Estimation plays an important role in cost planning by providing budget figures for decision making. There are two main methods of project estimation: detailed estimation and single rate estimation. Detailed estimation involves taking off quantities from drawings and applying unit rates, while single rate estimation uses an overall rate per ton of steel. Cost planning then uses the estimates to break the project into tasks with durations and resources. Comparing actual costs to estimates identifies cost changes. Detailed estimation is more accurate but also more time-consuming, so the appropriate method depends on the project information available. Accurate estimation is key to successful cost planning and avoiding cost overruns.

1. .Role of estimation in cost planning
What is estimation
The definition of estimation according to dictionaries is known as "an approximate
calculation of quantity" ;or "A judgment based on one's impressions' opinion".
Estimation is the process that provides the benefit , funding and resorting figures that
required for a variety of decision – making purposes.
What is project estimation
According to John Smyrk:
"Estimation has meanings at two levels of discussion:
• A general definition: Estimating is the process of establishing values for the
critical parameters in analytical model of a project.
• A specific definition : Estimation is the process of establishing values for
critical parameter in an analytical model of a project.
According to Rory Burke:
"Estimate is a quick method for pricing a project based on incomplete parts list of
materials".
Estimation is used to
• underpin benefit –cost analysis
• set expectation of timeframes.
Unexpected changes in the project's variables will impact , usually adversely , on the
project . It is important for good estimation to be provided , otherwise there may not
be enough allocated time and money to execute the project successfully.
Will discuses the role of estimation in cost planning within the structural steel
fabrication industry ,estimation play an important role on cost planning for any steel
fabricator because cost is important to all clients , there are different methods used
on estimation will discuss some of these .
Detailed Estimate
Detailed estimate is commonly used for medium size and small steel projects,
method is based on the following
1. Steel member length take off from tender drawings
2. Classify members by type (beam, column, rafter, purlin, bracing, tie, post,
lintel, canopy).
3. Multiply each member by unit rate, which is varying according to member
type.
4. Add a risk factor depends to cover any contingencies.
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2. Single rate estimate method
It is only based on the tonnage rate or price per ton for cost of steel fabricating and
erecting , it is preferred by the engineers and clients based on the fabricator rate
per ton figure they can plan the project budget.
Simply the estimation method role is to know the structure type if portal frame,
multistory building, house, bridge, stadium, truss, stairs, handrails, light structures.
What is cost
Cost is defined as detailed price based on a complete parts list of material, costing
requires
• The design .
• The scope of work
• The parts list.
• The detailed planning.
• Firm prices from sub-contracts and suppliers.
•
Benefit of cost planning
• Greater satisfaction with end results
• Better value for money
• Improved building quality and performance
• Budget and value accountability
• Improved relationships between all project participants
• Design problems identified and solved earlier
• Early identification of high-cost element
Factors in Successful Cost Planning
• Confirm that all project team members are speaking, and understand, a
common language
• Manage expectations. Acknowledge change is inevitable and establish contingencies
and escalation in cost planning
• Establish and document a solid base of prioritized needs
• Study as many feasible site and building alternatives as possible
• Establish well defined, manageable project schedules
• Insure the budget has the confidence and acceptance of all project team members
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3. Cost Management Cycle
Planning &
Preliminary
Budgeting
Pre-Design
Post &
Construction Programmin
g
&Design
Construction
Cost planning based on detailed estimate.
Project is broken down into tasks each task has a specific duration and resources, these
tasks extracted from project estimate according to the tender drawings these tasks are
• Shop drawing preparation
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4. • Ordering materials
• Component fabrication
• Fabricating and welding
• Painting
• Transporting
• Erection
Using Microsoft project feed all date calculated during estimation process into the
program, which will automatically calculate the CPM and provide accurate cash flow
during the project , compare actual cost to estimated budget for each task and identify
any change.
At what stage of design is used
• At tender stage only .
Advantages
1. The most accurate method Accuracy about 1 to 5%
2. Quantity servier prefers this way it works the same way he work.
3. Provide accurate competitive cost.
4. The lower risk margin.
5. Can be sued to any type of project.
Disadvantages
1. Time consuming.
2. Require height skilled estimator.
3. Only used at tender stage and depends on drawings information.
4. Estimator has to revise his tender with each revised set of documents.
5. Require meeting with client and engineers to discuss any documents
quires.
Cost planning based on single rate estimate.
Based on the client requirement will work out how many tons of steel involved in the
project ,then project is broken down into tasks each task has a specific duration and
resources, these tasks extracted from historical recorded information from similar projects
Using Microsoft project feed all data calculated during estimation process into the
program, which will automatically calculate the CPM and provide accurate cash flow
during the project
At what stage of design is used
• At brief design stage.
Advantages
1. Clients prefer this method they can easy understand it.
2. The quickest method.
3. Very simple.
4. Do not require skilled estimator.
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5. Disadvantages
1. Difficult to make allowances for building location, shape, drawing
revisions, lack of information, poor documentation and so on.
2. Do not know the cost of each item.
3. Accuracy about 15 to 20%
4. Cannot used for minor variation or special projects.
Conclusion
There is no easy way to produce accurate estimations, except with experience and using
better practice from other projects, comparing both methods on regard to the cost
planning effect it is obvious that the detailed estimate is more accurate and provide a
small
It is not always possible to have the required information for the detailed estimation at
planning time especially for small projects so fabricator should deal with a both methods
According to the available information in fact they use the single rate method if not
possible to make a detail estimate due to time or document limitation.
Estimation is a major effecting factor in successful cost planning the closer the estimate
the better and efficient will be the cost planning. Which if fails might cause cost overrun
effecting on the company financial stability.
There are different ways of improving estimation such as recoding actual costs for all
projects and compare it with the current applied rates, implement lesson learned from
past to new projects , up skill estimators by providing training , keep new technology to
a minimum .
References:
• Ten step project management process (www.tenstep.com)
• Project management fact sheet: project estimation version 1.0
• Burke, R. Project management planning and control.
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