Construction cost estimation is one of the most important aspects of any constructional project. Moreover it is one of the most complex processes that consists of different variable factors which changes the vary face of estimation of any project. Construction cost estimation is a pre-constructional job, i.e. it is done before the actual ground work, and thus it has numerous variable factors which determine the estimation of any project. Construction cost estimation is generally done by the estimation and costing department of the project, who takes care of all the governing factors affecting in due course of the project. The engineers responsible for this, has have a proper knowledge, skill, experience and training in order to become a proficient construction cost estimating engineer.
Factors affecting the construction cost estimation
The factors affecting the construction cost estimation can be categorized into two own simplicity, these are generally internal factors and external factors. Now the internal factors are generally those factors which can be related to the performance of the engineers and on the other hand external factors are those which are obligatory and can affect the estimation at any point of time.
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Here we are going to discuss some of the most relevant internal and external factors which are important from estimation point of view:
- Wage Rate: The wages of worker is one of the main reasons that could affect the overall cost of the project by a huge margin. Often workers put up their demand for higher wage because of various reasons and the investors are the one who suffer from this kind of unconditional hike in the project.
- Material cost: The cost of material all around the world is very different even if we consider the globe as one roof market. This is because the material cost is largely dependent upon its availability, situation of manufacturing units and transportation facility.
- Site condition: With rapid modernization the areas around the commercial hubs has been witnessing a great face up-liftment, but every now and then these sites are not available with basic facilities for an smooth construction. These kinds of sites often add extra cost to the overall estimation of the project.
- Inflation: Inflation is factor that directly varies the cost of the project form its estimation. As inflation is a sudden jump in the values of commodities and therefore any project running within the period of inflation has to suffer a rapid hike in its costing.
- Project schedule: Project schedule generally means the deadline or time period within which a project has to be finished. If the time period for the completion is less than the normal time period than, the construction cost estimation would be high as this requires the involvement of rapid fast techniques which may be costly as compared to the conventional methods.
- Size of the project: Larger the size of the project larger is the complexity involves. With the increase in the size of the project, the mobilization of the tools and machineries also gets increased. The size of the project also determines the potential of the bidders for the completion of the project and in the construction cost estimation.
- Location of the site: The location of the proposed work can be a significant component in developing a realistic cost estimate. A rural location usually has a limited force of skilled labour in the construction trades. Therefore, the contractor must have to import tradesmen and generally pay them for their expenses; i.e., out-of-town lodging and related costs. Additionally, remote settings increase the charges for material shipment.
- Contingency: The rule-of-thumb has historically added a 10% contingency to the construction so as to nullify the unforeseen cost that comes into play during the constructional period. But sometimes this contingency gets increased to 15%-20%, specially during the time of inflation or crisis.
- Granting agency: There are some projects in which the involvement external agency for a particular portion of the construction could make a huge elevation in the overall bid of the project. This agency has higher no of paper works to be done as compare to the normal consideration which subsequently increased the bid for the project.
- Quality and proper specification of the project: As we all know that a proper plan and specification is very important for a proper implementation of any project, thus If the prepared plan of the project s not as per required specification than alteration in specification has to be made and this leads to the time consumption and affects in the cost of the construction.
- Availability of monetary fund : Although the estimation of any project is a pre-constructional process, but during the course of the project if there is no proper funding for the ongoing project than it could affect the construction cost estimation of the project.
- Lack of experience of the engineer: As we have already discussed earlier that the experience, skill and knowledge of the engineer about forecasting the cost of the project is very important in preparing an accurate estimation. Therefore construction cost estimation should be managed under the guidance of proficient personal, otherwise the estimation could go wrong.
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