Published on April 22, 2014
Building Economy ARE 431 Dr. Mohammad A. Hassanain 1 Unit Pricing 2 Pricing Sources. Material Costs. Equipment Costs. Today’s Lecture
Building Economy ARE 431 Dr. Mohammad A. Hassanain 2 3 Unit Pricing With the quantity takeoff complete, the estimator has determined all the typical components that go into the project and how many of each type are necessary. The next task for the estimating team is to determine how much each unit will cost to : Produce and deliver to the site. Accept and store at the site Install in the correct position, and maintain until the project is accepted. Production and delivery to the site is included in the material unit price. The labor unit price includes the crew cost involved in the installation of the material at the job site. 4 Unit Pricing The equipment unit price covers the cost of the equipment necessary to install the material. Project overhead will cover the costs of accepting the material, storing it at the job site, and protecting the work until the project is accepted. Overall corporate overhead will include the costs of preparing the estimate, marketing the company, and providing technical and administrative support to the project.
Building Economy ARE 431 Dr. Mohammad A. Hassanain 3 5 Unit Pricing – Pricing Sources One cost data source used is R.S. Means Building Cost Data book, which is publicly available to cost estimators. In-house unit price data is often developed and maintained by the larger design and construction companies. Means data should be checked for accuracy as well as for the region and industry being considered. The best and most reliable costs that an estimator can get are those provided by a supplier or subcontractor. The costs quoted are usually good for a specific period of time and for a certain amount of material or work. When using quotes, the estimator needs to verify that the price quoted covers the entire scope of the work. 6 Unit Pricing – Material Costs Of all the prices that need to be determined, project material prices are generally the easiest to determine. The most reliable source is the supplier. Prices can also be obtained from previous projects or published unit price books. When receiving a price quote or when looking up a material unit price, it is important to consider the following questions: Is the price quoted for the actual item specified? Is the quoted price valid until the scheduled time of delivery? Does the price include delivery to the job site? What is the lead time to delivery? Does the supplier maintain adequate stock? What are the payment terms? Is there discount? How reputable is the supplier?
Building Economy ARE 431 Dr. Mohammad A. Hassanain 4 7 Unit Pricing – Labor Costs The pricing of labor is the most difficult factor to determine. In pricing labor, the estimator figures two different components: The hourly wage rate. The crew productivity. 8 Unit Pricing – Wage Rates The wage rate is figured by the trade(s) involved. Union rates are available from union locals, or from publications such as Means. Non-union labor rates are determined by each company and are dependent on the geographic area. In either case, wage escalation needs to be factored in, particularly on large duration projects. Each year Means publishes union labor rates by trade in the Building Construction Cost Data book. See Figure 6-12.
Building Economy ARE 431 Dr. Mohammad A. Hassanain 5 9 Unit Pricing – Wage Rates There are, however, conditions on the job that may increase these rates. For projects with an aggressive schedule, overtime should be factored in. If the project is located in a remote area or involves hazardous conditions, the average labor rates will be higher. 10 Unit Pricing – Productivity Once the quantity of work is known and the hourly wage determined, the last step in determining the labor cost is to determine how long the activity will take. The formula for labor costs is as follows: Labor cost of activity = Labor rate X Activity duration Determining crew durations or productivity requires experience and the ability to visualize how the work will be done in the filed. The estimator needs to know answers for the following questions: Will the crew be operating at full efficiency? Is other work occurring concurrently that will interface? What weather conditions are to be expected?
Building Economy ARE 431 Dr. Mohammad A. Hassanain 6 11 Unit Pricing – Productivity Will the crew be working on ladders or scaffolding or on the ground? Will extended period of overtime be occurring? Past project experience is essential in answering these questions. Because of this need, in most offices the quantity takeoff work is done by the junior estimators and the pricing by senior estimators. 12 Unit Pricing – Equipment Costs Equipment costs are the last element needed before assembling the estimate. These costs are of two general types: The cost of the equipment itself: including the cost of ownership, lease, or rental. The cost of operating it: including the cost of gasoline, oil, periodic maintenance and transportation. Equipment costs can be figured on an item-by-item basis, or can be covered on a project basis in general conditions or project overhead.
Building Economy ARE 431 Dr. Mohammad A. Hassanain 7 13 Unit Pricing – Equipment Costs Equipment, labor, and materials make up the three major cost categories of a project. When researching prices, it is necessary to predict what the cost will be at the time that the work will be done. When possible, the estimator should try to “lock in” or guarantee, the price if possible. Particularly in the case of labor and equipment, productivity is a factor since the length of time the worker or equipment is on the job site affects the final cost of the activity.
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1. Building Economy ARE 431 Dr. Mohammad A. Hassanain 1 Unit Pricing 2 Pricing Sources. Material Costs. Equipment Costs.
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