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First Principles Estimating for Construction Projects

Date Added: February 26, 2013 07:37:28 AM
Author: Alfred Bacon
Category: Business & Economy
What is cost engineering? Mostly required for the construction and manufacturing industries, cost estimating is the process by which a cost engineer determines how much time, resources and money will be needed for a specific project, prior to the company putting in a bid. They have to assess risks, come up with a workable schedule, take inflation into account, and note any areas where money can be saved. It is a vital procedure when deciding whether or not a company can afford to take on an assignment. There are several businesses nationwide that provide cost engineers as well as run training courses on how best to do cost estimation. First principles estimating is a method that is considered by many to be 'best practice' when it comes to cost estimation, and is regularly taught in cost estimation training. So what is it? Basically, it involves knowing precise details about the direct cost of required resources - in relation to the construction industry, these would be labour, materials, subcontractors and so on - and using this knowledge to provide the best possible, most accurate estimate. To do this, practical experience is crucial, and it is the reason why many construction cost engineers have prior knowledge of working in the industry before they go into estimating. First principles estimating has many benefits. Often you will have competitors bidding for the same project as you, and therefore having a clear understanding of your costs will allow you to put in your most accurate and precise bid. Staying with construction as the example, basing your costs of materials not on standard cost information but on the price in the region you're working will help you stay precise with your budget. If you are confident that your costs are exact and not generalised, you can then adjust your overhead and profit amounts to keep your bid competitive. If you go on to win the bid based on your first principles estimate, you are in a good position to make money; you will already know exactly which materials you require and how much they cost, and you will be able to track your project and compare it to your original schedule, meaning you can keep an eye on your profit margins. If you require further information on cost estimation services and estimating software, companies such as Benchmark Estimating can give you advice. An Australian-based company that is now enjoying a growing presence in the UK, Benchmark Estimating provides cost engineers and in-house estimating training for construction companies. Benchmark Estimating are a specialist construction cost engineering practice with particular expertise in civil engineering infrastructure. Established in 1996, we provide cost engineering, first principles estimating and estimating software for contractors, engineering consultants, owners and other organisations.
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