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Join Date: Oct 2008
Location: Bay Area, CA, USA
Posts: 825
Good Answers: 68

Re: Developing an Engineer's Estimate

02/01/2009 2:27 AM

CETech -- It strikes me as strange that an engineering firm designing equipment as important as water treatment or sewage treatment systems would not be ready to do a professional level cost estimate on the project it designs. Is this actually your situation or is your situation that of a student or apprentice working on a theoretical project. Assuming the former.....

Cost estimating of any engineering project is essentially a matter of breaking the project down into as many pieces as time allows and finding the most accurate cost of each piece. You start with the pieces and try to quickly put them into logical categories and sub categories. One natural set of categories commonly used within manufacturing companies is labor, material and one or more overhead categories for a given product. (that's where my experience lays)

In the construction industry cost estimating is a much bigger piece of the enterprise and the result is a good amount has been written on the subject. The first thing I would recommend is that you find a book on the subject and send a couple of evenings reading it. It will give you some necessary understanding of the estimating process. Only then go buy the software if your project has any construction component, even concrete foundations or electrical systems. If the software is any good it will have labor hour figures for basic construction elements like building a reinforced concrete foundation or common electrical equipment installation.

The mechanical stuff like pumps, motors, piping, electrical controls, fabricated tanks, water treatment equipment, comminuters, sludge handling equipment etc. are all bought from manufacturers or their dealers for a price that they will be glad to quote you prices if they can meet your specs. You will need these quotes to give any credibility to your estimates. This is a good starting point.

Next, for single pieces of large equipment the manufacturers can often give you a good idea of the amount of labor an auxiliary hardware needed to make the installation, especially if they have already you an equipment quote. Many have their own installation technicians and will quote that as a separate item. these quotes are usually good enough for an estimate because they tend to be on the "safe" high side. A general contractor or even principal mechanical subcontractor will often have a crew who can do those installations themselves at a lower cost and add the savings to their margins.

For the rest of the mechanical installation you are going to have to work up the labor elements (assembly times) yourself, a big project for one at your level of understanding. You could fall back on a common method of rough estimating construction costs where generic construction materials are involved. Just total up all the prices of these common materials and figure the same cost to build the system. If that isn't good enough then you'll have to develop the costs in the same manner that mechanical assembly costs are developed in the manufacturing industries. Some research will eventually turn up labor times such as how long it takes to install and tighten a nut and bolt or to lift and install a 75 pound pipe fitting. Then you will have to determine the prevailing labor rate for the skill level involved in dollars per hour (plus fringe benefits). This is the kind of stuff a good estimating consultancy brings to the party when you pay them the big bucks to do that job. The software and the actual arithmetic is the easy part.

In my experience with cost estimating for machined components and assemblies for a manufacturing company it was possible to find software companies that would sell you a site license for 10-20 seats of their estimating software for somewhere in the low 5 figures a year but if you wanted access to their database of regional labor and material costs it was quite a few thousand more per year. Reason is that this information is real a job to collect if you want it to have any accuracy.

Ed Weldon

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Good Answer (Score 2)