We believe the keys to accurate construction cost estimating include:
The establishment of guidelines for use in developing all capital cost estimates such that variations among estimators due to methodological differences are eliminated.
Institution of a uniform code of accounts.
Consistent add on allowances used by all estimators in compliance with Contract Requirements and Regulations.
At P&M, we develop capital cost estimates using the best practices in cost engineering including building information modeling "BIM" and traditional bottom up and top down estimating principals.
Conceptual & Parametric Estimate: This analysis is performed using a database of information from projects of similar size and complexity. This is a cost per square foot analysis and is calculated from an average of previously constructed projects, in the general location of the proposed project, during the last twelve months. Expected changes and unique specifications of the proposed project will be reflected in this analysis. The conceptual estimate is typically prepared to aid a go/no-go decision.
Preliminary Design Estimate: Estimates of all facets of a project or program will be prepared at the close of preliminary engineering. These estimates will follow a consistent format. Accurate documentation of the basis for design is important since this estimate will typically become part of the project baseline.
Final Design Estimate: As each part of the final design program proceeds through its successive milestones, the estimates of each construction or procurement package will be updated. This update should occur immediately prior to release of the relevant design package/milestone (60% design documents or 90/100% construction documents). Since successive estimates typically differ from earlier estimates, reconciliation of these estimate updates will be of utmost importance to project managers in order to determine the steps necessary to manage scope and maintain budget. Estimate updates should be prepared in a common format at each design stage and the estimator should produce a report on the estimate itself and a reconciliation with the previous estimate.
Engineer’s Bid Estimate: Immediately prior to the construction bid date, an engineers’ estimate will be prepared in the same format as required by the bidding documents. This estimate serves as a comparison to bid prices submitted by contractors and aids in determination of the lowest responsive bid. In preparing the estimate, the estimator adjusts the most recent final design estimate by comparing any bid period addenda and evaluating the local market conditions.
Change Order / Independent Fair Cost Estimate: These estimates are prepared during the construction period and are used as independent comparisons with estimates submitted by the Contractor regarding changes to the original contract. The estimates, while prepared independently, are prepared in the same manner as the Contractor would produce them. Much of the work of change order negotiation is a reconciliation of these two estimates.
Reconciliation Estimate: This estimate will be prepared along with a detailed record of each negotiation and cross referenced to numbered negotiation items. Each variation will be priced, with the variance to the fair cost estimate and the Contractor’s estimate recorded. Several revisions or iterations of the reconciliation estimate may be developed until agreement is achieved between the parties as a result of negotiations.