Cost Estimating FAQs

Q: What is cost estimating?

A: Cost estimating is the practice of forecasting the cost of a project or operation. It involves detailed analysis and evaluation of all the factors that may impact the cost of a project, from materials and labor to equipment and regulations.

Q: What is cost estimating in construction?

A: Cost estimating in construction is a comprehensive process that calculates the total financial resources necessary to finish a project. Equally as significant as other stages, your preconstruction estimate has a direct impact on the ultimate objective of generating profit at the end.

Q: What is AACE cost estimating?

A: Cost estimating as per AACE International’s recommended practice is guided by the Cost Estimate Classification System. This system sets the standards for incorporating the overarching principles of estimate categorization into project cost estimates (i.e., cost estimates that are utilized for the evaluation, approval, and/or financing of projects).

Q: What are cost estimating tools and software?

A: Cost estimating tools and software are digital solutions designed to help cost estimators and project managers predict the cost of a project. These tools leverage data, analytics, and industry benchmarks to enhance the accuracy of cost predictions.

Q: Do you provide cost estimating training?

A: While JLD Cost Consulting doesn’t provide formal training programs, we prioritize educating our clients about our process, ensuring they understand each step of our cost estimating system. We believe in transparency and collaboration throughout the estimating process.

Q: What is cost consulting or cost consultancy?

A: Cost consulting, or cost consultancy, is a professional service where specialists guide clients in planning their budget, controlling costs, and maximizing value on projects. At JLD, we focus on several areas, including cost estimating, value engineering, life cycle cost analysis, constructability reviews, and cost control.

Q: What is value engineering in construction?

A: Value engineering is a systematic method aimed at improving the “value” of goods or services by examining their function. In construction, this involves identifying and removing unnecessary costs while improving the quality and functionality of the project. At JLD, we consistently uncover opportunities to lower project costs and add value.

Q: Can you give some examples of value engineering?

A: Sure, some examples from JLD’s work include savings realized in environmental remediation methods, geotechnical and foundation design, reducing structure cost from relocated mechanical equipment, building envelopes, finishes, and multiple best-value alternates associated with project delivery methods and contracts.

Q: What is a cost estimator?

A: A cost estimator is a professional who predicts the cost of a project or operation. They use their knowledge of the industry, materials, labor, and market conditions, along with cost estimator software and tools, to determine a project’s cost.

Q: What is construction cost consulting?

A: Construction cost consulting involves providing expert advice on cost management throughout a construction project. This includes estimating costs, identifying cost-saving opportunities, assessing risk, and ensuring the project stays on budget. JLD provides top-tier construction cost consulting services nationwide.

Q: What is a constructability review?

A: A constructability review is an assessment of a project’s design from a construction perspective. It ensures the project can be built as designed while identifying potential construction issues early, improving efficiency, and saving time and money. At JLD, our constructability reviews form part of our comprehensive cost consulting services.

Q: How do you estimate the cost of construction?

A: At JLD Cost Consulting, our construction cost estimation involves a thorough review of project documents, detailed market research, and outreach to local vendors. We start by examining existing project documents, including architectural drawings and technical reports. We then study market conditions and engage with local vendors to determine current costs for materials, labor, and equipment. Our process ensures that our estimates are accurate, reflective of local market conditions, and offer maximum value.

Q: What is the most common way to estimate costs?

A: The most common approach to estimate costs is a process called “takeoff”. This involves examining project plans and determining the amount of materials required, the labor involved, and the equipment needed. However, at JLD, we take it a step further. We not only conduct detailed takeoffs but also engage in a value engineering process, life cycle cost analysis, and constructability reviews, to ensure the best cost-saving strategies and the most efficient project approach are identified.

Q: How do I calculate the cost of materials to build a house?

A: Calculating the cost of materials for building a house, or any other structure,  involves a detailed takeoff from the house plans, which details the quantity and types of materials required. It also requires reaching out to local suppliers for current material prices. At JLD, we leverage our market knowledge and relationships with local vendors to ensure we get accurate and current cost information, which we then incorporate into our estimates.

Q: What percentage of construction cost is equipment?

A: The cost of equipment as a percentage of total construction costs can vary widely depending on the type and scale of the project, as well as regional factors. However, it’s typically in the range of 7% to 12%. At JLD, our thorough market research and cost estimating practices ensure that we account for these costs accurately, keeping your project within budget while maximizing value.

Q: What are the different methods of cost estimating?

A: There are several methods of cost estimating, each with its unique advantages, and four common ones are:

Parametric Estimating: This involves using statistical modeling to develop cost estimates. At JLD, we often use this method in combination with others, as it provides good benchmarking and scalability.

Analogous Estimating: This technique uses the cost of similar past projects to estimate the cost of a current project. Our extensive portfolio at JLD allows for robust analogous estimating.

Bottom-Up Estimating: Here, each part of the project is estimated individually, and then these are added together. This is our preferred method at JLD, as it aligns with our detailed and comprehensive review approach.

Three-Point Estimating: This method takes into account the risk and uncertainty by considering the best-case, most likely, and worst-case scenarios. At JLD, we integrate this approach into our risk assessment and cost control measures.

Q: How do you calculate cost estimates?

A: At JLD, we calculate cost estimates by conducting a thorough review of project documents, including architectural drawings and technical reports. We then undertake detailed market research, considering current prices for materials, labor, and equipment in the local market. Our team also carries out value engineering and life cycle cost analysis to ensure maximum value for our clients.

Q: What is the best method for cost estimating?

A: The best method for cost estimating varies based on the specifics of the project, the available information, and the project phase. However, at JLD, we often prefer a detailed, comprehensive look at every aspect of the project, ensuring accuracy and value in our estimates.

Q: What is cost estimating with an example?

A: Cost estimating is the process of predicting the financial and resource costs of a project. For instance, if a client wants to build a public library, JLD would analyze the architectural plans, the local cost of materials, labor, and equipment, and consider factors like project delivery methods and contracts. We would then provide an estimate of the total project cost, along with opportunities for value engineering and potential cost savings.

Q: What is the formula for cost estimating?

A: There isn’t a single formula for cost estimating, as it can greatly vary based on the estimation method and project type. However, in a basic sense, the cost estimate for a project could be calculated as the sum of the estimated costs of individual tasks or components. This might look like: Cost Estimate = ∑ (Estimated Cost of Labor + Estimated Cost of Materials + Estimated Cost of Equipment). At JLD, our cost estimates also incorporate value engineering considerations and life cycle cost analysis to provide the most value and cost savings for our clients

Q: What should be included in a construction estimate?

A: A construction estimate at JLD includes a comprehensive breakdown of projected costs associated with the project. This typically involves costs for materials, labor, and equipment. Our estimates also factor in project-specific variables such as local market conditions, environmental impacts, and regulatory compliance costs. Finally, we conduct Value Engineering and Life Cycle Cost Analysis, helping our clients understand potential long-term maintenance and operational costs, as well as opportunities for cost savings.

Please contact us if you have any further questions about our services or methodologies. Our team at JLD is always ready to assist.