Estimating and takeoff

37 terms in estimating and takeoff

Estimate

An estimate is the builder’s internal calculation of what a job should cost and what to charge for it. It carries assumptions and allowances rather than a promise, which is what separates it from a quote, and one estimating system should be able to produce the estimate, the quote and the tender from the same numbers. Tender, estimate and quote reference. See also: Quote, Tender.

Quote

A quote is a price offered to a client that, once accepted, generally binds the builder to deliver the stated scope for the stated amount. Its legal weight is what distinguishes it from an estimate, and the conditions and exclusions attached to it are what keep the number honest. Tender, estimate and quote reference. See also: Estimate.

Tender

A tender is a formal priced offer submitted in competition against other builders, usually against a defined documentation set and tender conditions. Tendering well means qualifying whether the tender is worth pricing at all, and winning work without buying it by underpricing. Tendering reference. See also: Tender qualifications.

Tender qualifications

Tender qualifications are the written conditions, clarifications and exclusions submitted with a tender price that define exactly what the number covers. They protect the scope the price was built on, and a tender without them hands the interpretation to the other side. Tendering reference.

Takeoff

A takeoff, or quantity takeoff, is measuring the quantities of work from the drawings so each lands against a cost item in the estimate. It can be manual, on-screen or software assisted, and the classic failure is measuring from a superseded drawing revision. Takeoff reference. See also: ANZSMM, AI takeoff.

Australian and New Zealand Standard Method of Measurement(ANZSMM)

The ANZSMM is the shared measurement convention used in Australia and New Zealand for how building quantities are measured and described. Following a standard method is what makes one takeoff comparable with another and a bill of quantities readable by every party pricing it. Takeoff reference.

Bill of quantities(BOQ)

A bill of quantities is a structured schedule of the measured quantities of every item of work in a job, prepared so it can be priced consistently. On residential work a full bill is less common than on commercial projects, but the takeoff that would feed one is the same discipline. Takeoff reference.

Cost assembly (recipe)

A cost assembly, or recipe, is the live build-up behind a rate, the materials, labour and plant components that make up a unit of work, each repricing from the cost database. When a material price moves an assembly recalculates, where a flat unit rate has to be re-judged by hand. Assemblies and recipes reference. See also: Unit rate, Cost database.

Unit rate

A unit rate is a single composite price per unit of work, often adopted from a cost guide or from history, with the build-up invisible. It is fast to apply and hard to interrogate, which is the trade-off against an assembly whose components can be examined when a job goes wrong. Assemblies and recipes reference. See also: Cost assembly.

First principles estimating

First principles estimating builds a price from measured quantities and the real cost of the labour, materials and plant to perform them, rather than adopting composite rates. It is the most defensible methodology because every number in it can be traced to a quantity and a rate. Estimating reference.

Cost per square metre($/m²)

Cost per square metre is a build cost divided by a floor area, useful as a sanity check and misleading as a price. Two builders can quote very different rates for what looks like the same house because the rate quietly includes and excludes different things, and the measurement convention decides the denominator. Cost per square metre reference. See also: Gross floor area.

Gross floor area(GFA)

Gross floor area is the measured floor area of a building used as the denominator in per-square-metre rates and in planning controls. The measurement convention used decides what is included, so two rates or two areas are only comparable when they were measured the same way. Cost per square metre reference.

Cost database

A cost database is the builder’s maintained library of current prices, rates and productivity data that estimates draw from. Fed back from every finished job, it is one of the compounding assets that turn experience into something the business owns rather than something that leaves with people. Cost database reference. See also: Labour constant.

Labour constant

A labour constant is productivity data, the hours a task takes per unit of work, for instance hours per square metre of a given wall type. Kept separate from the labour rate, a wage movement becomes a single edit and every item reprices, and constants move far more slowly than prices, making them the most durable value in a cost database. Cost database reference.

Contingency

A contingency is an allowance in an estimate for risks that cannot be priced precisely, sized to the job’s actual risk rather than a blanket percentage. It is not margin and not padding, and it only works if it stays visible and separately tracked as it is consumed or released across the job. Estimating contingency reference. See also: Margin.

Allowance

An allowance is a budgeted amount for an item whose final cost is not fixed when the contract is signed, such as a provisional sum for a client’s selections or an estimate line for a trade package not yet awarded. The eventual quote or selection is measured back against it, and the difference flows to the job’s margin. Quotes over allowance guide. See also: Prime cost item, Provisional sum.

Prime cost item(PC item)

A prime cost item is an allowance in a fixed price contract for the supply cost of a product not yet selected, such as tapware or appliances, with the installation already priced. When the actual selection lands, the contract adjusts for the difference against the allowance. Disclosure rules under state domestic building legislation apply. General information, not legal advice. Prime cost and provisional sums reference. See also: Provisional sum, Practical completion.

Provisional sum(PS)

A provisional sum is an allowance in a fixed price contract for a whole item of work whose extent cannot be priced when the contract is signed, commonly site works such as rock excavation. It covers supply and installation, and the contract adjusts when the actual cost lands. Disclosure rules under state domestic building legislation apply. General information, not legal advice. Prime cost and provisional sums reference. See also: Prime cost item.

Preliminaries

Preliminaries are the costs of running a specific job rather than building any part of it, site facilities, supervision, scaffold, temporary services and the like. Time-related preliminaries grow when the programme slips, which is how a delayed job quietly loses money, and they differ from company overheads. Preliminaries reference. See also: Overheads.

Estimate to budget handover

The estimate to budget handover is the moment the winning estimate becomes the working job budget. Assumptions, exclusions, allowance intent and package boundaries get lost at the seam, and this handover is where the Reconstruction Tax concentrates in most building businesses. Estimate to budget handover reference. See also: Reconstruction Tax.

Quote validity

Quote validity is the period a supplier or subcontractor holds a quoted price open. An estimate built on quotes that expire before the job is won is carrying silent price risk, which is why validity and expiry are tracked alongside the numbers themselves. Subcontractor quotes reference.

Inclusions and exclusions

Inclusions and exclusions are the stated boundaries of what a quote or contract price covers and what it does not. Reading them is most of the work of comparing quotes, because two numbers are only comparable once they cover the same scope. Subcontractor quotes reference. See also: Quote levelling.

Build cost feasibility

Build cost feasibility is the assessment of the true cost of delivering a home beyond the construction line, layering site costs, statutory costs, finance, time risk and transaction costs onto the build price. A feasibility run only on a per-square-metre rate is a guess wearing a spreadsheet. Build cost feasibility guide.

Quantity surveyor(QS)

A quantity surveyor is a professional who measures and prices building work, prepares cost plans and bills of quantities, and advises on the cost of a project through its life. On residential work the same measuring and pricing discipline is often carried by the builder’s estimator rather than a separate QS. Estimating reference. See also: Bill of quantities.

Elemental estimate

An elemental estimate structures a build cost by building element, substructure, frame, roof, finishes and services, rather than by trade. It is useful early, when the design is not detailed enough for a full trade takeoff but a reliable total is still needed, and it lets a cost be benchmarked element by element. Estimating reference. See also: Order of cost estimate.

Order of cost estimate

An order of cost estimate is an early, high-level figure for what a project is likely to cost, based on area, function or elements before the design is resolved. It sets the budget and tests feasibility, and it carries a wide range of uncertainty that narrows as the design and the takeoff firm up. Estimating reference. See also: Build cost feasibility.

Wastage

Wastage, or the waste factor, is an allowance added to a measured material quantity for offcuts, breakage and the difference between what is bought and what ends up in the building. It differs by material and by how the work is set out, and leaving it out systematically under-orders and under-prices. Takeoff reference.

Productivity rate

A productivity rate is how much work a resource completes in a unit of time, such as square metres laid per day, the output view of the same data a labour constant holds as hours per unit. Realistic productivity rates are what make a labour estimate and a programme duration agree instead of contradicting each other. Cost database reference. See also: Labour constant.

Plant hire rate

A plant hire rate is the cost of hiring a piece of equipment per hour, day or week, often with separate charges for delivery, fuel and an operator. Pricing plant on the true engaged time, including standing time and mobilisation, is what stops an excavator or a crane quietly running over its allowance. Cost database reference.

Dayworks

Dayworks is work paid on the actual labour, plant and materials used plus an agreed margin, rather than a fixed rate, used where the scope cannot be measured in advance. It needs signed daily records of hours and materials to be paid, which is why dayworks without paperwork so often goes unrecovered. Variations reference.

Rate loading

Rate loading is adjusting a base unit rate up or down for the conditions of a particular job, such as difficult access, height, small quantities or a tight program. It is how a rate from the database or a cost guide is made honest for the job in front of the estimator rather than applied blind. Assemblies and recipes reference. See also: Unit rate.

Labour on-costs

Labour on-costs are the amounts that sit on top of the base wage to give the true cost of an hour of labour, superannuation, leave, workers compensation, allowances and payroll costs. An estimate built on the bare wage without on-costs understates labour every time, which is why the all-in rate is the one to price on. Cost database reference. See also: All-in labour rate.

All-in labour rate

An all-in labour rate is the fully loaded cost of an hour of labour, the base wage plus every on-cost, the figure a defensible estimate is built on. Keeping the base wage and the on-costs visible behind it means a wage or superannuation change becomes one edit that reprices every labour line. Cost database reference. See also: Labour on-costs.

Prime cost sum

Prime cost sum is a term some contracts and estimates use for an allowance for the supply of an unselected item, overlapping with prime cost item. Because usage varies between contracts, the safest practice is to read what a given document means by it rather than assume, and to reconcile the allowance against the actual selection either way. Prime cost and provisional sums reference. See also: Prime cost item.

Provisional quantity

A provisional quantity is a measured item whose quantity is estimated at contract because it cannot be fixed yet, to be remeasured and adjusted against the actual quantity performed. It is the quantity equivalent of a provisional sum, and it trues up on measurement rather than on selection. Prime cost and provisional sums reference. See also: Provisional sum.

Cost escalation

Cost escalation is the rise in the price of labour and materials over the time between pricing a job and building it. It is a different thing from contingency, which covers uncertainty in scope, and on a long build it is a real and separate risk that either the contract prices in through rise and fall or the builder carries. Estimating contingency reference. See also: Contingency, Rise and fall clause.

Lineal metre(lm)

A lineal metre is a measurement of length used to quantify and price items sold or installed by the running metre, such as skirting, gutter, timber and pipe. It is one of the standard units of measurement in a takeoff, alongside area, volume and the item, and reading the drawing’s dimensions rather than scaling is what keeps it accurate. Takeoff reference.