LG

Estimating and Project Delivery Systems (Video Notes)

Integrated Design and Delivery Systems

  • Overview: Design and build, design-build, construction manager/general contractor (CM/GC) delivery systems; integrated project delivery (IPD) is a newer approach involving owners, designers, contractors, and key subcontractors in the design process.
  • IPD characteristics:
    • Stakeholders (owner, design team, construction professionals, building operator) collaborate from conception to completion.
    • Ideally, stakeholders agree on shared values, goals, and technical specifications even before design starts.
    • Develop a common business model and potentially a common contract structure where all share responsibility and rewards for project success.
    • Expected outcomes: smoother execution, higher efficiency, higher profitability, and lower environmental impact across the life cycle of the building.
  • Why the shift? North American projects often miss deadlines or go over budget; in the U.S., delays and cost overruns affect roughly one in three projects.
  • Traditional approach (design–bid–build):
    • An architect designs with expert input, then contractors bid to build, and the successful bidder oversees construction.
    • Building operators manage the completed structure.
    • Hidden problems and design flaws can surface during construction, derailing schedules and increasing costs; pressure can cause underperformance relative to goals (performance and sustainability).
  • Lifecycle quality and sustainability emphasis: Integrated approaches aim to improve quality, comfort, environmental performance, and lifecycle costs.
  • Practical goal for students: Learn how integrated design and delivery can reduce waste, save time and money, and improve building performance for communities and the planet.

Traditional vs Integrated Design and Delivery

  • Traditional assembly-line model problems:
    • Conceptual/design flaws may be discovered late, causing schedule delays and budget overruns.
    • Under financial pressure, projects may fail to meet original performance and sustainability goals.
  • Integrated design and delivery advantages:
    • Early collaboration among client, design team, constructors, and operators; shared risk/reward; common contract structure.
    • Better alignment of goals and technical specifications; improved coordination reduces rework and delays.
    • Potentially lower environmental impact and improved lifecycle performance.
  • Lifecycle benefits: Better overall building performance, comfort, and sustainability due to earlier input from construction and operations perspectives.

Estimating Concepts: Profit, Risk, and Pricing

  • Profit margin and risk: Estimators and contractors seek an acceptable rate of return and compensation for project risk; profit margins should be maintained to cover risk and overhead.
  • Risk management in estimation:
    • If you’re an estimator, you must consider the likelihood and cost of adverse events; do not artificially reduce margins just to win bids.
    • Accurate risk allocation across the project scope helps determine price and contractual terms.
  • Accuracy vs time trade-off:
    • Preliminary estimates are faster but less precise; detailed estimates require more time and data.
    • The choice of method depends on time available, client needs, and required accuracy.
  • Preliminary estimates for new designs: Often include a first-stage cost indication to compare with other concepts or options; used to gauge feasibility and client interest.
  • Inflation and market changes: When comparing a historical project to a current one, adjust for inflation, labor and material cost changes, and code/plan changes to ensure a fair comparison.

Estimating Methods

  • Square foot estimate:
    • Compute cost by multiplying building area by a cost-per-square-foot, then adjust for height, perimeter length, and other building components.
    • Alternative units may be used when modularity or repeating units are present (e.g., parking stalls as a unit).
    • Purpose: quick check whether the project design fits the owner’s budget.
    • Data sources: professional associations (e.g., architecture or construction associations) publish annual or periodic cost data accounting for inflation and regional differences.
  • Parametric estimate:
    • Uses an equation that expresses statistical relationships between building parameters and cost.
    • Typical inputs: gross square footage, number of floors, length of the perimeter, percentage of the building that is common space, etc.
    • Formula (illustrative):
    • C \,=\, a\cdot \text{GFA} \,+\, b\cdot \text{Floors} \,+\, c\cdot \text{Perimeter} \,+\, d\cdot \%
      {\text{CommonSpace}} \,+\, \dots
    • More data yields better accuracy but requires more time.
  • Model estimating (computer models):
    • Uses computer models to prepare estimates based on answers to a questionnaire (length, floor thickness, number of sprinklers, bathrooms, skylights, etc.).
    • Pros: higher potential accuracy with more input data; cons: more time to gather information.
    • Example questions illustrate how detail affects precision (e.g., floor thickness ties to structural components).
  • Assembly estimating:
    • Breaks the project into groups of components (assemblies) with pre-defined cost structures.
    • Example: a residential light switch assembly includes: a single gang box, a single gang switch, a plate, two wire nuts, and 20 ft of 12-gauge wire.
    • Advantages: faster updates and repeatability across similar components; higher final-cost accuracy than simple square-foot estimates.
    • Time consideration: more time to build and maintain assembly lists yields better accuracy.
  • Detailed estimate:
    • Quantities and costs for everything required: materials, labor, equipment, insurance, bonds, overhead, and profit.
    • Most accurate and comprehensive; used for final pricing and bid preparation.
    • Involves quantity takeoffs, detailed unit costs, and reconciliation of all project components.

Estimating Roles and Career Path

  • Who performs estimates:
    • Estimator in a design-bid-build setting reads drawings, prepares quantity takeoffs, and prices work; may specialize in assemblies or parametric methods.
    • Engineers (civil, structural, mechanical, plumbing, electrical) provide price-influencing data through drawings and specifications.
    • Subcontractors provide prices for specialized trades; manufacturers’ representatives supply product quotes and cost analyses for materials and equipment.
    • Quantity surveyors (in Canada/Europe and certain US road projects) provide quantified material requirements and unit prices; may work as independent consultants or on staff.
    • Freelance estimators may perform takeoffs or prepare portions of the project for multiple bidders.
  • Required skills for estimators:
    • Reading and interpreting plans, elevations, and sections; understanding geometry and mathematics.
    • Building cost databases and historical data familiarity; tracking and updating unit costs for labor, materials, equipment, overhead, and labor productivity.
    • Ability to visualize the project through its phases and foresee problems (e.g., equipment placement, storage, sequencing).
    • Time management to meet bid deadlines; strong communication to explain what is included in bids and how estimates are structured.
    • Proficiency with spreadsheet software and estimation software; or at least a robust skill set with Excel and related tools.
  • Value of historical data:
    • Historical project data and accounting integration help align estimates with actual performance and inform future bids.
    • Computerized accounting systems support cost data for multiple projects and help track materials, labor, and equipment costs across time.
  • Industry practice note:
    • Some regions rely more on quantity surveyors; others rely on general contractors or design teams to provide estimates depending on market norms and project type.
    • The estimator's skill and judgment heavily influence how closely bid estimates align with actual costs.

Subcontractors, Suppliers, and Manufacturers' Representatives

  • Subcontractors:
    • May be individuals or firms hired to perform specific portions of work (e.g., electrical, plumbing, carpeting).
    • They provide unit-price or lump-sum bids; unit-price bids require the completed quantities for accuracy and risk assessment.
    • Subcontractors review drawings and project manuals and submit prices; often several subcontractors bid for the same scope.
  • Materials suppliers and manufacturers’ representatives:
    • Provide quotes for materials and equipment; some may cover multiple manufacturers and products.
    • They may suggest alternatives or new products with different installation costs; can propose value engineering or alternate construction techniques.
    • Quotes often have expiration dates to reflect market changes; estimators must verify that materials meet contract requirements and delivery timelines.
  • Advantages of using multiple subcontractors:
    • Risk distribution among many entities; increases specialization and quality for specialized tasks.
    • Facilitates more competitive pricing due to multiple bidders and suppliers.
  • MEPS, product changes, and innovations:
    • Consultants and reps often participate in cost analyses to propose alternative materials or methods that might reduce overall project cost or improve performance.

Project Delivery Techniques: Design-Build, CM/GC, IPD

  • Design-build:
    • A single entity is responsible for both design and construction; contract documents may be streamlined since design and construction are closely coordinated.
  • CM/GC (Construction Manager at Risk or CM with General Contractor):
    • The CM is involved during design and construction and provides pre-construction services, cost estimating, and constructability reviews; final price is established as the project progresses.
  • IPD (Integrated Project Delivery):
    • Emphasizes collaboration and shared risk/reward among owner, designer, contractor, and key trades from the outset.
    • Encourages common contracts and aligned incentives to improve project outcomes.
  • Preliminary estimates in design-build or CM/GC:
    • Often used during negotiation stages to set expectations; updates occur as design progresses and quantities are clarified.
  • When is estimation done by whom?
    • Estimating may be centralized in an office, or performed by specialized offices within large design/construction firms;
    • For large projects, an estimator may be dedicated to the project and coordinate with engineers, procurement, and the owner.
  • Quantity takeoffs and the role of quantity surveyors:
    • Quantities are derived from drawings and specifications; the quantity surveyor/engineer provides baseline quantities for bidders or quantity-based bids.
    • If quantities differ from initial estimates, unit prices may be renegotiated to reflect actual work performed.
  • Bids and contract types:
    • Competitive bidding: Contractors submit lump-sum bids; awarded to the lowest bidder or based on best value per evaluation criteria.
    • Negotiated bidding: Owner may negotiate with multiple contractors; price may not be the sole criterion; focus on capabilities, approach, schedule, risk mitigation, and price.
  • Best value criteria:
    • Evaluation may weight team capability, project approach, schedule, risk mitigation, and price.
    • The price component is sometimes withheld until other criteria are evaluated to prevent price bias; higher-quality proposals may win even with higher price.
  • Risks in negotiated bidding:
    • The contractor may not feel compelled to minimize price as aggressively as in competitive bidding; the owner and contractor must align on expectations and value.

Contract Documents: Nine Basic Contract Documents

  • Contract documents define the basis of the contract and include both written and graphic elements; they establish roles, responsibilities, and the scope of work.
  • The nine basic contract documents (for design-bid-build projects) are:
    • 1) Contract agreement: Defines the agreement between owner and contractor and outlines responsibilities.
    • 2) Scope of work definition: Describes project deliverables, duties, and limitations to achieve project objectives.
    • 3) General conditions: Define general terms, utilities, mobilization/demobilization, and organizational aspects; include obligations, overhead, bonuses, etc.
    • 4) Special conditions: Specific requirements or instructions; addenda to general conditions.
    • 5) Bill of quantities: Tendering document listing all work with quantities and prices; becomes part of the contract after bidding.
    • 6) Work schedule: Delivery dates, start/finish milestones, project duration, grouped by work breakdown structure (WBS).
    • 7) Drawings: Architectural, structural, electrical, mechanical, etc.; illustrate quantities, locations, dimensions, sizes, and how elements fit together.
    • 8) Technical specifications: Materials, workmanship, and equipment requirements; describe performance and standards; complement drawings.
    • 9) List of common types of construction insurance: Coverage types (e.g., builder's risk, general liability) and bonds; ensure insurance and bonds are defined to protect all parties.
  • Addenda and modifications:
    • Addenda issued before bids may modify contract documents; become part of the contract documents.
  • Variations by project type:
    • Design-build or CM/GC may use a simpler set of contract documents since the contractor has design involvement; some documents may be streamlined or consolidated.
  • Public vs private projects:
    • Public contracts often require more formal advertisement and plan sets; private owners may use fewer documents depending on risk and trust levels.
  • Plan rooms and electronic access:
    • Many contract documents are now distributed electronically; reduces printing costs and simplifies distribution; plan rooms provide controlled access to bid sets.
  • Plan room and paper copies:
    • Some subcontractors still prefer paper copies or printed sets; architects/owners may limit the number of copies and require deposits.
  • Source of information for estimating:
    • Historical project data and company cost databases are primary sources for estimating; accuracy depends on how well data reflects actual performance and practice.
  • Integration with cost accounting:
    • Accurate estimation is tied to the company’s cost accounting system; estimates feed into project budgeting and cost tracking.
  • Pricing guides and caution:
    • Industry manuals (e.g., price manuals) provide approximate current prices to check estimates; prices in manuals should be used for rough guidance, not as final values.

Plan Documents, Distribution, and Information Management

  • Electronic distribution:
    • Contract documents are commonly provided in electronic form; easier to print or view in estimation software or on-screen planning tools.
  • Print management:
    • Where paper copies are necessary, firms limit sets and require deposits to ensure return; otherwise, documents stay within the contractor’s office for cost control and version management.
  • Data and cost controls:
    • Historical data, job cost tracking, and a unified database help ensure estimates reflect actual performance and support future bids.
  • Importance of accuracy and caution in manuals:
    • While cost manuals provide helpful benchmarks, actual project costs can vary; use manuals for rough checks and market awareness rather than exact pricing.
  • Closing notes from the instructor’s perspective:
    • Emphasis on the balance between accuracy, time, and client expectations; careful record-keeping and data management are essential for credible estimating.

Plan, Estimate, and Bid: Practical Insights

  • The estimation cycle often involves cycles of preliminary data gathering, design development, and then updated estimates as drawings mature.
  • For residential construction in particular:
    • The estimator must consider how standard material sizes influence costs and how non-standard sizes affect price and lead times.
    • Early coordination with MEPS (mechanical, electrical, plumbing) engineers helps align the design with practical material and installation requirements.
    • Availability and lead times for critical components (e.g., windows) may require early orders; seasonal scheduling (avoiding winter roofing) can influence timeline planning.
  • Coordination with design professionals:
    • Drafters and designers should plan using standard material sizes where possible to facilitate earlier cost estimation and procurement; otherwise, provide preliminary estimates to guide design decisions.
  • The importance of plan clarity and on-site decisions:
    • If on-site clarification is needed (e.g., layout, scale, or installation specifics), estimate open-ended items with measurement-based notes and clarifications after site review.
  • Software and tools in estimation:
    • In class, Excel is commonly used; other tools include Bluebeam, RS Means price books, and various estimation software packages. Some instructors may not require software use, but real-world practice often relies on a mix of tools.
  • The human element in estimating:
    • Experience, judgment, and the ability to foresee project conditions are critical; accurate estimation also depends on the estimator’s ability to read plans and anticipate issues before bidding.
  • Final remarks on estimating practice:
    • Detailed estimates take time but improve accuracy; preliminary estimates help secure client interest and compare options; the final estimate consolidates quantities, labor, materials, equipment, insurance, bonds, overhead, and profit.

Nine Basic Contract Documents (Quick Reference)

  • Contract agreement: Defines the two parties and responsibilities; forms the basis of the contract.
  • Scope of work: Describes project deliverables, duties, and limitations to achieve project objectives.
  • General conditions: General terms, utilities, mobilization, demobilization, overheads, and other non-work-specific terms.
  • Special/supplementary conditions: Specific requirements or amendments to general conditions; tailored to the project.
  • Bill of quantities: Lists all work with quantities and prices for tendering; used to price the work; becomes contract attachment after bidding.
  • Work schedule: Delivery, start/finish milestones, project duration, and work breakdown structure grouping.
  • Drawings: Plans, elevations, sections; illustrate quantities, locations, dimensions, and how components fit.
  • Technical specifications: Materials, workmanship, and equipment requirements; complement drawings with performance criteria.
  • Insurance and bonds: List required construction insurance and bonding; ensure risk coverage across the project.

Key Formulas and Concepts to Remember

  • Square-foot estimate (illustrative):
    • C = c_{sf} imes A
    • where C is total cost, c_{sf} is cost per square foot, and A is building area.
  • Inflation-adjusted comparison (illustrative):
    • C{adj} = C{nom} imes (1 + i)^{\Delta t}
    • where i is the annual inflation rate and \Delta t is the difference in years.
  • Parametric cost model (illustrative):
    • C = a\cdot\text{GFA} + b\cdot\text{Floors} + c\cdot\text{Perimeter} + d\cdot\%\text{CommonSpace} + \dots
    • GFA = gross floor area; coefficients reflect unit costs for each parameter.
  • Assembly cost example (conceptual):
    • For an assembly with several components, total assembly cost is the sum of its parts; for multiple identical assemblies, costs can be multiplied:
    • C{assembly} = \sum{j} Pj \, (nj)
    • where Pj is price of component j and nj is quantity of component j in the assembly.
  • Unit price bidding (illustrative):
    • If a subcontractor bids per unit: ext{Bid} = p{unit} \times Q where Q is the quantity and p{unit} is the unit price.
  • Score-based bid evaluation (illustrative):
    • If criteria are weighted: \text{Score} = \sum{k=1}^{n} wk \cdot s_k
    • with weights wk summing to 1 and sk the score for criterion k.

Quick, Practical Takeaways

  • Integrated design and delivery can reduce waste, save time and money, and improve lifecycle performance; IPD emphasizes collaboration and shared risk/reward from the outset.
  • The traditional design-bid-build approach can lead to late changes, schedule slippage, and cost overruns due to late discovery of design flaws.
  • Estimating methods vary by time and accuracy needs: square-foot, parametric, model-based, assembly, and detailed takeoffs.
  • Estimators rely on a mix of drawings, specifications, data from engineers and subcontractors, and historical databases; data management and cost accounting integration are essential for accuracy.
  • Subcontractors and material suppliers play a critical role in pricing and risk allocation; unit-price bids require precise quantities, and quotes often have expiration dates.
  • Contract documents anchor the project; nine basic documents cover agreement, scope, conditions, quantities, schedule, drawings, specs, and insurance/bonds.
  • Plan rooms and electronic distribution have transformed how contract documents are shared and how bidders access information.
  • In residential projects, early ME P coordination and material lead times influence cost and scheduling; standard sizes simplify estimation.
  • The choice between competitive and negotiated bidding affects risk and price; best-value criteria often weigh capabilities, approach, schedule, innovation, and risk mitigation alongside price.
  • Real-world estimating blends experience, data, and judgment; accurate estimates require time, careful data handling, and continuous updating as drawings and specs mature.

References and Context (from the transcript)

  • As conveyed in the session, the speaker highlighted: the shift toward integrated and collaborative delivery in North America, the advantages of IPD, comparative costs of traditional vs integrated approaches, and the central role of the estimator in tying design, procurement, and construction activities together.
  • Additional notes touched on the practicalities of planning, bidding, and contract management, including the management of documentation, plan-room access, and the interplay between design decisions and cost.

Questions to Test Understanding

  • What are the main differences between IPD and traditional design-bid-build in terms of risk, reward, and collaboration?
  • How do square-foot estimates differ from parametric estimates in terms of inputs and expected accuracy?
  • When would a project prefer competitive bidding versus negotiated bidding, and what criteria might determine “best value”?
  • List the nine basic contract documents and give a brief description of each.
  • Why is it important to maintain a cost database and tie estimation data to a firm’s accounting system?