SubscribeThe steps for creating a detailed computerized estimate for an international construction project will be presented in this paper.
This is a detailed list of all the steps required in order to produce a Cost Estimate for an International Construction Project.
The Main Steps for Creating International Project Estimates
The overall International Estimating Process can be divided into the following main steps;
- View Estimates & Resources: open or create new Estimate or Resource Files.
- General Information: enter a description of the project, select the resource file to use and select the currency of the bid.
- Resource Libraries: open the resource file the estimate is linked to, update or enter new resource rates.
- Project Notes: enter general notes about the project.
- Enter Estimate: create the breakdown for the estimate, setup sections, enter items and activities, enter unit rates, select or enter resources, enter or modify production rates, copy from other bids, prorate quantities & productivity.
- Margins: apply overhead, profit, insurance and bonding.
- Schedules: export work breakdown to a scheduling system.
- Cash Flow: setup & generate cash flows based on schedule & revenue unbalancing.
- Quotations: enter quotations for single items, resources or packages of items or resources. Identify the currency of quotation.
- Close Bid: compare and award quotations, modify resource rates and spread and unbalance unit prices within the bid.
- Bid Results: enter & compare bid results.
- Reports: select and generate a single or a package of reports. Select the currency of the reports.
The Detailed Steps for Creating International Project Estimates
Step 1: Install and Maintain an International Estimating Database
It is essential that you utilize an up to date International Estimating Package with a comprehensive International Resource and Cost Database.
Step 2: Maintain a Master Estimate Work-breakdown Structure (WBS)
The software should have the capability to develop and maintain a master multi-level estimate work-breakdown structure
Step 3: Work in a Standalone, Network or Internet Environment
The estimator should have the capability to open their international estimates in a standalone, network or internet environment.
Step 4: Open or Create Multiple International Resource Files
The system must have the ability to create resource databases in multiple currencies in both the metric and imperial measurement system.
Step 5: Enter General Project and Currency Information
The Estimator should specify the base Currency for the project along with the secondary currencies of the estimate. Enter the Client, Contractor, Designer or Developer names and addresses. Click on your Contact Manager to retrieve names and addresses.
Step 6: Setup or Edit Resource Rates
Next setup or edit the resource rates for the estimate. You should be able to select from Equipment, Crews, Material, Material Assemblies and Subcontracts.
Step 8: Setup Links to External Files
This estimator should also have the option to link their estimates to external files. You should be able to link specific files (such as a Quantity Takeoff Spreadsheet or a Site Photos) to any line in your estimate.
Step 9: Enter the Estimate Work-Breakdown Structure (WBS)
Enter Sections (S): the estimate and the resulting bill of quantities can be grouped into main sections. You can also setup sub-sections.
Enter Items (I): enter or import the bid items under the appropriate sections. Enter the Item Number, Type, Description, Quantity, Unit of Measure and Status. Items can be a "Direct" cost item, also referred to as a bid item. Items can also be "Indirect", "Alternate", "Plant" or "Engineering". "Indirect" items are normally site overhead items that are automatically spread over all direct items when calculating the final bid prices. "Alternate" items are setup for comparison only and are not included in the total. "Plant" includes stationary items like Batch Plants where the costs can be spread separately over a range of direct cost items. "Engineering" can be kept separate from construction costs on design build projects and are also spread over all items.
Enter Activities (A): The estimating system should allow the user to add multiple levels of activities below an item. Resources are normally entered at the lowest activity level. Quotations should be able to be awarded at any level and should override all costs below that level. Activities should also include a Line Number, Description, Quantity, Unit of Measure and Status.
Step 10: Enter Plug or Conceptual Unit Rates:
Enter Plug (Conceptual) Unit Rates: to enter plug unit rates in any line in the bid, just enter the Quantity, Unit of Measure and the Unit Cost or Total Cost. A plugged unit rate is an initial rate or first guess at the cost. These rates can be replaced at anytime with a detailed bid or a quotation from a subcontractor. You may also select plug rates from an historical library of rates saved in a resource file.
Enter General Costs: General costs can be entered when the user wishes to enter costs not available from the resource file. These costs should also be broken down further by cost type including labour, equipment, job material, permanent material and subcontracts.
Step 11: Enter Resources& Production Rates:
Select Resources from a Resource File: select the appropriate resource type icon (labor, equipment, crews, material, material assembly or subcontract).
Enter or Edit Crew Production Rates: enter or edit a production rate as a production rate per unit of time and the resulting time (duration) should be displayed.
Modify Man-hour Factors or Time: you should also have the option to enter a man-hour factor (MHF) or the duration (Time) directly. The resulting production rate should be changed accordingly.
Work in Alternate Units of Measure:
When preparing a detailed International Estimate, users should have the option of working in alternate units of measure or alternate units of time.
Step 12: Copy Estimate Lines
The system should allow users to copy single lines or a range of lines from either the "Current Bid" or an "External (previous) Bid."
Step 13: Prorate Estimate Lines
Prorate Quantities: when you copy a line in the estimate the estimator should be automatically prompted to prorate the quantities based on the ratio of the target line over the copied line.
Prorate Production Rates: when the estimator copies a line in the estimate the option should be there to prorate the production rate of the line being copied.
Step 14: Enter Bid Review Notes
The Chief Estimator when reviewing the bid should summarize the notes under each line in the estimate breakdown.
Step 15: Apply Margins
Margins include Overhead, Escalation, Markup (Profit), Bonding, Insurance and Value Added Tax. Overhead, Escalation & Profit is applied as a % of cost (or price) and Guarantees, Bonding & Insurance is applied as rates per thousand of contract price (cost + overhead + escalation + profit).
Step 16: Prepare Schedule
Export the Estimate Work-breakdown to Excel and then import into your scheduling system to prepare the project schedule.
Step 17: Apply Escalation
To calculate escalation you must enter a schedule first, then apply a % to labor, equipment, material or subcontracts. To apply escalation, select the schedule, enter a start date and end date, the escalation rate, a description of what is to be escalated, direct or indirect cost and select the cost type from labor, equipment, material and subcontracts.
Step 18: Generate Cash Flows and Resource Histograms
With the schedule and estimate now complete the estimator should be in a position to generate cash flows by entering Cost Lag Details on labor, equipment, material and subcontract costs. The remittance % is the portion of labor that can be submitted to unions or government later than the normal pay period. Enter Holdback retention on progress payments and subcontractor costs. Enter Payment details including billing period and Advance payment details along with Interest earned and interest paid information.
Step 19: Generate Resource Histograms
Select the unit of time, highlight the resources to be included and generate a chart of resources plotted against time.
Step 20: Enter Quotations
When entering quotations, enter the subcontractor or supplier's name, address, phone and fax number, along with the unit price, taxes and any qualifications.
Bid Line Quotation: this is a single quotation from a Subcontractor for any line in the bid breakdown. Usually Subcontractors will quote on Bid Items.
Subcontract Package: this is a price from a Subcontractor on a package of items.
Bid Resource Quotation: this is normally a quotation from a supplier for material.
Supplier Package: this is a quotation from a supplier on a package of material. For example a pipe supplier may quote on a package of pipe sizes and fittings.
Step 21: Award Quotations
Compare and select subcontract quotations for individual lines in the bid. To award a Subcontract (Bid Line) package the various subcontractors who have quoted on the package should be displayed in a spreadsheet view. If a certain subcontractor has excluded an item, this item should be highlighted and the current price carried for that item should be included in this subcontractor's package. To award a Resource package, the various suppliers who have quoted on the package should be displayed in a spreadsheet view and then the selection should be made.
Step 22: Update Resources
The estimator should be able to "Edit" or "Globally Replace" any resource in the estimate.
Step 23: Spread & Unbalance the Bid
Spread indirect costs and margin over the direct costs. A balanced bid is a bid that is "Spread Evenly". Spread the bid based on the content of labor, equipment, material and subcontracts. An unbalanced bid is a bid with the indirect cost and margin spread over those items that will enhance the cash flow. If u do not want to alter the price of any item or range of items, the estimator should "Freeze Selected Items" and spread any change to the indirect costs or margins over the remaining items.
Step 24: Create Alternate Breakdowns
All estimate lines should also be grouped to create alternate breakdowns. Alternate breakdowns can consist of "Bid Packages, Work Groups, Joint Venture Comparison Groups and Groups Sorted by Location.
Step 25: Enter Bid Results
To compare the estimate against competitive bids create a Bid Result form and display the bids from low to high and display the variance from the low bid.
Step 26: Print Reports
Reports should be categorized as follows; Bid Preparation, Bid Closing, Resources in the Bid, Resource Rates, Currency Exchange Rates & Measurement Conversion Factors.
Generate Directly to Excel: the estimator should be able to print the reports directly into Excel format.
Generate Directly to Adobe: if you wish to e-mail a report that can not be edited the estimator should generate that report into Adobe format.
Step 27: Maintain Contact List
It is important when estimating International Projects that the estimator, maintain a vendor database of suppliers and subcontractors.
Setup Categories: Setup categories according to your standard work breakdown structure.
Step 28: Update International Currency Exchange Rates
International Estimators should maintain an updated list of the International Currency Exchange Rates as they apply to their estimates.
Step 29: Measurement Conversion
Measurement Conversion Chart: a convenient measurement conversion chart should be maintained in order to convert between Metric & Imperial.