Introduction

As a quantity surveyor, one of the most important aspects of your job is ensuring that your clients have an accurate estimate of the costs of their construction project. To do this, you will need to undertake cost estimating. Cost estimating is the process of predicting the cost of a construction based on limited information, usually carried out between stages 1-2 of RIBA design. Where there is little detail contained about the design of the building as it is still in concept stage, quantity surveyors will need to make assumptions about the materials, methods and costs associated with the project.

The types of cost forecast

There are various types of cost estimates that a quantity surveyor can produce, including:

1. Preliminary cost estimate: This is the first estimate that is produced during the design process and is based on very limited information. It is used to provide an indication of the costs associated with the project and to help inform the design decisions.
2. Detailed cost estimate: This estimate is produced once the design has progressed and is based on a more detailed analysis of the project. It is used to provide a more accurate indication of the costs associated with the project.
3. Final cost estimate: This estimate is produced once the design is complete and is used to provide an accurate indication of the costs associated with the project.

The accuracy of cost estimates will vary depending on the stage of the design process and the amount of information available. However, as a general rule, cost estimates should become more accurate as the design process progresses.

At an early stage there are several recognised methods of obtaining these cost estimates. Which one to choose is dependant on the type of project, the clients budget, the level of detail required and several other factors that need to be ascertained at an early stage.

There are different methods used to create cost forecasts, some of them are:

1. Analogous Estimating: This method uses the historical data from similar projects to estimate the cost of the current project.
2. Parametric Estimating: This method uses statistical data and mathematical models to estimate the cost of the current project.
3. Three-point Estimating: This method uses a combination of optimistic, most likely and pessimistic scenarios to estimate the cost of the current project.
4. Bottom-up Estimating: This method breaks down the project into smaller components and estimates the cost of each component individually.
5. Expert Judgement: This method relies on the knowledge and experience of experts to estimate the cost of the project.

It's important to note that different types of cost forecasts are appropriate for different stages of a project, and it's important to use the right type of forecast at the right time. Quantity surveyors play a crucial role in creating cost forecasts, by providing accurate and reliable estimates that can help ensure that the project is delivered on time and within budget.

What is cost estimating?

Cost estimating is usually undertaken early in the design stages when little is developed in terms of design, scope or specification. The process of cost estimating involves the development of an estimate for the project which will include all of the necessary costs associated with completing the project. This estimate will be based on the information that is available at the time, and will be updated as more information becomes available.

The Importance of Cost Estimating

Cost estimating is a critical step in the construction process as it provides a reliable estimate of the total cost of a project. This information is used to make informed decisions about project funding and budgeting. It also helps to ensure that the project is delivered on time and within budget by providing a benchmark for the project's cost. Construction benchmarking enables professionals to compare the cost of the project with the cost of similar projects, which helps to identify any potential issues or areas where cost savings can be made.

How Cost Estimating is Done

The process of cost estimating typically begins with an analysis of the project's scope, design, and other relevant factors. At the time of cost estimation this is usually limited and lacking key details so assumptions are made. One of the above mentioned methods is used to calculate the most accurate cost based off how much information is available

One way of estimating at such an early stage is through the use of project benchmarking. This is where the project is compared to similar projects which have been completed in the past, and an estimate is made based on the costs associated with those projects. This method can be quite accurate, but can also be subject to error if the projects being compared are not truly comparable.

Another method of cost estimating is through the use of elemental costing. This is where the project is broken down into its component parts (substructure, superstructure, finishes etc) and an estimate is made for each individual component. This method can be quite accurate, but can also be time-consuming and expensive to undertake, especially at very early stages of the cost estimation process

Iteration

It's worth noting that cost estimating is an iterative process that often requires multiple revisions as more information becomes available and the project progresses. The cost estimator will need to regularly update their estimates as the project progresses to ensure that the project stays on budget. This is where cost planning comes into play, as it helps to ensure that the project is delivered on schedule and within budget.

Cost planning is the process of identifying and managing the resources needed to deliver a project on schedule and within budget. It involves developing detailed schedules, budgets, and resource plans that are aligned with the project's objectives. This helps to ensure that the project stays on schedule and within budget, and that any issues or changes are identified and addressed early on.

What is Cost planning?

Once the design has progressed and more information is available, the cost estimator will update their estimate. This updated estimate is known as the baseline estimate, and will form the basis for the rest of the project.

Cost planning is the process of developing a detailed plan for the costs of a construction project. This plan will take into account the estimated costs of the project, as well as any known risks and contingencies. The aim of cost planning is to provide a robust and achievable budget for the construction project.

Cost planning is an essential part of the quantity surveyor's role and is usually undertaken during stages 3-4 of the RIBA design process. However, it is important to note that cost planning is not a static process and will need to be revisited throughout the course of the project to ensure that the budget is still on track.

How Cost Planning is Done

The process of cost planning typically begins with a detailed analysis of the project's scope, design, and other relevant factors. This information is used to create a detailed estimate of the project's total cost, which includes the cost of materials, labour, and any other costs associated with the project.

Based on this cost estimate, a detailed schedule and budget are developed. This includes identifying and allocating resources, such as labour and materials, to specific tasks and activities. This helps to ensure that the project stays on schedule and within budget, and that any issues or changes are identified and addressed early on.

Types of Cost Plans

There are different types of cost plans that can be used in the construction industry, each with its own advantages and disadvantages. Some of the most common types of cost plans include:

1. Master Schedule: This type of plan is a high-level schedule that provides an overview of the project's schedule and budget. It is used to identify the main milestones and activities that need to be completed to deliver the project on schedule and within budget.
2. Detailed Schedule and Budget: This type of plan is a more detailed version of the master schedule, and provides a detailed breakdown of the project's schedule and budget. It is used to identify and allocate resources, such as labour and materials, to specific tasks and activities.
3. Resource Plan: This type of plan is used to identify and manage the resources needed to deliver a project on schedule and within budget. It includes detailed information about the project's labour and material requirements, and is used to ensure that the project stays on schedule and within budget.

In Summary

In conclusion, cost estimating and cost planning are both essential components of the construction process that play a crucial role in ensuring that projects are delivered on time and within budget. Cost estimating involves predicting the total cost of a project, while cost planning involves identifying and managing the resources needed to deliver a project. Quantity surveyors are key players in both cost estimating and cost planning, providing accurate and reliable estimates and plans to help ensure that projects are delivered on time and within budget. Construction professionals should be familiar with the different types of cost estimates and cost plans, and work closely with quantity surveyors to ensure that their projects are completed successfully.