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Developing an Engineer's Estimate

01/30/2009 6:12 PM

Greetings Everyone,

I have been given the task of developing an Engineer's Estimate for a project that another engineer designed. The firm I work for does not have any estimating software, but is willing to make an investment if I can justify the cost. I have looked into some on the market, but they seem to only deal with "common" types of commercial construction. I am looking for something to assist with non-typical projects.

More specifically, I am looking for an estimating software which would allow me to develop costs related to projects like Wastewater treatment plants, Potable water distribution systems, and a verity of municipal improvement projects. Is there anything on the market which would fulfill these type of projects?

Any advice would be appreciated.

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#1

Re: Developing an Engineer's Estimate

01/30/2009 10:32 PM

Engineer's Estimate?

Did the other engineer not do any estimating? No BOM, no anything? what do you have?

Sounds like you want somebody on the commercial side.

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#2
In reply to #1

Re: Developing an Engineer's Estimate

01/31/2009 3:12 PM

That is exactly what had happen. The other engineer did not generate a BOM. This is one of the first things which I had done. I am working with an other engineer in my office, and he wants to group things into Lump Sum items. He doesn't seem to get the concept of the contractor's need for quantities for bidding.

I am looking for some type of software which could give construction costs. I have already compiled material costs for the project.

Any assistance would be appreciated.

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Anonymous Poster
#4
In reply to #2

Re: Developing an Engineer's Estimate

02/01/2009 3:28 AM

dear sir,

Ur bulding steel structure or concrete building?! and if concrete building which type of slabs u have.

I am trying from 2 month ago to bring software calculate the cost of slabs and which one is better (cost and structural) from my doctor. also i have softwares for steel structure but its just for our sections.

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#3

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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#5
In reply to #3

Re: Developing an Engineer's Estimate

02/01/2009 1:08 PM

GA to you Ed.

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#8
In reply to #3

Re: Developing an Engineer's Estimate

02/02/2009 12:00 PM

Mr. Walton,

I greatly thank you for your input. I have taken the information you provided to heart. The "lead engineer" on the project had developed an engineer's estimate. I had been approached several times in the recent past with 'questions' which made wounder the accuracy of the estimate which had been developed. I was the tasked to review the project "from a constructibility perspective." This is when I discovered that many of the pay items on the project were listed as "LS" under the UNITS column. I voiced my concerns to him. Through a discussion I stressed that when the project is let for bid, one of several things will happen: 1) He would be inundated with questions from contractors. 2) Contractors will just Mark up the project to cover "unknown quantities." 3) Some contractors would just pass on bidding the project.

Fortunately I was able to get him to 'see the light.' Now the bid item sheet still has the LS units for demolition, at least now the project plans and "estimated quantities" for the LS pay Items. (This is not ideal, but at least it's better than it was).

When I inquired as to how the Estimated Costs were derived, I was informed the state DOT average unit costs were utilized for the items which were not quoted by the 'suppliers'. This is how I ended up with the project. Now I'm trying to verify the accuracy of the estimate. The final project total may be accurate, but I can't be sure, and I don't want put my name on it until I'm certain (at least as much as possible).

I have taken your advise to heart, and will pass it on to the other Engineers in the office.

Again, Thank You.

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#6

Re: Developing an Engineer's Estimate

02/02/2009 10:14 AM

Having been an infrastructure contractor (Estimator, PM, Field Engineer) for 10years, and now working as Senior Cost Engineer for an Oil and Gas Engineering & Procurement firm, your question struck a chord.

Lump Sum v. Unit. Price: Unless your scope and drawings are so well defined that changes to the work will be easily quantifiable, you are better off with some form of a unit price contract. You will get the best price from your contractor if he is able to see and quantify the scope. Contractors are tend to be risk-adverse - which translates to money. If there is some vagueness to your scope - it will get addressed with additional money. Also a portion of your budget must exist to address contingency and variability. Knowing the project components well ensures you can have a rational discussion with your contractor.

You can set your contract later to be a lump sum with unit price adders, or where your contractor fills in the quantity as well as a unit cost. Which can be a good check for your own take-off.

Mechanical Equipment is often well defined, so those items can be lump-sum components for supply, with suppliers advice for install.

Piping Manhours tables and charts exist for estimating manhours, but supply and install can take many shapes.

I would suggest that cost control and budget setting is as important to your client as a design that works. Ultimately that design has to be paid for, and cost is the major driver/decider on a great many projects.

I'll touch on software packages later.

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#9
In reply to #6

Re: Developing an Engineer's Estimate

02/02/2009 12:09 PM

rjyou,

Thanks for the advise. I have implemented it into the process. Please read my response to Mr. Weldon. The appreciation I expressed to Mr. Weldon, I also extend to you. The scope and drawings have been revised. But, any additions suggestions you may have will be greatly appreciated. You may also respond to me through the following email KE7WAW@hotmail.com.

Respectfully,

Doug.

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#7

Re: Developing an Engineer's Estimate

02/02/2009 11:39 AM

As a Civil Engineer in a Water/Wastewater division of a Large corporation, I can tell you that we use Excel for our engineers estimates for the various municipalities and government agencies we serve. You should be knowledgeable of the cost, materials availability and labor circumstances in the area of the proposed facilities, and base your cost on this familiarity. It kind of sounds like you do not have the experience with such projects on which to base your estimates, but even worse the engineer you are working with sounds even less experienced and a bit lazy. Maybe your group should bring in an experienced engineering firm as a subcontractor.

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#10
In reply to #7

Re: Developing an Engineer's Estimate

02/02/2009 12:19 PM

Dear Guest,

Your response is appreciated. The material costs were not the problem. I was having a problem with the installation/labor cost. This is because I have only been working with this firm (in another part of the country) for about a year and a half. I'm not very familiar with construction costs here, but I'm getting there.

I must defend the other engineer. I may not have clearly explained the situation. He is not lazy, just unfamiliar with how major civil construction projects are bid. This has been a major learning process for him as well.

However, I do thank you for you input.

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#11

Re: Developing an Engineer's Estimate

02/02/2009 8:00 PM

It sounds to me that your company doesn't have the experience to bid a job such as yours. When bidding a job(cost estimating), one has to be very familiar with all the aspects of the job, from operation to maintenance and everything in between. I was an estimator(now retired) for a major shipyard that bid on ship repair jobs. You had to know all about a ship's construction, from structure to mechanical to electrical. You had a list of the different disiplines involved and the man hours needed to perform a particular task. All this data was added together into a final bid. Based on that, you either got the job or you didn't. BTW, that was before computers.

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#12

Re: Developing an Engineer's Estimate

02/02/2009 9:03 PM

Hi CETech,

You are now armed with the excellent inputs from Ed Weldon, rjyou & others to do your estimate. Let me add a few more tips :

1. Please develop a data bank of all the previous estimates done.

2. Analyse the results critically ( whether the Co. made profit or loss )

3. This will idicate corrective factors for your present estimate

4. you know what happened 6 months before about steel prices-it went up the roof and falling down now. In other words keep in mind the trend of major input rates.

5 Estimation is only an estimation done at a particular time & a particular person and it can vary from time to time.

6. Keep some cushion for costing errors & for negotiations

7.Follow the principle of estimation " Prepared by " , " Checked by " & " Approved By "

These types of general precautions can go on & vary from project to project.

Hope, these tips will also be useful.

Good Luck

Rangasamy.

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#13

Re: Developing an Engineer's Estimate

02/03/2009 9:09 AM

I promised some comments on Software. There are many software packages out there, all of them good to some extent. I've worked, and set up, 2 commercial systems, and an in-house system developed under rigid protocols for risk. Most of the packages are designed around a contractors tender submission. They provide an excellent tool for those with known labour, material, crew production, as well as rates, overhead, gross margin etc. The data has to be well structured and adaptable to the software. The costs come out of the first principles of knowing your knowns, productions etc, and allow you to accurately close a tender at high speed at the 11th hour to win the job.

Most of these packages can be adapted for engineering budget work, but you really have to understand what your client wants to control cost to.

I am still on the search for good package that will allow me to suit my main client, whose plants have 300+ major pieces of equipment, and control WBS is 800+ plus items.

Spreadsheets are extremely flexible, but this is also a major impediment to historical data. The data has to be structured to be usable and repeatable. The flexibility is also a major risk to your activities if too many people have access to a file. I suggest that you research spreadsheet error and risk on the web. As an estimator it will make your hair stand on end and keep you up at night.

There are many packages that incorporate established manhour data tables as well - these are next on my list to evaluate. But they have to be able to export the data into a schedule package so that reasonable cash-flows and earned value can be tracked.

If you find any good software suggestions, I'd appreciate any input.

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Users who posted comments:

Anonymous Poster (3); CETech (3); Ed Weldon (1); lyn (1); Randouli (1); Rangasamy (1); rjyou (2); ronseto (1)

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