Advanced Engineering

Projects Management

Dr. Nabil I El SawalhiAssistant Professor of Construction

Management

1AEPM L7

AEPM L7 2

Bid Estimate

Cost Estimate is the anticipated or probable cost of a work and usually prepared before the construction is taken up.

Before undertaking any work, it is important to know its probable cost which is obtained or derived from estimate.

The estimate is prepared by calculating the quantities required and then calculating the cost at suitable rates.

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Bid Estimate

Before start with his work, the cost estimator has to employee extensive efforts in the preparation

period which is very important.

He must make a comprehensive overview about all work needed and how to execute it .

He should also prepare a site plan indicating the roads, offices location and the equipments and

the workshops and elements of the project.

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Tender Price

Net Cost

Company OverheadsConstruction Cost

Site OverheadDirect Cost

RiskProfit

Mark up

Project Cost Estimate Organization

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Site overhead(General Direct

Expenses) It consists of all expenses incurred by the

contactors out of the cost of materials and

equipment for a specific project. it includes

every expenses not included in the

permanent facility.

The estimating of general expenses starts from the date of signing the contact and

end at the end of the permits works and

closing site official and directing the lab our

to a new project .

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Site overheads

1. The bonds needed for new project.

2. The insurance for the project and

contractor staff.

3. Cost of testing materials.

4. Cost of supervision from the contactor

side and the site office expenses .

5. Cleaning of the site cost.

6. Site offices cost.

7. Water and Elect. cost for site offices .

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Site overheads

8. Drainage cost of site offices.

9. Cost of cars and transport means

insurance to the site.

10.Cost of signs announcement, warnings in

the site.

11.Cost of site playing.

12.Cost of security and guards of the site.

13.Cost of access roads to the site.

14.Cost of site fences.

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Site overheads

15. Cost of air conditioning, heating, ventilation.

16. Cost of first aid services.

17. Cost of monitoring and control systems.

18. Cost of municipal services and cleanness, of site.

19. Cost traffic arrangement in site and around the site.

20. Cost of salaries, allowances, gifts, promotions for site offices staff.

21. Cost of residence and weal fare of staff living in the site.

22. Others.

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Company overheads (General

Indirect Expenses) It consists of the general cost of the

company as overall which mainly contain

the main office expresses of the company.

It should be clear that there is no

interference between their costs and the

other direct general costs for the projects.

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Company overheads

1. Salary of the company owner / owners.

2. Salaries of staff working in the main office.

3. Renting cost of the main office.

4. General costs of the main offices including

water elect. , sewage, telephone, fax,

internet, etc.

5. Cost of insurances operation,

Maintenance for vehicles working for the

main office.

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Company overheads

6. Cost of providing spare parts, furniture, and sets of main office

7. Depreciation cost of tools and equipments.

8. Cost of the main stores for equipment and materials.

9. Cost of functional services (legal, accounting, engineer and material.

10.Cost of membership in local organization.

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Company overheads

11. Cost of all types insurances.

12. Cost of travel and promotion.

13. Cost of tenders preparation and submissions.

14. Cost of allowances, rewords, promotion, staff and cost of their leaves.

15. Cost of donations and pledges to community services to improve company image

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How to Distribute Indirect Cost

Although it possible to estimate the overall general cost for the company yearly or monthly,

it seems very difficult task to load their

expenses to the current active project.

The contractor has to valuate the size and number of projects that he will be involved and

distribute their costs accordingly.

It is not only the construction industry that suffers form their difficulty, but others industries

as well.

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It is possible to evaluate the indirect general cost as percentage of direct general cost for the project added to the direct cost of the project.

Or it could be made as lump sum amount added to the project.

The general indirect expenses include the contractors profits.

There general costs and profits depends on the market conditions of competition.

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Usually, the direct cost for any project increase or decrease above or below the

estimated amount.

Though, there is no guarantee that the contractor will make profits form any

project.

AEPM L7 16

Tendering evaluation and

Estimating

The study of tender is the core process of the contractor work that can bring the profit and let

him live in the construction industry.

The strength of the contacting company is measured by its ability to study and compete

others with its prices.

To study the successfulness of tendering process, some indicators have to be met.

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1. The number of successful tenders

divided by the number of bided tenders.

2. The difference value between the

awarded value of contract and the

second price divided to the total price of

the contract.

3. Value of awarded tenders during the

year divided by the total allowed tenders

for bidding during the same year.

Tendering evaluation and

Estimating-cont..

AEPM L7 18

Steps of Tendering Study

1. General report: about the project to

enable the top management of the

company to decide the possibility of

appling for tendering.

2. Survey of materials: Survey the material

prices from the market and get the

subcontractors offers.

3. Site visit : for the project and the

surrounding area and get information about

the site that could affect the implement.

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Steps of Tendering Study-cont..

4. Schedules: Preparation of the executing method of the project and make a schedule for implementation also preparation the needs plans from labor, materials, equipments.

5. Site Layout: Overall planning for the site (layout) ,the preparation of temporary office locations and preparing designs for temporary facilities (offices, stores, fences, roads, residence ,sheds, parking ,etc).

Steps of Tendering Study-cont..

6. Temporary services: Preparing a list of required services (temporary, Elect, water,

telephone, lines, drainage, generators)

7. Organizational Chart: Prepare the organizational chart of the project and

deciding on the project teams (project

manager, executing manager, accountant,

store keeper, guard, supervisors).

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AEPM L7 21

Steps of Studying Tender-cont..

8. Check Design & BOQ: Reviewing of tender drawings and designs to ensure the safe designs and check the BOQ to ensure the accuracy of quantities.

9. Direct Cost: Prepare the direct cost of the project (labor, equipment, materials, and subcontractors).

10.Site overheads: Prepare the indirect cost of the project which related to the job site requirement.

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Steps of Tendering Study-cont..

11. Flowchart: Review and study the financial conditions in the contract and the financial conditions of the suppliers, and sub-contractors and preparing of flowchart to expect the financial needs during the executing of the project.

12. Company Overheads: Estimate of the overheads according to the company policy and the importance of the project to the company.

13. Project Risk: preparing a report about expected risks in the project.

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Steps of Tendering Study-

cont.. 14.Final cost: an estimate to the entire

cost of the project.