- Project Management

Cost Estimating Design and Construction Projects

Cost Estimating Design and Construction Projects
Cost Estimating Design and Construction Projects

Cost estimating has always been a challenge historically, but with the current state of inflation, estimating materials and labor costs for the design and construction of residential, public works, commercial or other built environment projects has become even more onerous. On the buyer side, it can be a bit easier since they have the opportunity to request multiple estimates for comparison. However, we all know cheaper is not synonymous with better or good. Therefore, there is a certain level of risk, which a buyer can mitigate by checking references and even visiting the work an engineer or contractor has executed in the past. However, even with a detailed scope, estimating is more challenging for a seller.

As a civil engineer, for example, certain types of projects can be monetized in terms of professional fees. And this is because the projects are relatively straightforward, and we have carried out many of them over the years. But even still, sometimes the client may need more of our attention and is not experienced in work, bureaucracy (permitting), and other components that go into designing and building a structure in the built environment. Also, some jurisdictions and agencies, such as a building or planning department, may be more challenging to get approval from than other agencies we are more familiar with. Therefore, we might estimate a certain amount of administrative work required but fall short.

So what can we do as designers/engineers to create a fair project fee for both seller and buyer? Well, here are three of the more common options:

  • Percentages: there is a common rule that design services should cost between 15% and 20% of the construction cost, which is often simpler to estimate. Also, for municipal projects, the fees tend to be lower at 7% to 15%. And how do we know how much something will cost? Construction costs are typically between $170 and $360 per square foot, depending on the construction grade. Therefore, a safe bet might be to select a square foot value of $250 or $255, which is the mid-point between the low and high rates.
  • Ask a fellow professional: though your competitors may be reluctant to share their rates, should they be in direct competition with you at some point in the future, the local American Society of Civil Engineers (ASCE), Chamber of Commerce, and other agencies may have that data available to them.
  • Ask a public servant: plan checkers, reviewers, inspectors, and others in the building and planning department in your city or county might have some data; or, to make it fairer, ask someone in a building or planning department of a neighboring city or county.

Of course, you can also estimate the hours you think you will spend and multiply that number by your hourly rate, but you might still want to be within the appropriate range by using one of the three options described above. In general, however, always ensure that you can stand behind your cost estimates by documenting the data you used, should you get into a negotiating situation with your client.

Cost Estimating Design and Construction Projects

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