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Construction Cost Estimation in California

Cost estimating is a well-formulated calculation of the possible construction cost of a particular building project. A cost estimate is considered as a significant management tool to library planners during the design phases of a project to render information about the facility and the project budget. Many projects at conceptual design need modifications to offer a suitable workable solution. Conceptual cost estimate is a tool to determine the needed funding and to estimate the requirement of a project and hence has emerged as a vital tool for architects, owners, and builders. Besides, this tool undergoes improvement during the project design stages.

The cost estimate is responsible for all items that are usually incorporated in the general contractor’s bid. The cost estimate is developed by segregating the items of work employing a standard format and determining the cost of each item from experience and a database of existing construction cost information.


A project budget is not similar to a cost estimate as it comprises of the total of the cost estimate along with soft costs. Soft costs include land acquisition, architectural and design fees, building permits and fees, movable furniture and equipment, fire and all risk insurance and are not included in the cost estimate. The project budget also includes non-construction related costs such as fundraising and moving costs. The various types of cost estimate include:


Cost estimates can be divided into two groups that are defined below:


  • Conceptual Estimate

    Conceptual estimating is also known as parametric estimating. It is the process of establishing a project’s cost, at times before the development of a graphical representation of a facility.


  • Detailed Estimate

    The detailed construction estimate is the result of a process that helps in the prediction of the cost of a proposed construction project. The estimate is generated by dividing the items of work in an orderly and logical basis, deciding the cost of each item from know-how, and summarizing the total.

Number and Timing


The project or owner specific number of cost estimates required is associated to the different design phases of the project. A cost estimating approach to a specific project, which dictates the number and timing of cost estimates includes the following phases:

Construction Cost Estimation in California
  • Pre-Design Phase

    Before the beginning of programming or design, the cost estimator develops a cost model and budget cost plan for the project. The cost model helps in establishing a construction budget and in defining how the project budget will be assigned among various building systems. The cost model also ensures the project scope and identifies any costs or work that has to be funded separately.


  • Schematic, Design Development Phase

    The cost estimator is a vital member of the design team who evaluates design decisions made throughout the design phases against the pre-established cost model. Through this approach, the cost management team can render an integrated value engineering process throughout the design phase.


    The cost estimator generates a comprehensive cost estimate at the end of the schematic design and design development stages. The estimate is compared against the cost model created during the pre-design phase of the project.


  • Contract Document Phase- Further cost estimates are developed after the completion of 50% and 100% construction document stages. Cost Estimate Details include:
    • Inclusions and Exclusions


A cost estimate comprises of all items that will typically be in the general contractor’s bid. The exclusions to a cost estimate are project specific, hence it is essential that all parties involved study the list of exclusions to attain a clear understanding of the scope of work accounted for in the cost estimate. Exclusions may include:


  • Professional design, testing, inspection and management fees
  • Assessments, taxes, finance, legal or development fees
  • Building permits and fees
  • Fire and all risk insurance
  • Scope changes and post contract contingencies for change orders and/or claims
  • Land and easement acquisition
  • Owner supplied and installed furniture, fixtures and equipment
  • Movable furniture and equipment


Minimizing Risks Associated with Construction Cost Estimates


There are several types of construction cost estimates such as preliminary or ballpark estimates, intermediate estimates, Engineer’s estimates also referred to as the owner’s estimate, and the Contractor’s bid estimate. During project development, precise estimate type depends on when the estimate is needed. Irrespective of the estimate type there are related risks involved in preparing an engineer’s estimate of construction costs for design professionals.


Construction Cost Estimate Risk


Through construction cost estimates, the project owner gets a reasonable expectation of the entire project costs, as well as a segregation of individual pay items, if the bid form is structured permits it. This serves as the standard for establishing acceptable bid proposals and allows the owner to ensure that adequate funding is in place prior to soliciting bids from construction contractors. Underestimating project costs causes problems like delayed contract awards and even rejection of bids. It is hence necessary to redefine the project scope and re-bid the project.

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