TOPIC:
CONCEPTUAL ESTIMATES
REPORTERS: Shalom Armigos
Kevin Joseph Moralidad
Eugenio Nagawang Jr.
Bon Anthony Sta. Ana
Keithleene Vee Jamora
Conceptual Estimate the initial effort made to predict the cost of a potential projectalso
defined as approximate estimate.
Characteristics of conceptual estimating
inexactness in the process
accuracy and validity are highly related to the level of information provided by the project
scope
it is a resource restricted activity
The importance of conceptual estimates is to assist the overall cost-control program by
serving as the first check against the budget.
Preparation of conceptual estimates
The preparation begins with a request made by management to estimate the cost of a
new project.
The next task is to collect historical data related to similar past projects.
The selection and usage of these data is crucial for the estimating preparations because
inappropriate information will negatively affect the estimate.
The resulting conceptual cost estimate is then submitted to management for decisionmaking.
To prepare an elemental cost plan the following information should be assembled:
A cost analysis of a previous similar building
Sketch plans and elevations of the proposed project
Outline specification/levels of services installation, etc. for the proposed project.
What is a conceptual estimating tool?
Cost Database developed from past experience and current construction climate.
Digitizers allows for accurate takeoff performed on drawings and documents.
Takeoff software allows an estimator to perform takeoff using digital drawings and
documents.
Estimating software helps assemble the estimate by combining the takeoff and cost
information into a final report.
Process for developing a conceptual estimate?
1. Initially collect as much documentation from the owner / designer as possible and review for
general understanding.
2. Study and interpret the project scope and develop a plan for moving forward.
3. Benchmark the project against similar facilities from past projects (the selection and usage of
this data is crucial since inappropriate information will negatively affect the estimate).
4. Make the necessary adjustments to cost information from previous projects to account for
differences in time, location and size.
5. Provide the customer with the conceptual cost estimate along with a documented defined
scope and assumptions used to develop this cost .
Conceptual Estimate Adjustment
It is necessary for the estimator to adjust the cost information from previously completed
projects for use in the preparation of a conceptual cost estimate for a proposed project.
There should be adjustment for time, location, and size.
Adjustment for time
The use of cost information from a previous project to forecast the cost of a proposed
project will not be reliable unless an adjustment is made proportional to the difference in
time between the two projects.
The adjustment should represent the relative inflation or deflation of costs with respect to
time due to factors such as labor rates, material costs, interest rates, etc.
Adjustment for location
Tender price levels vary according to the region of the country where the work is carried
out.
The adjustment should represent the relative difference in costs material, equipment and
labor of the two locations.
Indices that show the relative difference in construction costs with respect to geographical
location is usually published by many organizations.
Adjustment for size
The use of cost information from a previous project to forecast the cost of a future project
will not be reliable unless an adjustment is made that represents the difference in size of
the two projects.
In general, the cost of a project is directly proportional to its size.
The adjustment is generally a simple ratio of the size of the proposed project to the size of
the previous project from which the cost data are obtained.
Combined Adjustment
The conceptual cost estimate for a proposed project is prepared from cost records of a project
completed at a different time and at a different location with a different size. The estimator must
adjust the previous cost information for the combination of time, location and size.
Conceptual estimates often form the financial basis for grant applications,
monitoring design development and/or managing project cost. All too often,
deficient conceptual estimates yield inadequate project funding. If these
deficiencies are discovered early in the design process, owners can often
recover with a minimal amount of expense and inconvenience. However, if
deficiencies are discovered late in the design process or at bid time, owners
stand to lose substantial time and money and designers can lose hundreds of
hours to redesign. Deficiencies discovered too late can even threaten the
viability of a project.
