2. TOTAL PROJECT
COST

3. TOTAL PROJECT COST
The approximate total project cost, called the cost estimate, is used to authorize
a project’s budget and manage its costs. Professional estimators use defined
techniques to create cost estimates that are used to assess the financial
feasibility of projects, to budget for project costs, and to monitor project
spending.
It may divide into several area:
Professional engineering cost
Construction cost
Legal and Land Cost
Owner’s Cost, including project administration,
staffing. Financing, and other overhead
Contingency allowance for unknown

4. Professional engineering cost
The approximate total project cost, called the cost
estimate, is used to authorize a project’s budget and
manage its costs. Professional estimators use defined
techniques to create cost estimates that are used to assess
the financial feasibility of projects, to budget for project
costs, and to monitor project spending.

5. Construction cost
Construction cost estimating is the process of forecasting the cost
of building a physical structure. Of course, builders and clients both
worry about the financial impact of cost overruns and failing to
complete a project. That’s why they devote time and effort to
estimating how much a project will cost before deciding to move
forward with it. Clients considering large projects often seek
multiple cost estimates, including those prepared by contractors
and those calculated by independent estimators.

6. Legal and Land Cost
Buying property is generally considered one of the biggest
steps a person can take in life, typically due to the large
amount involved. But unlike other purchases that one can
make, real estate is not something you can normally have
by paying for in one quick transaction. Along with the
property’s price are other expenses that come as part of
the purchase. In this respect, the most important is
perhaps the cost to transfer the land title.

7. Owner’s Cost, including project
administration, staffing. Financing, and
other overhead
Owner’s Cost is the cost that includes a land, financial cost
(funding cost), owner’s third party cost including
engineering studies, permits, licensing fees, training, and
owner corporate costs etc.

8. Contingency allowance for unknown
The “unknown” unknown, or contingency, is the dollar
amount added to an estimated price that allows for
items or conditions that are uncertain and require
additional costs. There are two primary types of
contingencies: owner- and contractor-specific.

10. A civil engineer is often engaged to make a study
and to render a planning report on the contemplated
project including alternative solutions, layouts, and
locations along with initial estimates of the probable
project cost. These may involve alternative or phase
implementation schemes which add flexibility to the
project.
Professional Engineering Costs

11. What is Cost
Engineering?

12. Cost engineering is the application of scientific
principles and techniques to problems of estimation,
cost control, business planning and management
science, profitability analysis, project management, as
well as planning and scheduling. It is the practice of
managing the costs involved on a construction
project. This includes activities such as cost control,
budgeting, forecasting, estimating, investment
appraisal and risk analysis.

13. • Article I-Section 2
• Article I-Section 3
AACE International Constitution and
Bylaws which states:

14. Article I-Section 2
The Association is dedicated to the tenets of furthering the
concepts of total cost management and cost engineering.
Total Cost Management (TCM) is the effective application
of professional and technical expertise to plan and control
resources, costs, profitability and risk. Simply stated, it is a
systematic approach to managing cost throughout the life
cycle of any enterprise, program, facility, project, product
or service. This is accomplished through the application of
cost engineering and cost management principles, proven
methodologies and the latest technology in support of the
management process.

15. Article I-Section 3
Total cost management is that area of engineering
practice where engineering judgment and
experience are used in the application of scientific
principles and techniques to problems of business
and program planning, cost estimating economic
and financial analysis; cost engineering: program
and project management; planning and scheduling:
and cost and schedule performance measurement
and change control.

16. Study and Report Phase - Analysis of client needs, evaluation of alternatives and
recommendations of a preferred option, conceptual design, conceptual opinions of probable
construction cost.
The six standard phases of a construction
project and the engineering service:
Preliminary Design Phase - Preparation of final design criteria, preliminary drawings,
outline specifications, and preliminary estimate of construction cost.
Final Design Phase - Preparation of construction drawings, specifications, estimates of
probable construction cost, and other contract documents.
Bidding or Negotiating Phase - Assistance to the client with the bidding or negotiating
process for construction of the project.
Construction Phase - Representation of the client during construction and inspection of
construction.
Operation Phase - Assistance to the client in startup and operation of the project, including
periodic inspections.

17. Professional Associations

18. PROFESSIONAL ENGINEERING COST
• In the study and report phase, the costs included based on Civil Engineering
services are as follows: field or traffic surveys, planning analyses, geotechnical
explorations, and analyses.
• The estimated probable total cost of the project based on the study and report
phase must be understood to be preliminary in nature.
• Study and report phase is important as it determines the scope and
development of the entire project that includes the project's overall capital and
lifecycle cost.
• During the final and construction phase, additional surveying and geotechnical
engineering services may be needed.
• Costs for additional or special engineering services may be required by the
client or recommended by the Civil Engineer

19. CONSTRUCTION COST

20. CONSTRUCTION COST
Construction Cost means the total cost of the work to the
owner of all elements of the project designed or specified by
the design professional including the cost at current market
rates of labor and materials furnished by the owner and
equipment designed, specified or specifically provided by the
design professional. Construction costs shall include the costs
of management or supervision of construction or installation
provided by a separate construction manager or contractor,
plus a reasonable allowance for each construction manager’s or
contractor’s overhead and profit.

21. Costs
Associated
with
Constructed
Facilities
The costs of a constructed facility to the owner include both the initial
capital cost and the subsequent operation and maintenance costs.
Each of these major cost categories consists of a number of cost
components.
The capital cost for a construction project includes the expenses related
to the initial establishment of the facility:
• Land acquisition, including assembly, holding and improvement
• Planning and feasibility studies
• Architectural and engineering design
• Construction, including materials, equipment and labor
• Field supervision of construction
• Construction financing
• Insurance and taxes during construction
• Owner's general office overhead
• Equipment and furnishings not included in construction
• Inspection and testing

22. Costs
Associated
with
Constructed
Facilities
The operation and maintenance cost in subsequent years
over the project life cycle includes the following expenses:
• Land rent, if applicable
• Operating staff
• Labor and material for maintenance and repairs
• Periodic renovations
• Insurance and taxes
• Financing costs
• Utilities
• Owner's other expenses

23. Types of Construction Cost Estimates
Design Estimates Bid Estimates
Control Estimates

24. Types of Construction Cost Estimates
Design Estimates
For the owner or its designated design
professionals, the types of cost estimates encountered
run parallel with the planning and design as follows:
• Screening estimates (or order of magnitude
estimates)
• Preliminary estimates (or conceptual estimates)
• Detailed estimates (or definitive estimates)
• Engineer's estimates based on plans and
specifications
For each of these different estimates, the amount of
design information available typically increases.

25. Types of Construction Cost Estimates
Bid Estimates
For the contractor, a bid estimate submitted to
the owner either for competitive bidding or negotiation
consists of direct construction cost including field
supervision, plus a markup to cover general overhead
and profits. The direct cost of construction for bid
estimates is usually derived from a combination of the
following approaches.
• Subcontractor quotations
• Quantity takeoffs
• Construction procedures.

26. Types of Construction Cost Estimates
Control Estimates
For monitoring the project during construction,
a control estimate is derived from available
information to establish:
• Budget estimate for financing
• Budgeted cost after contracting but prior to
construction
• Estimated cost to completion during the progress of
construction.

27. LEGAL, LAND, ADMINISTRATION, STAFFING AND
FINANCIAL COSTS

28. LEGAL, LAND, ADMINISTRATION, STAFFING AND
FINANCIAL COSTS
INCLUDES:
• The audit
• the cost of issuing bonds
• land costs
• interest for borrowed money during construction
It can best be estimated in operation with the client because they are
usually outside the knowledge and control of the Civil Engineer.

29. What is
Contingency?

30. A contingency is an amount
added to an estimate to allow for
items, conditions, or events for
which the state, occurrence, and/or
effect are uncertain and that, in the
contractor’s experience, will likely
result in additional costs.

31. There are two general types of contingencies:
(1) owner reserve (an amount set aside for additions
to the project’s scope or owner’s risk items)
(2) contractor contingency (an amount built into the
contractor’s anticipated price for the project to
account for various risk factors that cannot otherwise
be accounted for in a schedule of values).

32. What is
Contingency
allowances?

33. A contingency allowance is a small
allowance of time which may be
included in a standard time to meet
legitimate and expected items of work or
delays, the precise measurement of
which is uneconomical because of their
infrequent or irregular occurrence.

34. Other Types of Allowances
• Policy allowance
• Special Allowance
• Training allowance
• Learning allowance

35. To provide for intangible costs,
contingencies should routinely be added to
the basic cost estimate. It is common
practice to add 20% or more to the
estimated probable total project cost at the
Completion of the study end report phase,
reducing this to perhaps 10% at the
completion of final design and perhaps to
5% when the Construction bids become
known. Larger or more complex projects
may require higher contingencies.