DEBRE TABOR UNIVERSITY

INSTITUTE OF TECHNOLOGY
DEPARTEMENT OF CIVIL ENGINEERING

Contract, Specification and Quantity

CHAPTER 5
Project cost estimation
ABADI TIEUMAY.
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Project cost estimation

 Project Cost estimation is the process of

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 Project Cost includes:
◦ Preliminary investigation (project appraisal
costs)
◦ Design and supervision (consultancy cost )
◦ Construction works (contractor’s cost )
◦ Land owning cost, and
◦ Monitoring costs
 Cost due to construction is the focus of this
chapter. Which includes: cost due to material,
cost due to labor, cost due to equipment,
overhead costs and contractor’s profit.

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Material Break Down -In order to facilitate
estimation of cost due to material, it is
important to know the quantities of various
elements involved in construction of
various parts of the building work
Example: Material Break Down for 1m3 C-25
concrete (1:2:3 mix)

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Wet (fresh) concrete mix = 1m3
◦ Quantity for dry base analysis= 1.55m3
Note:-1.5 to 1.6 times dry volume of the materials is
required to get 1m3 of compact dense fresh concrete
mix.
◦ Volume of cement = 1/6*1.55 = 0.258m3
= 0.258m3/0.035m3 per bag

= 7.4 bags of cement

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Purposes of Cost Estimation
 To determine cost of project and compare
with capacity of the owner.
 determine actual cost per unit of item
 identifying engineering estimate of the work
for bidding purpose
 in cases of variations to determine the
extra cost to be incurred
 when changes in cost due to legislation
happens, to work out the escalation in cost

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The following information is required to
define cost per unit of work
Correct information of the market price
of the materials at the time of need to be
used as a basic price
 Correct information of the rates of
various categories of skilled and
unskilled laborers as wage rates to be
used for daily work rate.

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Output of laborers per day for various
types of items (productivity)
Correct information of the rates of
various categories of equipments and
tools as rental rates to be used for major
items of rates
 Up-to-date knowledge of the
construction methods.

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Factors affecting cost estimation
 Type and documentation of the project
 Construction scheduling
 Bidding environment
 Quality and availability of material and labor
(given in specification)
 Construction facilities /tools and method of
construction
 Location of the site: Transportation charges
 Proper management
 Land charges (lease)
 Nature of subsurface condition
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Types of cost estimation
Estimation can be broadly classified as
preliminary (approximate) and detailed.
Preliminary /approximate: This type of cost
estimation is required to know the financial
position of the client before costly detailed
designs are carried out.
 Such estimates are based on practical
knowledge and cost of similar previous works.
Examples of approximate cost estimations are
as follows: cost per functional unit, Plinth area method
-cost per m2, Cubical Content method –cost per m3
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A. Cost per functional unit
 Hospital =cost per bed, Dormitory = cost per
student, Cinema or theatre = cost per seat,
residential buildings =cost per area, road works =
cost per kilometer length, culverts or bridges =
cost per meter span, water supply sewerage
projects = cost per head of population.
B. Plinth area method cost per m2
 Based on PLINTH AREA -roof area or external
dimensions at the plinth level (Courtyard & open
area shall not be included)
 The rate per meter square is deduced from the
cost of similar building projects in the locality.

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C. Cubical Content method –cost per m3
 Based on cubical contents of various
buildings, i.e. Plinth area of the building x
height x cubic content rate.
 Height should be taken from the top of flat
roof (or halfway of the sloped roof) to the top
of concrete in foundation.

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Detailed cost estimate( based on item rate)
 This is the most reliable and accurate type of
estimate.
 The quantities of items are carefully
prepared from the drawings and the total
cost worked out from up to date market
rates.
 A detail cost estimate thus requires:
◦ Quantity surveying and
◦ Analysis of the different rates for the quantities
prepared.

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Rate analysis
 Rate Analysis is the process of fixing cost per
unit of measurement for the different item of
works.
 Total cost per unit of work (TC): Direct cost
(DC) + Indirect cost (IC)
DC includes cost due to material (MC), cost due to
labor (LC), cost due to equipment (EC), IC covers
overhead costs, and contractors profit.
In order to facilitate estimation, Material break
down is essential.

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Example: -Calculate the Unit price for C -25 concrete per
m3 of work (formwork and reinforcement rated
separately). Assume 15% overhead and 20 % profit.
Solution: -
 Total cost (TC) = Direct Cost (DC) + Indirect Cost(IC)
 IC = (15% + 20%) of DC = 35 % of DC
 Direct Cost (DC) = Material Cost (MC) + Labour Cost(LC) +
Equipment Cost (EC)
Material cost (MC)
cement = 7.4 bags/m3 * 90 birr/bag 666.00 birr/m3
sand =0.517m3*120 birr/m3 62.04 birr/m3
aggregate =0.775m3*100birr/m3 77.5birr/m3
water =0.16m3*0.25birr/m3 0.04birr/m3
805.58 birr/m3
total
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Labour cost (LC)
Assuming the crew consists of a site engineer (salary=
4000birr/month), foreman(60 birr/day), mason(45birr/day),
four daily laborers (20birr/ day each) and a mixer operator
(32birr/day) and assuming a productivity of 0.50 m3 per hr:

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 Equipment Cost (EC)
Assuming a mixer with an hourly rate of 20.00
Birr / Hr and productivity of 0.5 m3 per hour:

DC = MC + LC +EC
DC = 805.58 + 47.56 + 40.00 = 893. 14 Birr/m3
IC = 35/100 * 893.14 = 312.6 Birr/m3
TC = (893.14+ 312.6) Birr/m3
= 1,205.74 ≅ 1, 210.00 Birr/m3

Total cost of C –25 Concrete = 1, 210.00 Birr/ m3

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THANK YOU!

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