Hi…Are you embarking on a project and unsure of how to arrive at a cost estimate? As we know, cost is a major factor when it comes to project execution. Hence the importance of planning and controlling costs cannot be overemphasized. The 3 options stated below are the major ways to calculate your project cost. There are other methods but they are based on these three… So,let’s go:
1. Analogous Estimate:
It involves deriving project cost based on similar past projects. This is the fastest estimating method but also the least reliable.Example: If you are building a three bedroom bungalow, asking someone who recently built a three bedroom bungalow of equal(or almost equal) size will give a rough idea of how much yours will cost. However,other factors that will affect cost which should be considered are:
Location: This will affect labour cost,approval cost,transportation costs etc.
Desired finishes:Two buildings of same design but different material finish specification will have different cost estimates.
Type of land: It’s obvious that building on a marshy land is more expensive than solid ground.
Time/project schedule: Time changes so many things including building materials and logistics prices.
This is simply multiplying a unit cost by the total area of your project to arrive at your project cost.
Example: Your building has a total area of 300 square meters, If it costs NGN50,000 per square meter to build. The parametric estimate is:
300sq.m x NGN50,000= NGN15,000,000.
This is more accurate than the analogous estimate as the unit cost considers some of the factors not included in that estimating method.It could also be used to cost only a part of the project.
3.Bottom up estimate:
It involves breaking down the project work into the smallest components and costing each item individually.Finally, all the costs are added up to arrive at the project cost estimate. This is the most reliable method of estimating your project cost but also the most time consuming and expensive. The Bill of Quantities (BoQ) is a major document in carrying out this exercise.
Before the BoQ is prepared, there has to be sufficient details in terms of drawings and specifications. You will need to engage the services of a quantity surveyor when using this estimating method.