Every construction project needs a build area, basic building materials, skilled labor, and a budget that is acceptable to all the stakeholders involved. Bidding Enterprise is a specialist of construction cost estimations that leads to creating highly useful and reliable budgets that are efficient, fast, and tailor made for each project.
The construction budget, also called the work budget, is a document that contains the detailed and anticipated calculation of the construction work costs including itemized inventory lists. The total budget represents all the costs and expenses that the general contractor will have to assume to carry it out.
The budget is prepared based on the metric calculations and unit price analysis of each of the items that make up the project. The unit prices of the items are based on the certainty of the calculation of the costs of materials, equipment and direct and indirect labor required for the construction of each item.
Necessary Items in An Estimation
In an estimation takeoff, the items are logically arranged according to the sequence of the work and are grouped into categories called titles, divisions or chapters.
The segmentation into a wide range of categories and/or subcategories originates a hierarchical structure, called the ‘Work Division Structure’, which facilitates the totalization and location of items in larger construction units.
A scope is described to the construction units and cost and supervision centers are associated with them, in order to achieve greater quality, financial and administrative control over the various specialties and groups of related items.
Effectiveness of A Project Budget
The construction budget, in addition to detailing the amount of money needed to meet the expenses necessary to undertake a project, fulfills a series of important functions during the development of the project:
It serves as the basis for the tender and for the preparation of the work contract.
It is used for the payment of the work, for the planning and control of costs, to confirm the amount quoted by third parties and as a reference point for cash flows.
In addition to allowing the rational application of resources, establishing priorities, evaluating the achievement of objectives, measuring risk with the intention of reducing it and finally achieving better results.
The preparation of a firm price estimate requires, first of all, knowing the plans, specifications and metric calculations of the completed detailed engineering.
Further, it requires knowing the location of the work, the climate, the quality of the land, the accesses, the public services, the availability of materials, the availability of qualified labor, and in general all that information that allows us to approximate the reality of the environment of the work to be built.
And most importantly, the preparation of a contractor price estimate requires a deep understanding of the totality of work necessary to build the project, in order to anticipate the difficulties of construction and thus be able to assess them.
Relevant Construction Costs
Direct construction costs are all the resources that are physically incorporated into the work, including raw materials, by-products, consumables, and all the equipment, machinery, tools and labor necessary to complete the whole project or a particular part of the whole project.
The direct cost of the items is calculated in the unit price analysis worksheet, which allows all direct cost elements to be formulated in an orderly and systematic manner; materials, equipment and labor required to build the work described in an item.
The repetition of the same format and procedure for all items facilitates understanding, review, documentation of information, and standardization of the process.
Now, when we have a construction project, we must study these direct costs.
The study of direct costs is based on a structured procedure, formulated in a logical manner, which combines different types of reasoning that allow a rational conclusion to be reached about the cost of the item. It is carried out through a sequenced execution method whose purpose is to obtain a similar result, when it is executed under the same criteria or conditions.
Detailing and Listing of Direct Costs
Firstly, the general construction procedure that will be applied in the execution of the item must be determined, describing the main operations and activities that must be carried out.
Secondly, an analysis of the most important variables or those that have a greater influence on the cost of the item must be carried out, whether they are the materials, the construction system, the available labor, the equipment and the performance.
Then we proceed to determine the type of supplies that will be used according to the plans and the technical and contracting specifications and to calculate the consumption and yields per unit of work. First the materials, then the equipment, the workforce and finally the performance of the activity. All this in accordance with the expected work conditions.
Lastly, the cost analysis of the various activities that make up the item must be combined, considering that an activity represents a set of operations that must be carried out. For example: prepare, print, move or install. That requires different human and material resources and that have different yields.
Bidding Enterprise creates reliable construction cost estimations and material takeoffs, that directly facilitates general contractors to build a working budget for any project and submit that budget to win a bid.
What makes us best is the attention to the details, our highly capable estimators are having ample experience and latest software to ensure all our clients receive estimation reports with maximum value and a very high utility, every time.