Cost estimating Research Paper Example | Topics and Well Written Essays - 2000 words

Cost estimating - Research Paper Example The purpose orientation of each type of the estimate with reference to the advantages each type provides to the various parties of a construction project has also been discussed. Introduction The process of predicting the total costs of materials, labor, capital and professional fees required to construct a proposed project is called as cost estimating. The estimate is based on an approximation of the probable cost of the materials, labor and other services required for the construction of a project and it can never be said to be hundred percent accurate and varies with the fluctuating prices of the construction materials and services. The accuracy of cost estimation is of vital importance of the success of a project for the owner as well as the contractor. Estimates are important for developing the feasibility of the projects and the owner’s decision to carry out the project depends upon the preliminary estimates. Accurately estimating the construction costs lies at the heart of a construction company’s success. There may be two scenarios; too low estimate can win bids to the construction company but results I ultimate loss of money to the construction company. On the other hand if the estimates are too high, the chances of getting the work are very less. A good estimate is the one which also incorporates the costs which are not apparent but are likely to occur during the course of completion of the project. Such predictive expertise is the distinguishing characteristics of a good estimator. The main objective of cost estimating is cost control which is very important in construction industry because inappropriate cost control results in the over-budgeting of the project which can ultimately result in the bankruptcy of the construction company. Over the years the methodology adopted for cost estimating has changed and new techniques have evolved. The evolution of the current methodologies and techniques employed in cost estimating is discussed in the following paragraphs. History and Evolution of Cost Estimating The history of construction dates back to the early days of civilization and as other construction techniques and methodologies have evolved over the years cost estimating has also developed with the advent of new technologies and computation devices. The history of cost estimating and cost control dates back to the ancient Greek times and the Greek architects were also concerned about cost control in building their structures and sculptures (Jenkins, 2006). The construction industry has undergone rapid changes over the last 200 years with the technological development. The construction in the medieval ages was not very cost effective and very primitive methods of cost estimation were used with no proper planning resulting in project costs beyond the initial estimates. In the estimates made during those days the indirect costs were never taken into account with only the apparent costs of material and labor calculate d on simple cost per unit quantity basis. The estimates were usually made by the construction contractors and the client never relied on any type of estimates while there was no concept of the role of consultants in construction projects. With the industrial progress the importance of cost estimating increased as the investors were more concerned about the return they were getting on the invested capital. With the industrial revolution the importance of economical use of resources increased resulting in the birth of cost