Summary

Submitted by sylvia.wong@up… on Wed, 08/25/2021 - 15:18
Sub Topics

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.
 

Term 

Definition 

 

 

Agreement 

Aa contract between two or more parties, either written or verbal  

Australian Standard 

Tthe approved standard for material, equipment, technique, or procedure as set down by the Standards Association of Australia International Limited (SAI LtdA) 

Building trades 

Aall trades which have a part in the construction of a building 

Consumable 

are non-durable goods that are expected to be used up quickly, including office supplies, packaging, paper and paper products, and cleaning products.

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.

Direct costs

These are costs that are directly linked to the construction project eg materials, labour, equipment costs

Employee 

refer to the paid workers of a construction project

Employee entitlements

Entitlements are rules about what employees get at work eg work rates, pay rates, annual leave, sick leave , personal leave etc.sub

Indirect costs

These costs are not specifically allocated to a construction project and comprise of overhead costs, general expenses ect.

 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

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

Operational costs

are the costs incurred for the use of the physical resource

Overhead costs

These are  costs to run the business, including rent , insurance and other utilities

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.

Physical resource

Physical resources in building and construction refer to the plants, equipment, and machinery with which construction works are done with.

Quantity take - off

The process of estimating how much of each building material is needed for a construction project

Statutory costs 

Are costs incurred by a business because they are mandated by a "statute," i.e. any law or rules/notifications.

Sub-contractors

Sub-contractors are typically specialists in specific types of construction work, including piling, roofing, cladding, steelwork, plumbing, and so on.

Tender

is a document containing an organisation's offer to supply construction services to a client who has invited them to make the offer

Waste management sites

Are sites that are specifically allocated for Waste disposal from construction activities

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 

To access the National Construction Code (NCC) Volumes One, Two, and Three, register to NCC’s website and download the documents free of charge.  

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