represent work which will ultimately be carried out by the main contractor or by a specialist
contractor. As such they are to be read as not including any discount or attracting any profit
addition.
Provisional sums should be employed only for small pockets of work, where the character of
the work on conditions of working is so uncertain that no price can be estimated in advance.

EX.

Allow the general provisional

sums of 1.5 million to cover the
cost of any unforeseen works. 1.5 M /=
This sum is to be spent entirely
on the discretion of the
architect.
 i.e repairs to existing structures, underground rock, pumping rain water in foundation
trenches or underground work.

(c) Contingency sum.

This is a sum of money included in a contract to cover the cost of work or expenses not
contemplated or implied in the contract sum.
It is often between 2 ½ and 5 % of the total value, while for alteration work 10 to 15 %.
This figure is allocated to be spent entirely at the architect’s discretion. Basically this allows
the architect a sum of money to cover minor alterations to the project without the necessity of
approaching the client for extra funds.
No quantity surveyor should write in his own idea of the contingency sum but should discuss
the matter with the architect.

PAYMENT CERTIFICATES
The certificates issued by the architect, approves the payment to the main contractor. There
are THREE types of certificates.

1. Interim certificate.
This is a temporary certificate that enables the contractor to receive regular payment so
that he will not have to carry the heavy financial burden of a complete project.
The QS prepares a valuation of the work properly executed and the total value of
materials and goods. He then passes it to the architect the final valuation upon which if
the architect is in agreement, he will issue an interim certificate which is in effect is an
obligation of the client to pay the contractor for the work done.

2. Penultimate certificate.
It means a certificate issued by the architect to the contractor signifying that the works
have been carried out and completed in accordance with the terms of the contract and all
adjustments to the contract price have been made in accordance there with.
At this stage the project is practically complete and the building can be transferred to
the client.

3. Final certificate.
This is the last certificate issued by the architect to the contractor to signify a state of
satisfactory completion, where to the opinion of the architect; the works are substantially
complete and can effectively and conveniently be used for the intended purposes. This is
issued one month from the expiring of defect liability period certificate making good
defects.

Defect Liability Period (D.L.P)

It is a time allowed after completion of the project for observation purpose. It is normally a
period of 6 months. Within this period the contractor carries out minor repairs to the defects
that may arise and general maintenance of the project.
VARIATIONS AND VALUATIONS

Variations to building contracts.

Building works are complex in nature, and frequently variations to the original proposals are
made during the progress of the work. There are several causes of variations i.e
a. Errors in the preparation of bills of quantities
b. Changes to the design or specifications required by the architect or client
c. Non-availability of specific materials
d. Unforeseen site conditions.

Therefore, variation means alterations or modifications of the design, quality or quantity

of works as shown in the contract drawings, bills and specifications. It includes;

I) Addition, omission or substitution of any item of work

II) Alteration of the kind or standard of any material/goods.

When a variation occurs for whatever reasons, it is the normal practice for the architect (or
supervising officer on government projects) to issue an instruction in writing to the
contractor informing them on the details. For convenience a pre-printed form is issued
known as a variation order or architect’s instruction. Each instruction is numbered
consecutively and a copy sent to the quantity surveyor.

Valuation of Variations.

It is the responsibility of the quantity surveyor to value the work contained in a variation. He
will usually do this in consultation with the architect’s surveyor. Assuming that there is a
priced bill of quantities or a schedule of rates (similar to bill but no quantities measured, just
priced description of work) the quantity surveyor can use the following methods of valuing
the work;

1. Use of contract rates;

This is where work to be executed as a variation is both of similar character and carried
out under similar conditions to work described in the contract bills. Here the
contractor’s original rates may be used to calculate the cost of the variation.

2. Use of pro-rata rates;

This is where work is not of similar character but executed under similar conditions to
work described in the bills. Therefore, the QS may calculate new rates which are
adjusted from the contractor’s original rates.

3. Use of star-rates;
This is where work is not comparable with that given in the contract bills but can be
measured and priced. The contractor’s original rates can neither be used nor adjusted
and therefore a fair valuation of the varied work must be agreed between the parties.

4. Using Day works;

Day works are used when work may not be easy to measure and value e.g where items
are omitted in the BQ. Day work means reimbursing the contractor the direct cost of all
materials, labour and plant used in the varied work plus an addition to cover the
contractor’s overheads and profit.

N/B – It is important to realize that not all variations will result in an additional cost.
Often work is deleted and will result in an omission from the final contract cost.

Valuation of work in progress.

As mentioned in the contract document, a contractor is entitled to payment from time to
time during the progress of the work. In this way the client finances the job. Payments are
usually made monthly depending on the work completed and materials on site. This
payment also includes the works carried out by nominated sub-contractors and the
suppliers to access the amount due.
Evaluation is made as follows;
(I) The estimator prepares a schedule of work completed and materials on site with
their values taken from the bill of quantities and estimates, day works or variation
order.
(II) The QS agrees the valuation or request adjustment where necessary.
(III) When the amount is agrees, the architect is informed by the QS. The architect
prepares and signs the certificate after deducting 10% retention.
(IV) Variation order is sent to the contractor along with the signed certificates which
will be forwarded to the client for payment.

There can be as much as three-four weeks between the valuation and the payment.
And the payment is therefore always less than the work done at the time the
contractor receives the money.

In addition the amount usually equivalent to 10% of the valuation is deducted from
the value and held until the end of the contract. Half of this is released at the
beginning of the defects liability period or on practical completion. The object of the
retention is to create an incentive for the prompt and satisfactory performance of the
work and to provide security for client against default by the contractor.

The valuation should include the following;

i. A percentage of the total value of preliminaries (from the preliminary

section of the BQ).
ii. The value of the contractor’s work carried out to date (from the work
sections of the BQ).
iii. The value of any variations which have been measured and their value
agreed upon.
iv. The value of nominated sub-contractors and nominated suppliers claims to
date.
v. The value of materials on site.
vi. The value of any fluctuation to date.
CONTRACT DOCUMENTS

a) Working Drawings
b) Specifications
c) Bill of Quantities
d) Form of tender
e) Schedule of rates
f) Conditions of contract
g) Articles of agreement

Working Drawings

They include plans, elevations, sections and large scale details of the proposed construction project
of which should be able to interpret the project at hand. Drawings of a building or a structure show
the arrangement of rooms and various dimensions i.e breadth, length and height with very few
descriptions of parts.

Specifications

These are documents prepared by architect to supplement the drawings. A specification specifies or
describes the nature and class of work and materials to be used in the various parts of work from
foundations to superstructure in details as well as methods of work (workmanship). It is a short
description of different parts of work, specified materials, proportions, qualities etc. For example,
foundation shall be in brickwork with lime mortar or cement mortar 1:6.

Bill of Quantities

This is prepared for the client by professional quantity surveyor whose fee is paid by the client.
Copies of bill of quantities are sent to the contractors to enable them to estimate when tendering. BQ
specifies the type of materials, method of work and the quantities of work to be done. When the
contract is signed, the priced BQ become part of the contract agreement and will be used for
preparation of the final account and settlement of any variations.

Form of tender

The form of tender is a pre-printed formal offer, usually in letter form, which ensures that all tenders
are received on the same basis and should be simple to compare. The tenderer fills in his name and
address and a sum of money (contract sum) as an offer to carry out and complete the works as
described in the conditions, drawings and bills of quantities.

Schedule of rates;

In appearance they are similar to a page of a bill of quantities without any quantities given. The
contractor simply inserts his rates upon which his tender is based against each description of work
included on the schedule. In practice only the major work items of significant cost and value are
included. Those rates can then be used to value any variations. Schedules of rates are also used to
obtain tenders for maintenance works.

Form of agreement

This is a legal document signed by both parties agreeing to abide to the conditions of contract. It states
that the contractor accepts to put up the building in accordance with drawing and specifications and
the client agrees for his part to pay the contract sum.

Conditions of contract

They are clauses in the agreement of which is stated and observed by the construction team. It defines
the responsibilities of the employer, contractor, architect, engineer and other non-technical staff.

Importance of contract Document

• Contracts provide a written document that outlines the full understanding of the business
relationship and scope of the work so that no one can claim any misunderstandings later
down the road.
• They specify exactly what rights are being purchased and what rights you’re retaining.
• They’re binding and legally enforceable.
• They protect both you and the client.
• They stipulate how and when you get paid, what needs to trigger that payment, and what
recourses you have if the client stiffs you.
• They minimize risk.

In construction
It is extremely important for the contract administration system on a project to manage the
documents forming the contract efficiently. In a claim situation, these documents will assist in
producing an effective claim submission and may be vital to its success.
1. The contract documents should be compiled and signed as soon as possible after the
agreement has been reached.
2. The contract documents should reflect any changes that have been introduced to the tender
documents as a result of tender clarifications and negotiations between the parties.
3. The propensity to include volumes of ‘other documents’ as appendices should be discouraged.
4. A controlled set of contrast documents should be maintained on site.
5. The controlled set of documents should be annotated with cross-references to other parts if
the documents where necessary.
6. A copy of the contract conditions which consolidates the general conditions and the particular
conditions should be produced for day-to-day use.
7. It is good practice to build up a ‘library’ of frequently used clauses, including any amendment
made by the particular conditions in a Word document for future reproduction in correspondence
and claims.
Why you need a contract
• Contracts provide a description of responsibilities.
• Contracts bind parties to their duties.
• Contracts can establish a time frame for duties.
• Contracts can secure payment
• Contracts provide recourse when the relationship falters.

The ROLES of contract document

1. It clarifies expectations
A (good) contract lays out the expectations you have for your client and the expectations they
can have for you. This doesn’t sound like it would be a big deal but when you consider that most
disappointed or upset clients can be tracked back to a misunderstanding of expectations, you can
imagine how much easier this actually can make your life. This eliminates that “When will you
be delivering my photos?” emails, the “But I thought you were going to do that” conversations
and the “I didn’t know you needed that information by a certain date” hang-ups. Your contract
makes sure that everyone is on the same page and this alone eliminates SO many headaches.
Your contract allows you to lay out important details like ownership of artistic property &
copyright and inform your client on the way that they are allowed to share things like photos. It
also allows you to set boundaries so that you aren’t on call 24/7.

2. It holds your client accountable

When your client signs your contact they are agreeing to the terms laid out. That means they are
to pay you on the dates specified and get you the information you need long before the last
minute scrambling begins. It also educates your clients about what you need from them because
chances are they have no idea. This isn’t something they do every day.

3. It holds you accountable

Just as a contract holds your clients accountable, it holds you accountable as well so that there is
a mutual agreement and protection in place. If you want your clients to feel cared about and
valuable, having a contract that protects both of you is essential.

4. It holds you accountable

Just as a contract holds your clients accountable, it holds you accountable as well so that there is
a mutual agreement and protection in place. If you want your clients to feel cared about and
valuable, having a contract that protects both of you is essential.
 5. It holds you accountable
Just as a contract holds your clients accountable, it holds you accountable as well so that there is
a mutual agreement and protection in place. If you want your clients to feel cared about and
valuable, having a contract that protects both of you is essential.

6. It gives you a way to remedy any misunderstandings

Sometimes even if you have a contract misunderstandings happen. Maybe someone read through
the contract but months later doesn’t recall a specific clause. That’s not a problem if you have a
contract because you can refer back to it and see what you both mutually agreed to. There is no
he-said she-said bullshit when you have it in writing.

7. It ensures no one gets screwed over

If either you or your client does not fulfil your agreed about responsibilities, your contract
protects you from getting screwed over. Obviously the goal is not to end up taking this to court
but if you have to, you can and your contract will serve as a record of what you and your client
agreed to.

8. It ensures you get paid and when that happens

If you value getting paid, you need a contract. It is the document that you can fall back on when
someone is refusing to pay you. It’s also the document that outlines when the client will pay you
via your payment terms. This varies among wedding professionals. Maybe you want them to pay
you 50% now and 50% 7 days before the wedding. Maybe you want them to pay you in monthly
installments. This is where you lay that out and your client agrees to pay you.

9. It builds a professional relationship

You’re a professional and that means conducting business in a professional manner. Having a
contract shows that you’re serious about your business and that you want to protect yourself and
your client
TENDERING PROCESSES

TYPES OF TENDERING
This is the manner in which contractor will be invited to submit tenders for work. The system
used is at the discretion of the architect for private works or the local authority or government
department for public works.
The common systems of tendering are;
1. Open tendering
2. Selective tendering
3. Negotiated tendering

1) OPEN TENDERING

The prospective employer advertises the project in the local or national press giving brief
details of the proposed works and issues an open invitation to contractors to apply for the
necessary documents.

Tender documents are sent to contractors who express an interest in the project. The
tenderer must pay deposit which would be returned by employer or client on receipt of a
bonafide tenderer. This prevents people who might decide to apply for curiosity sake. This
money also covers the cost of preparing documents.

The contractor submitting the lowest tender figure will normally be awarded the contract,
although the lowest does not have to be accepted.

Because of their public accountability local authorities often use this system.

Disadvantages of open tendering

a. When work is scarce many contractors may apply to tender for the work. However,
contract documents are costly to prepare as each contractor requires a set.
b. The contractor submitting the lowest tender may not have the ability, resources or
experience required for the project and this may lead to problems during the course of
work i.e poor quality building, bankruptcy hence unsuccessful completion.
c. There is always a lengthy delay to a contract being awarded due to time taken in
advertising the project, receiving replies, forwarding tendering documents and
finally receiving tenders.
d. The unsuccessful firms will have wasted a lot of time in skillfully estimating the bill
of quantities. Hence, regular clients cannot escape the extra cost.

Advantages of open tendering .

a. Open tendering allows new firms to obtain work and prove their capabilities.
b. Due to no restrictions, a chance of favouritism in drawing up the list of tenders is
very low and is a valid point in public accountability.
c. There is maximum competition of which is obligation of tenders.

2) SELECTIVE TENDERING.

This differs from open tendering in that selected competent contractors are invited to
submit tender for the project. This may be done by architects writing to companies who
have the skills, experience and known ability to carry out the project.
These are firms with good stock of plant and equipment, experienced technical and
managerial staff, and can provide sufficient back-up resources to ensure satisfactory
completion of the contract.

Like the open tendering system, the lowest tender price is normally accepted.

Guidance in selection

• Financial standings and record

• Experiences on completion of work
• Structure of the firm; technical staff, managerial, workforce/labour, back-ups i.e
plants and equipments.
• Capability of accepting work any time i.e asses the current workload.

Advantages of selective tendering.

a. Unsuitable contractors are eliminated.

b. Contractors with good reputation will normally guarantee the client a good standard
of work.
c. Cost of preparing many tender documents is minimized.

Disadvantages of selective tendering.

a. Potential new firms are locked out

b. Higher tender prices might be reflected because overheads of these firms tend to be
high and yet a reasonable profit has to be realized.
c. Involves a lot of investigation work excessive time is lost in research of firms.
 3) NEGOTIATED TENDERING.

Negotiated tenders can take many forms, but they basically occur when one contractor who is
considered to be the most suitable under the circumstances is selected to carry out a
particular contract by the architect or client. A price is negotiated until an agreement is
reached.

There can be several reasons for this;

i. Specialized knowledge of the contractor i.e having specialized plant or technique.

ii. Perhaps the contractor has carried out previous contracts for client or architect
which have satisfactory.
iii. The building is required as quickly as possible and by negotiating a contract the
delays which are normal with open and selective systems are reduced. (Quick start
required).
iv. When the building industry is overstretched and contractors are kept busy with full
order bookings (state of market)
v. Magnitude of the contract may be unknown at first, such as repair work, excavation
in unknown ground or where tender documents are insufficient
INTRODUCTON TO ESTIMATING.

Estimating revolves around the need for all interested parties involved in the building
process, but particularly the contractor to be able to predict as accurately as possible
the cost of construction.

The purpose of estimating is to forecast costs required to complete a project in

accordance to a contract’s plan and specification for any given project.

The person responsible for the preparation of prices and estimates for building work is
called the estimator and it is who must use his skill, experience and judgment in
attempting to assess the extent of likely future costs.

ROLE OF ESTIMATOR.
1. Build up rates;
An estimator will build up in detail a price for each item contained in
the B/Q, allowing for the cost of the necessary labour, materials and
plant, together with other site operating costs i.e contingencies and
generally a percentage to cover overheads and profit.

2. Re-measurement;
This is commonly used with refurbishment work where the full
extent of work cannot be accurately determined. The quantities set
out in the B/Q are the estimated quantities and are not to be taken as
the actual quantities; the actual quantities are measured during the
construction phase i.e Rock excavation.

3. Prepare claims;
Compile claims submitted by the contractor for loss and expense
incurred while carrying out the works. Items that form the basis of a
claim;
➢ Variations
➢ Postponement of the works
➢ Adjustment of provisional sums for undefined work
etc.
SOURCES OF COST INFORMATION.

b) Priced Bills of Quantities;

Priced B/Q from previous projects is a useful source of information, partly as the cost
information tends to be current. As with other forms of cost data, there is need to
adjust for the differences in location etc.

c) Trade journals/Magazines;
Many journals concerned with the construction industry contain frequent
supplements on building costs.

d) Priced books/Lists;
They are usually published by Ministry of Public Works on annual basis. They
containthe following information;
i. Calculation of basic wage rates
ii. Daywork rates
iii. Professional fees for architects; quantity surveyors and consultant engineers
iv. Market prices for building materials
v. Labour constants etc.

Price books should be carefully studied to determine the basis used to calculate
market prices, labour rates and what percentage has been added to cover overheads
and profit for the rates given.

e) Schedule of rates;
Prepared by contractors and used as a basis for estimates during tendering.

f) Quotations;
These are obtained from specialists’ suppliers and sub-contractors.

g) Build up of rates;
Refer to the role of estimator as highlighted previously.

N/B – Whatever the source of published information used it should be understood

that the prices given are an average for guidance only. The size of a building
company, its efficiency, workload, labour force, standard of workmanship and level
of profit required will affect the estimator’s calculation.
TERMS USED IN ESTIMATING.

Overheads;

These are costs which are not directly related to labour or production in the site, but have
cost implication to the firm. For estimating purposes, they include all items which are
necessary to the running of a building company and which are not normally charged to a
specific contract. They include;

• Head office costs; stationery, telephone, lighting, office furniture, salaries etc.
• Head office building; rent rates, depreciation, repairs, insurances etc.
• Finance costs; interest on bank overdrafts, bank charges etc.

Overheads are usually related to turnover and the required percentage addition is included in
the unit rate build-up. For example, if the annual turnover of a company is Kshs. 50 million
and fixed costs are Kshs. 2.5 million then the required %age is;
𝑲𝒔𝒉𝒔.𝟐.𝟓 𝒎
𝑲𝒔𝒉𝒔.𝟓 𝒎
× 𝟏𝟎𝟎 = 𝟓%

Profit;

This is the amount of money added to the net estimated cost as a return on invested capital.
The amount of profit required by a building contractor will vary considerably depending on
the size the company, turnover, market conditions, the contract value, the extend of the risk
and uncertainty included etc.

Profit and overheads may be included either as a percentage addition to measured work, or in
the preliminaries section or as a combination of both.

Unit rate;

These are rates per unit of measured work within the Bills of Quantities. They are described
in terms of LM, M2, M3, tonnes, item etc.; all complying with the rules of SMM; for each
unit measured work the Estimator includes a price at which he/she considers that the work
can be completed.

All-in labour rate;

The question of cost per hour to the contractor of employing an operative on the site is
referred to as ‘all-in’ labour rate. The term being so called because it embodies not only the
cost to the contractor of an operative’s wages, but also of employing him and can therefore
be looked at from these two aspects, namely;
 i. The direct cost (i.e wages, bonuses, overtime allowances, tool allowances –
applicable to craftsmen etc)
ii. Indirect cost (i.e Insurance contributions, levies, sick pay, employer’s
liability and 3rd party insurance etc.)

The total cost, when divided by the number of productive hours obtained, will give the all-in
rate per hour;
𝑻𝒐𝒕𝒂𝒍 𝒍𝒂𝒃𝒐𝒖𝒓 𝒄𝒐𝒔𝒕 𝒑𝒆𝒓 𝒚𝒆𝒂𝒓
𝑨𝒍𝒍 − 𝒊𝒏 𝒍𝒂𝒃𝒐𝒖𝒓 𝒓𝒂𝒕𝒆 =
𝑵𝑶. 𝒐𝒇 𝒑𝒓𝒐𝒅𝒖𝒄𝒕𝒊𝒗𝒆 𝒉𝒐𝒖𝒓𝒔 𝒑𝒆𝒓 𝒚𝒆𝒂𝒓

All-in mechanical rate;

It includes all plant costs taken into account before taking a plant or machine to site e.g
mechanical soundness, insurance, operator and fuel. Also security and cost incurred while
transporting them to the site.

The estimator has to include plant costs in the tender and therefore there is need to calculate
the total hourly cost of using each item of plant in the site. However, the procedure

depending upon whether the plant is owned or hired.

Man-hours;

This is the average unit time required to do either skilled or unskilled labour i.e. when
excavation is done by a person at a rate of 2.5m3/hr. This is the output rate per hour for the
mentioned operation.
 TOPIC 3: TYPES OF ESTIMATES

Cost estimates may be divided into at least two different types depending on the purposes for
which they have prepared and the amount of information known when the estimates are
prepared.

(a) Approximate estimates (preliminary or budget).

(b) Detailed estimates (final or definitive estimates).
Three parties are involved, the owner, the designer and contractor. Each
party should estimate costs during various phases of the budget.

APPROXIMATE ESTIMATING

These are techniques of cost appraisal which can be carried out by the quantity surveyor.
They are used when estimation is needed forthwith and there is no efficient time to prepare
accurate bills of quantities and so the need to tender.

Before a prospective client can give approval for detailed and costly design work to proceed, he
must first conduct a general feasibility study during developmental phase of a project or part of the
study and economic analysis is undertaken to compare the cost of construction with potential
earnings that could be obtained upon the completion of the project.

The designer of a project must determine the costs of various design alternatives in order to obtain an
economical design that meets the owner budget. To obtain an approximate cost, the estimator will
adjust the unit cost resulting from quantities of material, workmanship, location and construction
difficulties.

Approximate estimating techniques are not only of use to the client, but also give valuable
assistance to the architect in comparison of sketch details, specifications and building method to
allow the most economic and efficient building design to evolve.

Having been appointed to the job of preparing an approximate estimate of the cost of the building,
the quantity surveyor can make use of the following methods in common use;

i. Functional unit method

ii. Superficial or floor area method (Square area method)
iii. Cubic unit method
iv. Storey enclosure method
v. Approximate quantities (Elemental unit quantities)

The methods used will depend on the size and complexity of the proposed building work and the
degree of accuracy required in the approximate estimate.
 FUNCTIONAL UNIT METHOD.

This method is used mainly for public sector works where large sums of money are involved but
where little serious design work has been carried out and must be regarded as a very rough guide
suitable for preliminary investigations only.

It involves the establishment of target costs for functional units provided, with such costs being
frequently revised in the light of current Government and Local authority expenditure plans.

The technique is based on the fact that there is usually some close relationship between the cost of a
construction project and the number of functional units it accommodates. This may be in terms of;

i. Number of beds in a hospital.

ii. Number of seats in a cinema.
iii. Number of parking spaces in a car park.
iv. Number of places in a school.
v. Number of rooms in hotel accommodation etc.

Having determined the number of functional units required, the total cost of the project can then be
gauged from multiplying the number of units provided by the cost of providing each unit.

The cost of providing the unit itself would have to be calculated from the information extracted from
the document and pricing of previous similar contracts, with costs suitably adjusted for inflation,
changes in design, state of the market, site conditions, specification and regional changes.

Example;

Assume that a primary school intended to house 200 children has recently been built at a
cost of Kshs. 12 million. Calculate the cost of the school per place.

Solution;
𝒃𝒖𝒊𝒍𝒅𝒊𝒏𝒈 𝒄𝒐𝒔𝒕 𝒌𝒔𝒉.𝟏𝟐,𝟎𝟎𝟎,𝟎𝟎
Cost of school per place = 𝟎 = 𝒌𝒔𝒉. 𝟔𝟎, 𝟎𝟎𝟎/=
𝒏𝒐.𝒐𝒇 𝒑𝒍𝒂𝒄𝒆𝒔 𝒑𝒓𝒐𝒗𝒊𝒅𝒆𝒅
= 𝟐𝟎𝟎

Merits of functional unit estimates.

Usually, the simplest and quickest method where deficiency of information exists. Client expresses
his/her requirements as structure e.g. classroom to house 𝒙 number of students. For overall budgets
and calculations for investment purposes, it is a useful method of approximate estimating.

Demerit.

This method of estimating is not accurate as there are high number of uncertainties and variables, as
well as lack of comparable historical records. No two projects, or clients, are same. One cannot
compare a hotel in Mombasa to a hotel in Nyeri.

This type of estimate provides a very rough indication of building cost and should not be used in
viability/feasibility studies. It can be used for buildings and facilities, and for certain types of service
installation.
SUPERFICIAL/FLOOR AREA METHOD (SQUARE METRE METHOD)

This method is a simple method which can give reasonably accurate details if used with care and
consideration. In this method, some basic design work has been done hence the total floor area of
all storeys, measured between external walls and without deduction for internal walls, stair wells,
etc. is calculated. This area is then multiplied by an appropriate rate per square metre of floor area
for that type of building in order to obtain the total approximate cost.

Example;

Let us assume a house has recently been built at a cost of ksh.2, 560,000/=. This is purely the cost
and does not include land, legal fees or finance charges. The dimensions of ground floor and first
floor are 10m by 8m measured within external walls.

Solution;

Area of ground floor = 10.000 × 8.000

= 80 m2

Area of first floor = 10.000 × 8.000

= 80 m2

The cost of this particular house can now be expressed in terms of price per m2 to build.

𝐛𝐮𝐢𝐥𝐝𝐢𝐧𝐠 𝐜𝐨𝐬𝐭 𝟐,𝟓𝟔𝟎,𝟎𝟎𝟎

Cost per m2 = 𝐭𝐨𝐭𝐚𝐥 𝐟𝐥𝐨𝐨𝐫 = = ksh.16, 000/=
𝟏𝟔𝟎
𝐚𝐫𝐞𝐚

Having established this cost per m2 we can now use this method to give an approximate estimate on
future projects of a similar nature.

Limitations of the method.

This method gives an approximate answer only;

- Buildings compared must be of a similar shape, specifications, design and storey height.
- Contractors’ estimates which are compared should be from similar sized companies and
work capabilities; in order to obtain the total approximate cost.
- Applicable only to building with large floor areas.
- Inflexible as it does not consider variation in design.

Merits of the method.

- The method is quick and simple to use though, as in the case of the unit method, it is
imperative to use data from similarly designed projects.
- The unit of measurement (area) is meaningful to both the client and the design team with it
being directly related to usable floor space.
- Cheap to client and can easily understand.
 - It is useful in setting a cost ceiling/limit for the project or providing a preliminary estimate.

CUBIC UNIT METHOD.

This is a preliminary estimate or an approximate estimate, and is prepared on the basis of the cubical
contents of the building. The cubic rate is deduced from the cost of a building having similar
specifications and construction.

The total cost is found by multiplying the cubical content of the building, (length × breadth × height)
by its cubic rate. The length and breadth should be taken as the external dimensions of the buildings at
the floor level and the height are taken from the floor level to top of roof.

For storied building the height should be taken from the floor level of one storey to top of the next
higher floor.

Cubic unit rate method is more accurate as compared to the superficial area method as the height of
the building is considered.

STOREY ENCLOSURE METHOD.

When this method was suggested, it aimed at overcoming the problems detected in other
approximate estimating methods, by taking into account variations in plan shape and storey height.
Unfortunately, the method was never totally adopted by construction professionals because it
requires much more calculations than other approximate methods and because the rates needed
cannot be directly extracted from historical data.

Basically, the utilization of the method starts with the measurement of the building enclosure
(comprising floors, external walls and roof areas). Each area is then multiplied by an appropriate
weighting factor, thereby resulting the number of storey enclosure units.

Total cost = unit cost rate × number of storey enclosure units

Limitations.

- Not much used in practice as it involves greater calculations.

- Historical data are not readily available.
- Provides a single rate.

Merit.

- Relatively accurate as it takes into account the difference in plan shape, total floor area,
vertical position of the floors, overall height, storey height, extra costs of providing usable
floor areas below ground.
 APPROXIMATE QUANTITIES (ELEMENTAL UNIT METHOD)

In this method the building is divided into elements such as foundations, structural frame, external
walls, internal walls, floor finishes etc. Each element is sub-divided into components. A rate is
calculated for the component by breaking the component up into the individual items to be priced
per measurable unit of the component. Example, a slab can be broken up into concrete,
reinforcement, formwork, and power floating.

However, it relies on a significant amount of design work having been completed and can be a
lengthy process since it is essentially a simplified version of preparation and pricing of traditional bill
of quantities.

The method can be regarded as being the most accurate of all approximate estimating techniques as it
relies on availability
of considerable information.