Construction Cost Estimating

Construction Cost Estimating

Allocation of costs: involves transferring expenditures between cost elements.

Allowance: a cost estimate for undefined but known work.

As-sold Estimate: The estimate matches the negotiated components and price for the project scope.


Basis of estimate (BOE): It outlines the scope, pricing, methodologies, qualifications, assumptions, inclusions, and exclusions.

Bill of Materials (BOM): specifies supplies needed for project construction, including quantities.

Bill of Quantities (BOQ): a construction tender document that lists materials, parts, labour, and costs. 

Bond: An insurance firm or bank will give a surety bond to ensure a contractor completes a project to their satisfaction.


Chart of Accounts (COA): A COA is a business organisation’s list of accounts to define the spending and receipt of money or equivalents.

City cost index: refer to the location cost index. RSMeans releases the city cost index.

Construction: It involves building, modifying, or destroying facilities, buildings, civil works, and infrastructure.

Construction cost estimatingIt is the project’s total cost. Pre-planning, site or right-of-way acquisition, design, start-up, and commissioning costs are typically not included in this value. This sum, or subtotal, is generally noted in an estimate report. TEC is the total estimated contract cost.

Consumables: items that can be consumed, meaning they can be destroyed, dispersed, wasted, or spent. Construction supplies include welding rods, fasteners, tape, glue, etc.

Cost: the currency needed to buy a product or service, employ labour and tools, or run a business.

Cost index (or factor): A cost index (or factor) adjusts the cost over time. Cost indexes are produced annually, quarterly, or monthly. The RSMean cost index is historical.

Costing: After takeoff, line items are costed. RSMeans calls this “price the quantities.”

Crew: a group of construction workers. The crew may also have construction equipment.

Crew hour (ch): an hour of work.


Deliverable: In project management, a deliverable refers to a tangible or intangible product intended for delivery to a customer (internal or external).

Direct costs: Theseare directly related to the cost object. Direct costs in construction include materials, labour, equipment, and all directly associated efforts or charges for the cost object.

Distributives: This category of project expenditures is not linked to a single account.

Duration: clock or calendar time needed to complete a task or activity.


Effort: Effort is work done to complete a task or project. May quantify the hours needed.

Equipment: It includes cost categories for organising and summarising expenses—construction equipment for project execution and engineered equipment such as pumps or tanks.

Escalation: Itrefers to fluctuations in the cost of products or services in an economy over time. Escalation is an adjustment for construction cost increases in estimates.

Estimation: Digital Estimation in project management involves utilizing proper approaches to estimate costs.

Estimators: estimators are the workers of an estimating company.


Facility: A facility is a device or place that assists with a task—building, plant, road, reservoir, etc.

Field supervision: It includes supervisors and non-manual staff at building sites.

Foreman: a worker or tradesman in command of a construction crew. The supervisor may be a hands-on worker or a non-worker. A general supervisor may oversee multiple crews.

Fringe Benefits: labour costs for worker benefits like health insurance, pension, and training.


General and administrative costs: are the expenses of running a construction enterprise. These costs include office space, workers, facilities, etc. They may be used in cost estimates across projects but are not project-specific. See overhead and indirect costs.

General contractor: Throughout a project, the general contractor is in charge of managing vendors and trades, keeping an eye on building sites, and keeping stakeholders informed.

General Requirments: The project execution’s general needs costs (Division 1) are included in the deliverable. Cleaning and waste management, commissioning, temporary facilities and controls, project management and coordination (47).


Indirect costs: They have nothing to do with a project, building, feature, or product directly. Refer to the Distributable, General, Administrative, and Overhead Costs.


Labour costs: refer to hiring labour, crafts, and trades for construction work.

Labour load: includes payroll taxes, insurance, and workers’ compensation costs for employers for hiring workers.

Labour rate (or price): the cost per unit of time for hiring labour, crafts, or trades for construction work. The rate may include benefits and labour responsibilities or just wages.

Line item: a cost element listed in the estimate spreadsheet.

Location cost index (or factor): compares costs between locations. Include or exclude currency exchange rates. Boston 223 / Austin 187 = 1.19. The location cost factor adjusts costs between locations. Multiply an Austin cost by 1.19 to get a Boston cost. See also the city cost index.

Lump amount: the total in-place cost of a system, subsystem, item, or project.


Man-hour (mh): one person’s effort for one hour. Some attempt to make this gender neutral—even though it’s unnecessary—by renaming it person-hours, work hours, job hours, etc.

Man-hour norms: established rates for work tasks under typical conditions

Man-hour rate: the number of person-hours needed to complete a task. Person-hour rate = necessary person-hours / accomplished work. Example: 0.125 mh/cy excavation. The person-hour rate is the inverse of the production rate times crew size. A few publications name this productivity, which needs to be clarified.

Markup:  is the difference between a product or service’s cost and selling price. To make a profit, producers add a markup to their costs.

Manual labour: refers to physical work performed by those participating in project construction. Manual labour includes all trade workers, including supervisors.

Methods: the methods employed to complete the work


Non-manual labour: refers to work performed by an individual not defined as manual labour.

Non-productive time refers to compensated work that does not add to productivity—safety meetings, trips, clean-up, wash-up, etc.


Open shop: refers to employment without requiring union membership or financial backing (closed shop). A merit store is an open shop.

Overhead: refers to ongoing business expenses

Overtime: refers to working beyond regular hours.


Per diem: It is a daily allowance given by an organisation to cover living and travel expenses.

Plug number: a placeholder value used in estimates to estimate the cost of an unspecified scope piece. See also Allowance.

Premium pay: It is the additional wage paid for overtime work. Example: The wage rate is 10.00/hour, overtime is 15.00/hour, and premium pay is 5.00/hour.

Price is the amount one party pays another for goods or services.

Pricing is the amount of money requested for a project. The price may exceed the cost, depending on market and profit factors.

Production rate: the amount of work accomplished in a given period. Production rate = work done / time. Example: 80 cy/day excavation = 10 cy/hour (8-hour day). Some sources use productivity for production or person-hour rate, which needs to be clarified.

Productivity: Productivity compares rates for the same job under different conditions. Production rates above the reference rate indicate higher productivity. A higher person-hour rate than the reference rate indicates lesser productivity. A person-hour rate below the reference rate indicates increased productivity. Productivity is an average output-to-input ratio of manufacturing efficiency.

Profit: In accounting, profit is the difference between revenue and cost. An allowance for project profit is made in estimates.

Profit margin is a measure of profitability. Find the net profit as a proportion of revenue.

Project: A project is a short-term effort to produce something new.


Quality: Quality can refer to either absolute excellence (“quality product”) or a lack thereof (“work of average quality”).

Quantity: Refer to Takeoff

Quantity surveyor (QS): a U.K. construction expert focusing on building expenses in some other locations.


Resources: Resources are needed to complete project tasks.


Schedule of values: A building contractor, builder, or other provider provides a schedule of values detailing contract sum components. It values work components and is used to submit and review progress payments.

Scope: Project scope in project management encompasses all products and their needs or features.

Specification: A specification lists material, product, or service requirements.

Subcontractors are individuals or businesses who sign contracts to fulfil the duties of another’s contract.

Supplier: A supplier is a company that provides materials, parts, or equipment.


Takeoff: The takeoff process examines the design package and quantities.

Task: a specific work completed.

Tool: A tool is a physical item used to attain a goal, particularly if not consumed.


Unit Cost: The cost of one completed work activity as measured


Virtual Design and Construction (VDC): Incorporating multidisciplinary performance models into design-construction projects to accomplish observable business goals in the workspace, workflow, and team organisation. Time and cost are the three aspects of the VDC (one-way) model in BIM.


Work refers to work put into a task or deliverable and encompasses all necessary materials for a construction project.

Work breakdown structure (WBS): It divides projects into deliverables. A project’s distinct workpieces are defined and grouped to organise and define its work scope.

Worker: someone who performs work. Cost estimates include hands-on workers in production rate calculations. Other workers supervise or assist with hands-on labour.

Wage rate: The wage rate is the agreed-upon monetary compensation per hour for labour performed. Workers receive this compensation without fringe perks or other labour constraints. Collective bargaining agreements set worker wages and fringe benefit rates.

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