Identifying the estimated cost of a construction project sounds like a big task, and it is. Before you can begin calculating how much a construction project will cost to complete, you first need to establish what the project requires in terms of statutory compliance. You also need to find out the client's expectation of the finished product according to the construction drawings and specifications. It is important to establish these first because the rest of the costing and estimation process will depend on how you interpret the construction drawings and specifications, as well as your understanding of the statutory requirements of the construction project.
Once this step is completed, you must proceed with the calculation of material and labour costs which include materials required for the construction project and estimating the labour hours that will be going into the project. Fortunately, to eliminate the need for complicated equations, most organisations now use digitally based software such as electronic take off and electronic biding.
While these two resources make up several of what is needed in a construction project, another resource is vital for completing a construction project. These resources are what make construction works possible, the physical resources.
Plants, equipment, and machinery make up the physical resources that are needed in a construction project. They entail costs that are different from material costs because physical resources, like plants such as excavators and cranes, are usually hired for projects instead of bought, and the use of such resources follow specific regulations.
When all the above costs have been identified, they can be added up to produce the estimated project cost. The process of producing estimated project costs may vary between organisations; however, the main principles followed for each step of estimating projects are the same.
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Term |
Definition |
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Agreement |
Aa contract between two or more parties, either written or verbal |
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Australian Standard |
Tthe approved standard for material, equipment, technique, or procedure as set down by the Standards Association of Australia International Limited (SAI LtdA) |
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Building trades |
Aall trades which have a part in the construction of a building |
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Consumable |
are non-durable goods that are expected to be used up quickly, including office supplies, packaging, paper and paper products, and cleaning products. |
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Contractor |
is the person who will enter into a contract of services with the client under which they will carry out the building work or arrange for building work to be carried out. |
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Direct costs |
These are costs that are directly linked to the construction project eg materials, labour, equipment costs |
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Employee |
refer to the paid workers of a construction project |
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Employee entitlements |
Entitlements are rules about what employees get at work eg work rates, pay rates, annual leave, sick leave , personal leave etc.sub |
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Indirect costs |
These costs are not specifically allocated to a construction project and comprise of overhead costs, general expenses ect. |
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Materials |
are physical substances with which construction work is done, including manufactured products, such as components and fillings, and naturally occurring materials, such as timber, thatch, and stone |
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Off- site production |
Is a process whereby, some elements or components of a construction project are completed in a different location from where the construction site is |
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Operational costs |
are the costs incurred for the use of the physical resource |
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Overhead costs |
These are costs to run the business, including rent , insurance and other utilities |
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Overhead margin |
The overhead margin is the percentage difference between the direct costs (i.e. material, labour, physical resources) and the total project cost that an organisation wants to meet to make up for its overhead costs. |
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Physical resource |
Physical resources in building and construction refer to the plants, equipment, and machinery with which construction works are done with. |
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Quantity take - off |
The process of estimating how much of each building material is needed for a construction project |
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Statutory costs |
Are costs incurred by a business because they are mandated by a "statute," i.e. any law or rules/notifications. |
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Sub-contractors |
Sub-contractors are typically specialists in specific types of construction work, including piling, roofing, cladding, steelwork, plumbing, and so on. |
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Tender |
is a document containing an organisation's offer to supply construction services to a client who has invited them to make the offer |
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Waste management sites |
Are sites that are specifically allocated for Waste disposal from construction activities |
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Work rates |
The project and work rates are how much the organisation will pay each contractor, sub-contractors, and employees working on a construction project. |
Department of Agriculture, Water and the Environment URL: https://www.environment.gov.au/about-us/legislation
Dictionary/Glossary from AS and ABCB https://www.constructiondictionary.com.au/search
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