Estimating and Cost Planning
Estimating builds a price from measured quantities and rates; cost planning controls cost across design stages. Know the measurement logic: quantity × rate = cost, with rates built from labour, material, plant, and preliminaries, plus overheads and profit. Understand unit-rate estimating, approximate quantities, and elemental cost planning (grouping costs by building element such as substructure, frame, envelope).
Key concepts: preliminaries (site setup, supervision, temporary works) are time-related and often under-estimated; contingency covers risk; allowances differ from contingencies; escalation accounts for price inflation over the programme; and the difference between cost, price, and value. Understand build-up of an all-in labour rate (basic wage plus on-costs such as insurance, holidays, and supervision).
Traps: confusing net and gross rates; forgetting waste and shrinkage factors on materials; mixing up contingency (unknowns) with profit (return); and treating prime cost (PC) sums and provisional sums as fixed when they are allowances subject to adjustment.
Rule of thumb: order the build-up as quantity → material + labour + plant → add waste → add preliminaries share → add overhead and profit → add contingency and escalation.
Worked example: 200 m² of wall at 0.5 hours/m², all-in labour $40/hour, material $25/m² with 10% waste. Labour = 100 h × $40 = $4,000. Material = 200 × $25 × 1.10 = $5,500. Direct cost = $9,500; add 10% overhead and profit = $10,450.