CHAPTER 2
Types of Estimates

Estimators use four basic types of estimates. These types may be referred to by different names and may not be recognized by all as definitive. Most estimators, however, will agree that each type has its place in the construction estimating process. The four types of estimates are as follows:

• Order of magnitude estimate. The order of magnitude estimate could be loosely described as an educated guess. It can be completed quickly. Accuracy will vary between 20% and 25%.
• Square foot estimate. This type is most often useful when only the proposed size and use of a planned building is known. This method can be completed within an hour or two. Accuracy can be plus or minus 15%.
• Assemblies estimate. A systems estimate is best used as a budgetary tool in the planning stages of a project when some parameters have been decided. This type of estimate could require as much as one day to complete. Accuracy is expected to be plus or minus 10%.
• Unit price estimate. Working drawings and full specifications are required to complete a unit price estimate. It is the most accurate of the four types but is also the most time consuming. Used primarily for bidding purposes, the accuracy of a unit price estimate can be plus or minus 5%.

As an estimator and his or her company gain repetitive experience on similar or identical projects, the accuracy of all four types of estimates will improve dramatically. In fact, given enough experience and the historical data backup, square foot estimates can be extremely accurate for certain types of work. However, most prudent contractors would never sign a contract based on a square foot price for the electrical scope of the work without some wiggle room. Unit price estimates are still the method of choice for competitive bidding leading to contract.

ORDER OF MAGNITUDE ESTIMATES

The order of magnitude estimate, also called a rough order of magnitude (ROM) estimate, can be completed with a minimum amount of information and a small expenditure of time. The units of measure, described in Chapter 1, "Components of an Estimate," can be very general for this type of estimate and require little definition. The units of measure are frequently units not typical to the construction industry and are used for cost-benefit analysis and very early decision making. For example, the cost of electrical work for a residential apartment building can be provided in a cost per apartment.

This type of ROM estimate can be made after a few minutes of analysis, drawing on experience and historical data from similar past projects. While this ROM might be appropriate for initial decision making, it does not take into account the uniqueness of individual projects. Experienced electrical contractors with historical data from similar projects can distill the total project cost into units of measure that are at their most basic. For example, the total electrical cost for an apartment complex could be provided in terms of the number of apartments in the complex. For parties with no historical cost data from which to draw, there are sources of published cost data that can provide data that can be the basis of a ROM estimate.

Table 2.1 and 2.2, from Means Electrical Cost Data, is a source of data that can be used in generating early ROM estimates. As previously stated, this cost data is in a unit of measure that is representative of the type and use of the project. As an example, refer to the bottom of the category titled APARTMENTS Low-Rise (1 to 3 Story). The proposed use and magnitude of the planned structure-such as the desired number of apartments in an apartment complex-may be the only parameters known at the time the ROM Estimate is done. The data given in Table 2.2 does not require that details of the proposed project be known to determine rough costs; the only required information is the intended use and capacity of the building. The lack of accuracy can be subsidized with the addition of a contingency of 20% to 25%.

Table 2.1 Order of Magnitude Data (Lines 9000 and 9500)

Table 2.2 Square Foot Cost Data

SQUARE FOOT ESTIMATES

Another type of estimate requires more definition to the project. In addition to the building's use or type, the definition is provided in the form of its size in gross square area of the building. This type of estimate is called the square foot estimate. The use of square foot estimates is most appropriate after the conceptual design has been started and maybe only a floor plan and elevation exist, although these types of estimates can be applied in the absence of any plans. This allows early cost estimates to be generated and budgetary parameters to be set.

For the electrical contractor with the historical data and experience, he or she can translate total project costs into dollars per gross square foot of building. The best source of square foot costs is the estimator's own cost records for similar projects, adjusted to the parameters of the project at hand. Once again, this is a preliminary estimate and not meant to be the cost basis of a contract.

For parties with no historical cost data of their own, published cost data can serve as the basis of the estimate. Referencing the APARTMENT Low-Rise (1 to 3 Story) category in Table 2.2, one will note that costs are presented first as total project costs by square foot. These costs are broken down into major categories of work in terms of costs per square foot, and then into the relationship of each category to the project as a whole, in percentages. This breakdown enables the estimator to adjust certain categories of work according to the unique requirements of the proposed project. The costs on this and other pages of Means Electrical Cost Data are representative of actual project costs contained within the RSMeans database. These costs include the contractor's overhead and profit but do not include architectural fees, carrying costs, or other soft costs. The 1/4 column shows the value at which 25% of the projects had lower costs and 75% had higher. The 3/4 column value denotes that 75% of the projects had lower costs and 25% had higher. The median column value shows that 50% of the projects had lower costs and 50% had higher.

While helpful for preparing preliminary budgets, square foot estimates can also be useful as checks against other, more detailed estimates-a "big-picture" check and balance. While more time is required than with ROM estimates, a greater accuracy is achieved because of a more specific definition of the project.

ASSEMBLIES ESTIMATES

The next level on the evolutionary scale of estimating is the assemblies estimate. This method categorizes the estimate into major systems of the structure. The assemblies estimate provides the distinct advantage of enabling alternate construction techniques to be readily compared for budgetary purposes. Rapidly changing construction costs in recent years have made budgeting and cost-effectiveness studies increasingly important in the early stages of building projects. Unit price estimates, because of the time and detailed information required, are not well suited as budgetary or planning tools. A faster and more cost-effective method with the needed flexibility was created for the planning phase of a building project. It is the assemblies estimate.

The assemblies method is a logical, sequential approach that reflects how a building is constructed. The estimate is organized into seven groups based on the major components that can be found in a project. This organizational structure is called UNIFORMAT II and is outlined as follows:

Assemblies Major Groups

• A-Substructure
• B-Shell
• C-Interiors
• D-Services
• E-Equipment & Furnishings
• F-Special Construction
• G-Building Sitework

Each major group is further broken down into systems. Division D, Services, which covers electrical construction, is composed of the following groups of systems:

• D5010-Electrical Service & Distribution
• D5020-Lighting & Branch Wiring
• D5030-Communications & Security
• D5090-Other Electrical System

Each system incorporates several different components into an assembly that is commonly used in construction.

A great advantage of the assemblies estimate is that the estimator is able to substitute one system or assembly for another during design development and can quickly determine the relative cost differential. This allows the decision makers for the project to determine the benefit of one system over another. The owner can use the assemblies estimate as guidance in keeping the project on a budgetary tract.

The assemblies method does not require the degree of final design details needed for a unit price estimate, but estimators who use this approach must have a solid background knowledge of construction materials and methods, code requirements, design options, and budget considerations.

The assemblies estimate should not be used as a substitute for the unit price estimate. While the assemblies approach can be an invaluable tool in the planning stages of a project, it should be supported by unit price estimating whenever greater accuracy is...