This course introduces the types of cost estimation from the conceptual design phase through the more detailed design phase of a construction project. In addition, the course highlights the importance of controlling costs and how to monitor project cash flow. Students will work on a break-even analysis of construction tasks in a project.

From the lesson

Pricing

James Sneath, Associate Director of Cost Management for Turner and Townsend, discusses pricing, labor costs and equipment costs. Topics include, cost materials, formwork, reinforcing steel and concrete. Money component and productivity component is discussed in labor costs, as well as estimating equipment costs.

Instructor, Department of Civil Engineering and Engineering Mechanics, Columbia University Director of Research and Founder, Global Leaders in Construction Management

So in the last part we've got materials, we've got labor,

the loss component to derive in your overall cost and

the right that you are going to use in your estimate is equipment.

So, you got two basic options for your equipment and

this is going to be your day to day running equipment for your overall site.

So, you have two options here of either renting the equipment or

purchasing the equipment.

Now again, like we discussed throughout this pricing section, there's lots

of publications and different guidances that you can use to look this up.

So you are not expected to typically work it out yourself,

although at the same time, you can source it yourself by calling out different

companies who actually do rent out the equipments and also sell the equipments.

That's one way of doing it, but quick and easy way to look at up at certain cost

data publications like Rental Rate Blue Book, EquipmentWatch and

also a lot of it is now online, which is should be in these days.

So an example, if you got a guidance book to your side it's going to have so

this is from the Rental Rate Blue Book.

So this particular equipment here, it's hydraulic excavator.

It's a caterpillar and it's got the full data in there,

the type of equipment it is.

The cost per month, the weekly cost, the daily cost and the hourly cost.

So, you can use all of this to help get the actual rates of the equipments.

Now, what you need to take on board though,

throughout all of this is to make sure you've got the latest guidance book.

Normally, they're released yearly.

And even better, if you're going online,

you should be getting the most live and up to date rates.

Again, nothing beats picking up the phone or sending an email and

just getting it confirmed with a local equipment, rental company or

seller of that particular equipment.

So just further examples, again, so this is going online.

You can actually see, plugin the region.

It's in the year, you can even split the ownership and

the operating percentage there.

So, you can play around with it and

make it applicable to your particular project you're working on.

So, looking at purchased equipments.

So it's only purchase cost that you need to consider,

there's a necessity to determine the cost of owning and operating it.

And includes the depreciation, the maintenance and repairs,

the investment itself and other parts, such as fuel and lubrication.

That's the mechanical parts of purchasing it.

So depreciation cost,

this the loss of value of equipment resulting from use and age.

There's different ways you can work out the depreciation cost.

The three main ways are the straight-line method,

the declining-balance method and the sum-of-the-year's-digit methods.

But these days, the most straightforward and the most commonly used is

the straight-line method, so we're just going to explain that one here.

So, the straight-line depreciation.

So, value decreases at a uniform rate.

This is the cost per unit of time or per unit of work produced.

So as an example, we've got an equipment cost of $12,000.

The useful life of it 2,000 hours per year and

the life span is 5 years.

It has a salvage value of $2,000.

Now remember those guidance books and

online guidance we just mentioned earlier, this is where you'll get

that information from to help build up your straight line depreciation.

So here, it's quite simple really,

the total depreciation is 12,000 minus 2,000, gives us $10,000.

So, that's the salvage value to be taken off of it.

You've got the annual cost of depreciation,

which is 10,000 divided by 5 years,

gives us a value of $2,000 per year.

Your annual costs of depreciation,

therefore is 2,000 divided by 2,000,

gives us an hourly cost of depreciation of $1 per hour.

So, cost of maintenance and repairs.

So here, you've got to take onboards your replacement parts and the labor involves.

It varies with the equipment and use.

For example, shovel excavating soft Earth versus hard clay.

So, the where repair will depend on the usage it's being used for.

Other fact is based on cost records kept by the owner and

different publications with values can be obtained.

For example, operating costs guide.

The Technical Bulletin, the Power Crane and Shovel Association.

And also of course, the EquipmentWatch.

So as I mentioned earlier, the cost of maintenance and repairs,

you get your average cost from operating cost guides.

So again, guide books and going online and here's an example here.

It's turning your rear either the useful lifespan and

the percentage total cost so per year and per hour and for

this example, it's for shovels and hoes and lifting cranes.

But your guide should have every type of machinery and

equipment on a typical construction site, which will apply to your project.

Again, going back to the online version.

This is where all the information is there.

It splits up your overhead costs,

your overhaul of labor and parts.

So it's got all the information there and it gives you the value cost

per hour that you can include, that again is from EquipmentWatch.

So the investment of costs is a cost regardless of the extent to which

the equipment is used, includes interest on the money invested,

taxes assessed against the equipment.

You'll have insurances involved and then also there'll be a cost for storage, for

particularly the larger machinery items and

also the smaller ones that will be kept together in storage sheds.

So with regards to the operating costs, these vary with the type and

size of the equipment as well as the conditions under which it is operated and

the location.

So for fuel consumption understand the conditions,

an engine will consume approximately 0.06 gallons per horsepower by hour.

And for diesel, it's typically 0.04 gallons per horsepower by hour.

Handling and transporting material.

So when estimating the time required by truck for a round trip,

the estimator should divide the round trip time into four elements.

You got the loading part.

You got the hauling when it's loaded.

So, that's the transportation part.

You then got the unloading part and then you got the returning,

and the emptying part to it.

So really,

you can apply this to all different types of the construction project.

It could be even the turn-key parts of the project,

such as kitchens and things like that.

So, there will be a loading cost.

They'll be a transportation cost.

They'll be a unloading cost and

it will be the returning of that transportation vehicle being used.

So, let's look at an example here.

So, we're sticking with lumber again.

So, it's hauling lumber to the job.

So, bit of information here.

So, lumber is loaded by laborers directly onto the flat bed

trucks is hauled to the job and it's stacked according to size.

A laborer should be able to handle on average,

3,000 feet board measure per hour and

typical trucks used will haul from 2 to 6 tons per load.

The average speed will vary with distance,

type of roads, traffic congestion and weather.

So, here we go.

So transporting 40,000 fbm of lumber with 1 truck, 1 driver and 1 laborer.

The truck can carry 2,000 fbm per loads and

the job site is 2 miles away from the lumber yards.

The average speed of the truck is 20 miles per hour.

So, how many trips can be made per hour?

How much wood can be hauled per hour?

How many hours are needed to finish the job?

So, let's look at those three.

So, let's look at the example here for hauling lumber to the job.

So first of all, let's look at the rate of load in a truck.

So you got 2 men times 3,000, because we discuss that earlier.

You get 3,000 fbm per hour, it gives us 6,000 fbm per hour.

The time to load the truck, as discussed earlier is 2,000.

So the time to load the truck as discussed earlier,

you can get 2,000 fbm per hour and divided by the rate of

loading the truck of 6,000, gives us 0.33 hours.

So, that will be the same time also then to unload the truck.

Again, it will be 0.33 hours.

Your travel time is going to be 4 miles divided by 20

miles per hour, gives us 0.2 hours.

So the total time per load is 0.86 hours,

adding all of those together there.

The number of trips per hour is 1 divided by

0.86, gives us a value of 1.16.

Constantly hold per hour, therefore,

then is 1.16 times 2,000 fbm equals 2,320 fbm per hour.

The total time for the job is 40,000 divided by the fbm of 2,320,

gives us a total time of 17.2 hours.

This is an example there of how you work that out.

So the cost, therefore, would be for the truck,

it will be 17.2 hours at $10.58 comes to $181.98.

The truck driver, the same time,

17.2 hours at $8.10 would be 139.32.

Laborer is right is at $7.50.

Transport hours is 129, the total cost being $450.30.

So what we're saying here then is cost per 1,000

fbm equals $450.30 divided by 40,

gives us a rate of $11.26.

It's also key to take on board here.

We've assumed this is all productive time.

There's no wastage of time.

So just note at the bottom there,

nonproductive times are not taken into account.

So, what we've covered?

We've looked at equipment costs, handling and transporting material.