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picture1_Construction Pdf 84227 | Short Feature Piece 2017 11nov13 V2


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Construction Pdf 84227 | Short Feature Piece 2017 11nov13 V2

icon picture PDF Filetype PDF | Posted on 13 Sep 2022 | 3 years ago
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           Construction cost estimates: reconciling, 
           comparing and relating your estimate to 
           another independent estimate
           Ramani Sundaram, CCP CEP MRICS PMP
           It is likely that two independent cost estimators will come up with two different costs, even 
           when given the same set of project documents for pricing. Estimating is an art as well as 
           a science, so no two estimates will be precisely the same. When independent versions of 
           estimates are compared, differences in the estimated costs may sometimes be small, but 
           can be significantly ‘out’, requiring more time and money to re-evaluate.
           This piece discusses a number of important points to consider when reconciling, comparing 
           or relating your figures to another independent estimate. 
           Reconciling the owner’s                      Following the reconciliation meeting,       was much higher for the foundations 
           design phase estimate                        each party may go back and refine their     package. While comparing quantities, 
           with another independent                     estimates. Remember that the intent is      it was found that there was a large 
           estimate                                     not to match the other number to the        difference in the quantity of excavation, 
                                                        penny, but to come close to each other      particularly in rock excavation. Even 
           The following steps will aid efficient       within a variance of 5 to 10%.              though contour drawings and a well-
           reconciliation of two given estimates:                                                   written geotechnical report had been 
                                                        Following standard methods for              provided, the first firm had not come 
           1.  Check first whether the same set         quantity take-offs                          up with the right quantity for rock 
               of project documents has been            Methods used to quantify items can          excavation as their take-offs were 
               used by both parties for preparing       make a huge difference to the final         not per issued documents. The first 
               the estimate. This is essential, as      outcome, especially for items with high     estimator had assumed an average 
               interpretation of project drawings,      unit prices. In one project example, an     depth of excavation for the building 
               drawing notes and project narratives     owner engaged a second consultant           footprint (three below grade floors) 
               could vary significantly if the issued   to do an independent estimate for a         without following the contour levels that 
               documents are not the same.              high-rise structure. The owner already      indicated the rock depth varying almost 
                                                        had an estimate prepared by a different     by 18 feet between the diagonally 
           2.  Review the basis of estimates            firm. The second consultant’s estimate      opposite corners.
               (BOE) and the project scope for any 
               discrepancy.
           3.  Compare quantities, unit prices and 
               assumptions.
           4.  Make a side-by-side comparison 
               of cost for subtotals (using CSI 
               ‘uniformat’, ‘master format’ or 
               another cost breakdown structure), 
               and attempt to identify reasons for 
               any cost variances.
           5.  Schedule a meeting with the other 
               estimator and review the complete 
               estimate.
           6.  Revisit take-offs and unit prices.                    Methods used to quantify items can make a huge 
           7.  Refine assumptions, quantities,                    difference, especially for items with high unit prices.
               prices and mark-ups.
           Estimating with the same set of 
           documents 
           Independent estimators need to receive 
           the same set of project documents 
           from the owner in order to make 
           sure the scope is captured in both 
           versions of the estimate. If there are 
           multiple reports, it is better to issue a 
           consolidated project scope summary 
           that will form the basis of estimate.
           As an example, in a recent hotel 
           renovation project, three different 
           reports were supplied – two reports 
           from two different facility condition 
           assessment consultants and one project 
           improvement plan by the owner. One 
           report recommended modernisation of 
           existing elevators, whereas another one 
           recommended complete replacement. 
           Similarly, recommendations for the 
           existing escalators differed between        Agreeing on assumptions                     during the pre-award meeting to ensure 
           reports. For guest bathrooms, one                                                       the bidder is clear about the scope. This 
           report suggested complete remodelling,      During the design phase, not all details    will aid the owner to make a ‘Yes’ or ‘No’ 
           but the other only minimal renovation.      may be available from the drawings          decision for awarding the contract.
           The prospective construction manager        and specifications. It may be necessary 
           (CM), working with the developer on         to make assumptions for certain items       Items for which comparison of unit 
           board, prepared an estimate that was        using methods commonly practised in         prices are possible will enable the 
           significantly lower than our estimate.      the industry. Agreeing to use the same      owner to create a historical database for 
           This was because the CM had assumed         assumptions for such items may help to      future reference.
           the final scope after reading different     narrow the cost difference between both 
           reports, and included only those items      parties.                                    Approving change orders 
           in their estimate!                          Agreeing on design allowances, such 
                                                       as pounds per square foot for steel         Comparing the owner’s estimate 
           Aligning cost models                        framing or rebar quantity for concrete,     with the contractor’s change order 
           Comparison of estimates will be very        will ease the process. If vendor quotes     proposal is required in order to confirm 
           difficult if the format differs between     are available, both parties could agree     entitlement and fair price. 
           estimators. If there is an estimate         to use the same quote for pricing.          The first action is to find out whether the 
           prepared already in a certain format,       Similarly, both parties could agree to      contractor’s proposal includes the right 
           the owner should ensure that the            use the same percentages of mark-ups        scope changes from the change order 
           independent estimator is instructed         over the trade/raw costs, contingencies,    (CO). Next is the comparison of prices. 
           to follow the same breakdown. In one        escalation factor and so forth.             In this regard, two separate meetings 
           example, the owner had asked the            Beyond the ‘technical stuff’ and dollars,   could be scheduled with the contractor. 
           consultant to prepare an estimate           reconciliations also involve willingness    The first meeting may be specifically for 
           according to contract packages              to give and take between the two            clarifying the scope to be included in the 
           whereas the CM had prepared the             parties. For some items, both must          CO proposal, and the second meeting 
           estimate using CSI (Construction            simply agree to disagree!                   could be exclusively to review pricing. 
           Specifications Institute) divisions. In                                                 With different approaches, one estimate 
           another case, this was reversed. In                                                     is bound to differ from another. Well-
           both these cases, reconciliation was        Comparing the owner’s                       organised means and methods for 
           very difficult and the consultant had       estimate with construction                  reconciling, comparing and relating 
           to redo the whole estimate, involving       bids                                        the estimates, help owners to clarify 
           unnecessary additional time and effort.                                                 differences and understand the 
                                                       Unlike the design phase estimates, the      different cost estimates or bids, and 
                                                       difference here is that the comparison is   finally to confirm that the variances are 
           Independent estimators                      done in only one way!                       appropriate and within range.
           need to receive the same                    The comparison may not be 
           set of project documents                    straightforward as in the case of the 
                                                       design phase reconciliations, but 
           from the owner.                             preparing bid forms and listing the key                 The owner’s upfront 
                                                       items for the contractor to indicate             estimating will help them 
                                                       prices against each item may be helpful 
                                                       for comparison of the owner’s estimate                 to form a negotiating 
                                                       with the bids.                                     strategy for settling and 
                                                       By comparing and discovering items                            approving COs.
                                                       where the bid prices differ, the owner 
                                                       will be better equipped to ask questions 
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...Construction cost estimates reconciling comparing and relating your estimate to another independent ramani sundaram ccp cep mrics pmp it is likely that two estimators will come up with different costs even when given the same set of project documents for pricing estimating an art as well a science so no be precisely versions are compared differences in estimated may sometimes small but can significantly out requiring more time money re evaluate this piece discusses number important points consider or figures owner s following reconciliation meeting was much higher foundations design phase each party go back refine their package while quantities remember intent found there large not match other difference quantity excavation penny close particularly rock steps aid efficient within variance though contour drawings written geotechnical report had been standard methods provided first firm check whether take offs right has used quantify items were by both parties preparing make huge final p...

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