Introduction to Types of Cost Estimates for Construction-

- What is a construction cost estimate?
- Types of cost estimates
- Approximate method-
- Plinth Area Method
- Cubical Content Method
- Service Bay Method
- Typical Bay Method

- Detailed Estimate method-
- Revised Estimate
- Supplementary Estimate
- Revised & Supplementary Estimate
- Repair & Maintenance Estimate

- Approximate method-

The article explains the definition and types of cost estimates for a construction project. The construction cost estimation types have been divided into two broad heads, i.e., approximate and detailed estimates.

# What is a construction cost estimate?

An estimate is the probable cost of the work. It tells the cost of the construction before it starts. Further, it is prepared by estimating the quantum of work for each activity and its’ respective unit rates. However, the actual cost of the work can only be determined after the work has been completed.

The US Government Accountability Office (GAO) defines the cost estimate as “*the summation of individual cost elements, using established methods and valid data to estimate the future costs of a program, based on what is known today*“.

Since the construction is heavy capex work. Hence, it is necessary to check for the project feasibility beforehand. For this purpose, compare the cost of construction and the project benefits. Moreover, a cost estimate is compulsory for budgeting, financing, tendering, billing etc. Thus, an estimate finds its’ application in every phase of the project, i.e., from initiation to closing.

The cost estimate’s accuracy is a function of the work scope details, specifications and rates. Therefore, a firmer scope yields a more accurate estimate. Also, accuracy is about the ability of an estimator to capture the details correctly.

# Types of Cost Estimate for Construction

The construction cost estimate is prepared based on drawings, specifications and rates. The availability of information decides the accuracy of the cost estimate. Therefore, the estimates are divided into two heads.

- Approximate estimate
- Detailed estimate.

## 1. Approximate Cost Estimates

In the conceptualisation or initiation phases of the project, the available details and information are limited. The clarity on scope and rate comes with the progress of work. Therefore, the estimate prepared at this stage are based on thumb rules and assumptions and is known as approximate estimate.

An approximate estimate is also known as a preliminary estimate, abstract estimate or rough cost estimate.

In this section, we shall understand the methods of approximate methods.

- Plinth Area Method
- Cubical Content Method
- Service Bay Method
- Typical Bay Method

### 1.1 Plinth Area Method

One of the most popular approximate estimation methods for buildings is the plinth area method. The method uses the plinth area of the building and the unit rate for the plinth area.

In continuation, the built-up plinth area of a building is the basis for plinth area calculation. In absence of layout, the plinth area is calculated by adding the room area requirement and 30-40% area for walls. However, for multistorey buildings, a separate plinth area is calculated for each floor.

Further, the plinth area unit rate is established from the data from similar projects in that area. Therefore, the basic assumption in the plinth area unit rate is that the projects have similar specifications. Also, another assumption for this method is that the cost increases in proportion to the area.

**Example- **For 1,000 sqft plinth area and INR 1,000 cost per sqft, the cost of a single-storey house is INR 10,00,000.

### 1.2 Cubical Content Method

Since the plinth area method doesn’t account for the height of the building, it gives an erroneous estimate of the building storey heights are different. To resolve this issue, the cubical content method comes into the picture.

Further, the cubical content method takes the 3D aspect of costing while the plinth area method only considers 2D. Hence to determine the cost of a building, multiply the cubic content of the building by the cubical rate per cubic feet or cubic meter.

For calculating the cubic content of a building, first, take the external dimension of the buildings, i.e., length and breadth. Second, multiply these dimensions with the height of the top of the roof taken from the floor.

**Example- **For 300 cum cubical content and INR 300 cost per cum, the cost of a single-storey house is INR 9,00,000.

### 1.3 Service Bay Method

The cost of a building is proportional to the number of rooms. Similarly, for hospitals, the cost associates with the number of beds it hosts. Also, stadiums have their cost calculated in terms of seating capacity.

Thus, it is established that the cost of a building equals the number of service units multiplied by the cost of one unit. For example, hotels have rooms as a service unit, for theatres, it is a seat, for condos, it is flats etc.

Similar to the other approximate methods, the bay method gets the unit cost for the service from projects of similar nature.

### 1.4 Typical Bay Method

The buildings have symmetric bays, i.e., columns having equal distance. To calculate the cost, multiply the number of bays by the cost of each bay. Therefore, this method of estimation is called the typical bay method.

Further, the bay length equals the building length, and the bay width is the centre-to-centre distance between two adjacent columns.

## 2. Detailed Cost Estimates

The estimate prepared as per the dimensions of each member is known as a detailed estimate. The measurement of each member is taken upon the availability of drawings. Further, it has the report, drawings, calculations, general specification and detailed specifications attached with it.

Moving ahead in this article, we shall discuss the following types of detailed estimates.

- Revised Estimate
- Supplementary Estimate
- Revised & Supplementary Estimate
- Repair & Maintenance Estimate

### 2.1 Revised Estimate

The project nature and requirements may deviate in the execution phase thus, the estimate needs revision. The conditions for a revised estimate are as follows.

- The quantity exceeding more than 5% of the contractual value.
- Expenditure exceeding more than 10% of the previously estimated value.
- Material deviation even though the cost remains unchanged.

The revised estimate should have a comparative statement attached with it. For example, the CS should contain a comparison for each line-item side by side with the quantity excess or saving and the reason for the same.

### 2.2 Supplementary Estimate

An estimate that covers the additional works is a supplementary estimate. To explain further, it covers the work that has been newly added to the scope or was missed in the previous estimate.

Moreover, the supplementary estimate has a statement for the amount of the original estimate and the total amount having the supplementary estimate.

### 2.3 Revised & Supplementary Estimate

An estimator prepares a Revised & Supplementary estimate if any of the below conditions meet-

- Work is partially abandoned such that the remaining work costs lesser than 95% of the original estimate.
- Material deviations lead to substantial savings in the estimate.

Therefore, the revised & supplementary estimate has a lesser value than the original estimate.

### 2.4 Repair & Maintenance Estimate

Over its lifetime, a building needs repair and maintenance. An estimator annually prepares the repair and maintenance estimate. It includes white-washing, painting, minor repair, plumbing correction, electrical correction etc.

Other than the annual repair and maintenance estimates, there are monsoon damage repair estimates, special repair estimates etc.

I hope the article has cleared your doubts about the methods of construction cost estimation. Don’t forget to share it with your civil engineer friends.

Also, check out this *excel template for preliminary building cost estimate*.

If you want to learn about quantity surveying, check out this *quantity surveying beginner’s guide and excel template*.