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CE5382: Construction Cost Analysis and Bidding

COURSE: CONSTRUCTION COST ANALYSIS AND BIDDING

LEVEL: GRADUATE

ASSIGNMENT # 2

TOTAL POINTS:

00

LEARNING OBJECTIVES:

After successfully completing this assignment, students will be able to:

• Differentiate between various construction processes and methods for cost
estimation

• Understand direct and indirect cost associated with a construction project

• Understand various components of a good cost estimate

Note: Your work should be professionally presented and all the steps for calculations must be

included.

Remember that this assignment will be a part of the final

term project so please give proper attention to the details.

CE 5382: Construction Cost Analysis and Bidding

Problem Statement

Your company is interested in bidding for a commercial building project (you can choose

any location). Use the hint below to estimate all job overhead and assumed home office

overhead costs for that project. Please note that DRAWINGS ARE PROVIDED FOR

YOUR REFERENCE ONLY and you will not need to use all of them for this assignment.

The site plan will provide an overview of the project that is helpful to plan for some of

the temporary facilities. The duration of the project is 2 years. You can make

assumptions on the annual revenue of your company.

Hint

1. You should follow the examples in chapter 6 (Overheads and Contingencies) to

make assumptions and calculate these overheads (For home office overhead

follow figure 6.1, example 6-1 and for job overheads follow details on pages1 68-

70).

2. Please go through the estimating checklist under week 2 folder for various

indirect costs.

Grading

Your work will be graded based on the completeness and accuracy of the

following components:

o Cover sheet including your name and ID (-5)

o Assumptions made to complete your work for example what’s the annual

revenue of your company, office rent etc. in order to calculate home office cost

allocation (-15)

o Calculations needed to get all the quantities and cost numbers (-50)

1 The page number can be different if you have different edition of the textbook. Please contact the TA in this case.

CE 5382: Construction Cost Analysis and Bidding

o Project estimate summary excel sheet attached as an Excel sheet. You will only

fill out the portion for the overhead cost ONLY in that excel sheet (-20)

o References including your cost resources (-10)

Quote of the Day:

“The secret of getting ahead is getting started. The secret of getting started is breaking your

complex overwhelming tasks into small manageable tasks, and then starting on the first one.”

Mark Twain

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Discussion Questions

1. Are computers tools changing the way construction

estimating has been done in the past?

2. Discuss why we need to differentiate between direct and indirect overheads in construction?

Discussion Responses

SJ

Are computers tools changing the way construction estimating has been done in the past?

Computers are definitely changing the way estimating is done. In the old days, estimators would have to break out pages of paper and calculations, along with books of updated cost data, and estimate by hand. Through the use of new technology such as computer programs and spreadsheets, data can be implemented and automatically calculated based upon projected hours, materials, and so forth. Computers can reduce the amount of errors, increase speed of estimation, and provide the estimating team the ability to make easy changes that translate to the bottom line price in the process.

Respond

2.       Discuss why we need to differentiate  between direct and indirect overheads in construction?      

You need to be able to differentiate the costs because one applies to company overhead NOT related to the project site, while the other refers to overhead that directly affects the job and site. For instance, indirect overhead includes staff salaries, travel expenses, and office supplies at the headquarters or regional office. Direct overhead costs would be classified as project superintendent salaries, temporary office facilities on the site, temporary utilities, and sanitation facilities for workers. All the direct overhead is site related, while indirect covers all the home office aspects.

Respond

BH

Are computers tools changing the way construction estimating has been done in the past?

1. Absolutely they are. If someone said they weren’t then I would call that person crazy. Everything now is just point and click and enter a formula and move on. Building Information Modeling is another advancement that details the evolution of technology in construction. Even though it’s been at least a thought since the 1970’s, more advances in technology have led to more advances in BIM. Alternatively, the new computer tools also might cause for more errors, or errors that are new to estimating. Like the lecture says, a computer can become a crutch and can sort of sideways influence laziness. Drag and drop or copy and paste, etc.

Respond

Discuss why we need to differentiate  between direct and indirect overheads in construction?      

2. The need to differentiate between direct and indirect costs is because indirect costs can grossly outweigh direct costs. Think of the two as an iceberg floating in the ocean. The top portion of the iceberg that we can see only represents about 10-20% and what is left is what we cannot see. That would be a good way to think of direct and indirect costs. Direct costs include: windows & doors, foundation concrete, steel, light fixtures, subs and other labor, etc. While indirect costs represent: temp. power to a jobsite, jobsite trailer, reportings and schedule, clean up, etc. 

Respond

VA

Are computers tools changing the way construction estimating has been done in the past?

Yes, technology has made construction sites safer and workers more efficient. It has allowed an increase in productivity, improved collaboration, and tackles more complex projects. Today, new technologies in construction are being developed at a breakneck pace. Smart devices and wearable construction technology, as well as sensors and on-site cameras can be tied in to construction management software and give a much clearer picture of building progress and real-time status reporting.

Respond

C o n st r u c t i o n Est i m a t i ng C h e c k l i st

Direct Overhead Costs
(Project Overhead)

Personnel
Superintendent
Project manager (if for that project only)
Field engineer (if for that project only)
Cost engineer (if for that project only)
Scheduler
Warehouse personnel (if for that project only)
Watchman/guard dogs
Tool room keeper (if for that project only)
Tool room keeper (if for that project only)
Timekeeper (if for that project only)
Foreman (if for that project only)
Site safety manager

Indirect Costs
(Main O�ce Overhead)

Salaries
President
Executives
Secretaries/reception
Estimators/schedulers
Project managers
Construction manager
Cost engineers
Purchasing agent
Cost/bookkeeping
Engineers
Other o�ce personnel
Yard personnel
Tool manager
Mechanics/maintenance
Drivers
Equipment operators

Bonds
Surety
Bid
Payment
Performance

Miscellaneous
Vehicles
Permits
Licenses
Tools and equipment
Photographs
Surveying
Testing
Job signs
Pumping
Dust control
Sca�olding
Lifting /hoisting
Cleanup (periodic)
Final cleanup
Damage/repair to adjoining buildings
and/or public ways

Temporar y Facilities
Field o�ce expense
Set-up and removal
Light
Water
Telephone/internet
Supplies
Equipment
Fax machine
Copy machine
Blueprint machine
Co�ee machine
Computers/software
Temporary light and power
Temporary heat
Temporary water
Cell phones/radios
Toilet facilities
Enclosures
Storage trailers
Fencing
Barricades and signals
Construction road
Project sign

O�ce
Rent/cost of ownership
Electricity
Gas
Water
Sewer
Telephone
Internet
Postage
O�ce equipment
Furniture/furnishings
O�ce supplies
Advertising
Literature
Club/association dues

Professional Ser vices
Legal
Accounting
Architectural
Engineering

Vehicles
Cars/trucks
Cost of operation
Mileage expenses

Insurance
Fire
Property damage
Vehicles
Public liability
Windstorm
Workers’ compensation
Unemployment
Social security
Flood
Theft
Elevator

C o n st r u c t i o n Est i m a t i ng C h e c k l i st