A cost estimate depends on different estimation techniques. These techniques vary in terms of potential accuracy and speed. Here are the primary costs estimating approaches.
Joint Costs Allocation
To allocate the costs that are considered hard to assign to different elements of the project, estimators use different mathematical formulas. For instance, an estimate can prorate supervision in the field proportionally to different tasks on the basis of their total basic costs share.
Empirical Cost Inference
This is a statistical method that employs regression analysis in relating construction cost to a predictors’ model. This model’s accuracy is largely dependent on the predictive model’s quality. As such, it requires the estimator to be familiar with different predictors of construction costs and expertise in statistical methods.
Production function basically relates the output or the amount built to factors like labor and materials or the input. As such, to achieve output at a certain level or build specific square feet, you should define your optimal input or labor hours per every square foot. When it comes to forecasting a project’s input-output relationship, production functions tend to be fairly accurate. Nevertheless, this depends on the project type and the extend of the available data.
This approach is extremely accurate. However, it’s incredibly time-consuming. It’s basically about determining the total expenses by listing the costs of single components of a project in order. Producing a stick estimate takes time and human error can occur during the estimating process. What’s more, the long time required for stick estimating can lead to concentration loss or carelessness.
Unit Cost Estimating
This form of construction cost estimation associates the unit costs with the involved assembly throughout the construction process. This approach is relatively accurate and quick especially if the assemblies have been used before since the available evidence justifies the unit costs for the assemblies.
Each construction cost estimator uses a different estimate approach. Talk to your cost estimator to understand the approach they intend to use.