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02 CETS461 Construction Cost

The document outlines various types of construction costs, including direct, indirect, and contingency costs, which are essential for managing a construction project. It also discusses preliminary estimates, which provide an early cost projection to assist in budgeting and decision-making, and explains two pricing methods: stipulated sum and unit price. Stipulated sum is a fixed total agreed upon for the project, while unit price allows for flexibility by pricing based on measurable units.

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5 views11 pages

02 CETS461 Construction Cost

The document outlines various types of construction costs, including direct, indirect, and contingency costs, which are essential for managing a construction project. It also discusses preliminary estimates, which provide an early cost projection to assist in budgeting and decision-making, and explains two pricing methods: stipulated sum and unit price. Stipulated sum is a fixed total agreed upon for the project, while unit price allows for flexibility by pricing based on measurable units.

Uploaded by

cerialessheila
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as PPTX, PDF, TXT or read online on Scribd
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CONSTRUCTI

cost
ON
ENGR. MIGUEL G. CABANIT
Agenda

TYPES OF PRELIMINARY
CONSTRUCTION ESTIMATES
COST

STIPULATED SUM UNIT PRICE

2
TYPES OF
CONSTRUCTION
COST
Direct
Cost
Thesecosts are directly associated with
the construction project and include
materials, labor, equipment, and
subcontractor expenses.
Direct costs are typically easy to track
and allocate to specific project
activities.
3
TYPES OF
CONSTRUCTION
COST
Indirect
Cost
These costs are not directly tied to a
specific project activity but are necessary
for the overall construction process.
Examples of indirect costs include project
management fees, insurance, permits,
utilities, and site maintenance. These
costs are usually allocated based on a
predetermined formula or percentage.
4
TYPES OF
CONSTRUCTION
COST
Contingency
Cost
These costs are set aside as a buffer to
account for unforeseen events or risks that
may arise during construction. These costs
are meant to cover unexpected expenses
such as design changes, delays, or
unforeseen site conditions.
Contingency costs are typically a percentage
of the total project cost and are used as a
safety net to manage uncertainties. 5
PRELIMINARY
ESTIMATE
A preliminary estimate is an early estimation of the
potential project cost of a construction project. It is
typically prepared during the initial stages of project
planning, before detailed design and engineering work
has been completed.

Its purpose is to provide a rough idea of the project cost,


allowing stakeholders to make informed decisions and
determine the feasibility of the project.

6
PRELIMINARY
ESTIMATE
This also takes into account factors such as:
size and complexity of the project
type of construction; and
historical data from similar projects

A preliminary estimate includes the following:


materials
labor
equipment
permits; and
other necessary expenses
7
PRELIMINARY
ESTIMATE
Preliminary estimates are useful for the following:
budgeting purposes
securing financing; and
initiating discussions with stakeholders

As the project progresses and more detailed information


becomes available, the preliminary estimate can be
refined and updated to provide a more accurate cost
projection.

8
STIPULATED SUM AND UNIT
PRICE SUM
•STIPULATED
A stipulated sum, also known as lump sum, is a fixed
total amount agreed upon between the owner and the
contractor for completing the entire project.

This amount includes all costs associated with labor,


materials, equipment, overhead, and profit. The stipulated
sum is typically used for projects with well-defined scopes of
work and clear specifications.

It provides a fixed price that the contractor is responsible


for, regardless of any changes or variations that may occur
during the project.
9
STIPULATED SUM AND UNIT
PRICE
•UNIT PRICE
Unit price estimating involves breaking down the project
into measurable units, such as quantities of materials or
specific tasks, and assigning a price per unit to each item.

The total cost is then calculated by multiplying the unit


price by the quantity required. Unit price estimating is
commonly used for projects where the scope of work is
uncertain or subject to change. It allows for flexibility in
adjusting the quantities and prices as the project
progresses.

10
THANK
YOU!
Let’s get smarter
every day!

11

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