||Pre-Construction Budgeting and Estimating
This presentation is for the benefit of all construction professionals that would like to have an early handle on one of the two most critical areas of construction; cost control through budgeting and estimating. The focus of this presentation is on the first point, meeting the cost requirements and parameters of an Owner through the proper use of budgeting and estimating techniques during the pre construction phase of the project.
This phase encompasses from the conceptual stage through the construction budget just prior to ground breaking. These four phases of budgeting are as follows:
- Schematic or Transitional.
- Design Development or Work Scope.
- Construction or Work Scope Award.
Additional highlights of this presentation are as follows:
- Arrangement of a Bid Documentation Package.
- Definition of the contents required for each phase of design.
- Bid Forms and documentation.
- Budget Levels and expected accuracy.
- Budgeting and Estimating reports.
||Budgeting And Estimating– Overview
During the course of a project, there are two points when the construction professional’s
(Construction Manager) efforts will be sternly evaluated by the Owner. The first point is
the opening of the proposals for the work. If the cost of the project is within the
The second is the date of completion. If the project is completed on schedule, the Owner will note that the CM firm performed adequately as well with regards to its time commitment. If either goal is not met, extenuating circumstances or changed conditions
notwithstanding, the Owner will not be easily comforted.
This is a reality of the construction business and it must be understood by every member
of the construction firm that undertakes a project for an Owner. The focus of this
presentation is on the first point, meeting the cost requirements and parameters of an
Owner through the proper use of budgeting and estimating techniques during the pre
construction phase of the project. This phase encompasses from the conceptual stage
through the Construction Budget just prior to ground breaking.
Generally speaking every proposed project has a proposed budget. We live in a costoriented
society where a capital expenditure must have a justification in the form of a
return. The cost expended on a manufacturing plant must be returned through the sale of
the products produced. The cost of an office building or apartment complex must be
returned through rents and leases. To keep the cost of manufactured products
competitive, maintain rental rates within the market, the capital investment must be a
known quantity. An assured return on investment is dependent upon accurately
predicting the costs involved. Construction cost is a significant expense, third in line to
financing and operating expenses during the life of a facility
The estimating and budgeting activities within this process become the known quantities
that guide the project from its conceptual phase to its completion. The four levels of
budgeting and estimating that contain the process are:
Once an owner has formulated an idea of a project or the concept of what is to be
developed, documentation commences to become an integral part of the project. During
the estimating process, the CM needs without failure to gather as much of this
documentation as possible in order to produce a complete and accurate estimate and bid
requests or “bid package”. If properly gathered, sorted and organized for easy retrieval
and management, the CM can produce various alternatives to pricing for the project as
well. It will allow for the evaluation of systems, materials, alternate methods and the
changing of the project as the owner may find suitable. However without the information
that estimating documentation can provide, the accuracy and practicality of the estimate
will suffer. The following should be part of the CM’s documentation during the
The bidding process commences the relationship with subcontractors, establishing
the correct guidelines and procedures of how bids are submitted is of extreme
importance. Properly prepared bid requests, or “bid package”, obtain these results. A bid
package should comprise of the following
- Transmittal Letter
- Letter of Introduction
- Bid Instructions
- List of Drawings
- Insurance Requirements
- Bidder Qualifications
- Standard Bid Form
- Trade Payment Breakdown
- Scope of work and scope sheet
Other forms of documentation which form part of the estimating process is generated
primarily in support of the estimate and commonly created by the estimator. This
documentation is an aid in filling the gaps of the information at hand, provides the
assumptions and clarifications on which the estimate is based. Sketches and other
freehand and preliminary drawings form part of this classification as well. These
documents as a group provide the supportive information and until other bidding
documents are more advanced and/or available is all that the budgets and estimates are>
A summary list of additional documents includes but is not limited to the following