Estimating & Tendering 
Methods of Estimating  & Tendering 
 
 
 

 
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Methods of Estimate

Methods of Estimating / Type of Construction Estimate Methods of estimating, used in the early stages of
cost planning, depend on reliable historical cost data whereas an analytical approach to estimating is
based on applying current prices for resources to a well-developed design. A contractor may use a
combination of estimating methods in developing a cost for a design and build project

1. Preliminary Estimate

a. Single Rate Methods

i. Unit Method
ii. Cube Method.
iii. Story Enclosure Unit Method
iv. Superficial Area Method

b. Later Stage Estimating ( Multi Rate Methods)

i. Approximate Estimating
ii. Elemental Estimating
iii. Cost Modeling

2. Engineering Estimate

3. Contractor detail estimate

i. Unit Quantity Method

ii. Total Quantity Method

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WHAT ARE CONSIDER SELECTION OF EQUIPMENT COST?

Equipment costs rank second to labor costs in term of uncertainty and in their effect on the outcome of
anticipated profit for a construction project. Many factors can influence the selection of equipment in the
construction project. These factors are considering equipment selection.

Task Consideration
Nature of work This cost depends on the size of the job, the distance of transportation, and the means of
transportation
Daily or hourly forecast of planned production
Distribution of work at site
Quality of work and tome allowed for completion
Interference expected and interdependence with other operation.

Site condition:-
Accessibility to location
Maneuverability at site
primary site condition factors are type of material to be handled. Physical constains onsite, and hauling
distances.
The type and condition of the soil is important when choosing the most adequate equipment since each
piece of equipment has different outputs for different soils. Moreover, one excavation pit could have
different soils at different stratums. Larger volumes of excavation will require larger excavators, or
smaller excavators in greater number.

Equipment characteristics
Type of equipment considered suitable for the task.
Make, models and size of special purpose, and general purpose equipment available that can handle the
task

Production capability, serviceability condition and delivery time of each equipment available.

Economic considerations
Owning costs.
Operating costs
Re-sale or residual value after use
Replacement costs of existing equipment

Commercial considerations

Buy second – hand or new equipment

Rent equipment
Hire- purchase equipment
Purchase on lease.

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UNIT METHOD ESTIMATING

The unit method estimating consists of choosing a standard unit of accomodation and multiplying an
approximate cost per unit

Estimate = Standard units of accommodation X Cost/Unit

for example:

Schools – costs per pupil place

Hospitals - costs per bed place
Roads – per Kilometers
Car parks - costs per car space

The technique is based on the fact that there is usually some close relationship between the cost of a
construction project and the number of functional units it accomodates. Functional units are those factors
which express the intended use of the building better than any other. This method is extremely useful on
occasions where the building’s client requires a preliminary estimate based on little more information
than the basic units of accommodation.

The units adopted to facilitate this analysis depend on the type of project under consideration.

Site condition
Specification changes
Market conditions
Regional changes
Inflation

Using this estimating method can generate a rough estimate quickly, but the lack of accuracy will render it
of little use in the cost planning procedure outlined earlier. However, this method ids often used to
determine the very first notion of a price in early discussions of a project and as a crude means of
comparing the known costs of differet buildings.

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CUBE METHOD ESTIMATING

The Cube method estimating is specific for building projects and aims to overcome the current criticism to
the floor area method that does not take into account possible variations of the storey height. The
building volume method became very popular in some European countries like in Germany and
Switzerland, where building costs are often expressed in cubic meter prices. The total cost of the project
will be given by:

Estimate = Volume X Unit Cost (Cost/m3)

External plan area X height X Cost (cost/ m3)

In order to use the method, the building volume must be first assessed and explicit rules exist in some
countries for that purpose. Buildings with distinct types of occupation should have corresponding
volumes assessed separately, for example, car park areas, shopping areas and office areas in a
commercial building. Specific works like excavations, foundations and external works ought to be
assessed separately by using cost comparisons or approximate quantities, for example.

Costs per cubic meter may be difficult to find in countries where the method is not current. Actually, such
costs depend on a number of variables, like building types, proportion of wall area per floor area, quality
of finishes and so on.

Calculation of volume is subject to rules of measurement

1. Measured from external faces of external walls

2. Height of the building is taken from the top of foundation to

a. For pitched roof.

i. A point midway between the ceiling and the apex of roof 2/3 where roof space is
un-occupied

ii. A point three quarters from the ceiling to the apex of the roof where roof space
is occupied -

b. For Flat roof

i. A point 610mm (2feet) above the roof structure

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STOREY ENCLOSURE METHOD

Storey enclosure unit – It measure the area of external walls, floors and roof areas (effectively enclosing
the building) and multiplying them by an appropriate weighting factor.

¾ Not much used in practice and involves greater calculation.

¾ Historical data are not readily available

¾ Provides a single rate

¾ Take into account of difference in plan shape total floor area, vertical position of the floors, overall
height, storey height, extra costs of providing usable floor areas below ground.

Floor areas, measured from the internal face of external walls and subject to the following weightings.

¾ basements X 3
¾ ground floor X 2
¾ first floor X 2,15
¾ second floor X 2.30 and add 0,15 for each successive floor

2. Roof areas are measured in its plan projection, to the extremities of eaves: roof x 1.

3. External wall areas, measured on the external face of the walls:

¾ basement wall area X 2 (basement floor to ground floor level)
¾ Above ground wall areas X 1 (ground floor to ceiling of top floor with no deduction for openings)

When this method was suggested, it aimed at overcoming the problems detected in other single-rate
estimating methods, by taking into account variations in plan shape and storey height. Unfortunately, the
method was never totally adopted by construction professionals because it requires much more
calculations than other single-rate methods and because the rates needed cannot be directly extracted
from historical data Storey enclosure unit Method Estimate.

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FLOOR AREA METHOD ESTIMATING

This estimate is an approximate cost obtained by using an estimated price for each unit of groos floor
area. This method of estimating facilities costs is frequently used in building and residential home
construction.

The main reason for the popularity of the floor area method is its simplicity.There are few rules to
remember and the cost per square metre is well understood by property developers.A proposed building
is measured at each floor level (between inside faces of external walls);no deductions are made for
internal walls,stairs or lift zones.Previous similar building costs are used by dividing the construction cost
by the internal floor area.Adjustments can be made for location and inflation; but specification
adjustments are much more difficult to estimate.Subjective judgements are made for size,shape,number
of storeys,services,ground conditions and standard of finishes.A separate assessment should be made
for external works,demolitions, incoming services and drainage which can be significantly different
for similar buildings.

There are many buildings where the unit of accommodation method is impracticable;such as warehouse
projects or open-plan offices.In these cases the superficial floor area method is found to be reliable with
an accuracy of 10% to 15%.This method also works well with certain external works contracts such as
concrete paving or macadam surfacing.

Sometimes contractors are asked to quote for building work using sketch drawing sand a square metre
price.It is unlikely that a contractor would risk signing a contract on this basis.First a clear scope of works
would be needed together with a site survey and soil investigation report.The price must accurately
reflect the amount and specification of works.

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SINGLE-RATE APPROXIMATE ESTIMATING

Unit of accommodation method This method is commonly used by national bodies such as the education
and health services at the inception stage of construction. If a client has an amount of
money to spend (a budget) then it would be possible to consider the likely number
of functional units which can be provided. From experience, it might be found
that the cost of providing a study bedroom in student accommodation is £20000. Using this figure an
expenditure of £12 million would provide accommodation
for approximately 600 students. On the other hand if the number of units is
known,a budget cost (usually expressed as a cost range) can be calculated.
Providing there are recent comparable data available, the unit method is useful
where a simple and quick cost range is needed in the early stages. It is difficult,
however to adjust the costs for specific projects,in different locations,with varying
ground conditions and so on.

APPROXIMATE ESTIMATES

The object of the exercise is to estimate the cost to the employer of their desired scheme. It usual to base
the pricing of such estimates on historical cost date gleaned from the analyses of the costs of similar
buildings adjusted to account for any fluctuations in price levels and for project idiosyncrasies.

The accuracy of the estimate will be influenced by the state of the design information, both drawing and
specification notes. A preliminary estimate is often required when there is little or no information available,
so it is usual to base such an estimate on place costs or net area/volume costs. as the design information
is developed it is possible to produce more refined estimate based upon element unit quantities or
measured approximate quantities. Finally, when the design an even more accurate estimate can be
achieved by basing it on the measured accurate quantities in the bills of quantities.

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OPEN TENDERING

In this procedure, practically any contractor can submit a bid for the job. This method was probably the
traditional method until more sophisticated techniques were accepted. The process begins by the placing
of an advertisement in trade, magazines and newspapers highlighting the significant features of the
project. This method of tendering has the benefit of attracting number of tenders and hence the price the
obtained are usually very competitive.

The advertisement will carry brief details of the location, type, scale and scope of the proposed works.

Advantage of open tendering

1. Unknown contractor can tender for the work

2. Open tendering secures maximum competition.
3. There is no restrictive list of tenders, which does not allow favoritism – a valid point for local
authorities Who are publicly accountable.
4. There is no obligation to tender therefore all tenders received will be genuine.

Disadvantage of open tendering

1. Cost of tendering is expensive to the client who must bear the cost of reproducing multiple copies
of drawing, bills of quantities, etc.

2. The wrong contractor can be chosen. Little may known about the contractors – their record,
experience, standard of workmanship, etc.

3. The lowest tender may not necessarily be a “bargain”. Choosing a low tender may result in

a. Poor work – a large number of, or even permanent, defects may occur unless there is
close supervision by the client’s agent.
b. poor organization – late completion, specialist subcontractors delayed, etc.

4. It is lengthy operation requiring skilled estimating, the cost of which must be recovered on the job
by the contractors. The higher the proportion of unsuccessful tenders the higher the cost to be
recovered on the job.

5. A contractor may be awarded work for which he has little or no experience and which he be ill-
equipped to deal with.

6. The use of open tendering on public sector contracts is required by law in several developing
countries. But In many countries, private sector clients generally avoid open tendering.

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SELECTIVE TENDERING.

All the construction firm and the construction deportment are main taint a resister of selective contractors.
The a bore firm and the deportments wants to do a good job in there construction work then they select
name of boor 7 contractors from the register whom be consider suitable for the work. This ensure that
reputable firms tender, on need for the engineer to advice the employer against accepting the low priced
tender from a contractor whose technical competence doubtful. These sleeted tenders may be insert in
the register by adverb tiding in papers or firm and any other technical firms every year all construction
firms & departments the list of registered contractors must res cutinized leaving some names add some
new names of the con tractors in the registered list.

Advantage:-

1. The employer or the client know the capacity of the con tractor accepting lowest tender.

2. We save time in a diver tiding & publishing as in open tender.

3. All the contractors may be in the same status so they get more profit & the work is also in good
quality.

Disadvantages.

1. This type of contract the client some time well know the contractor this leads to give some kind of
help by the client more core needed in selective contractors.

2. Without rescrutniziny the register selecting names of can tractors lead the client to undergo
difficult in doing construction work.

3. The tendered rate may be hig when compared with the open tender but when consider the
standard & good management it brings advantage to the client in the long run.

4. Some con tractors may coat too higher rates for the con strum action work because they didn’t
want to do the set job but for the sake of getting next tender docents from the client.

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NEGOTIATED TENDERING

When negotiated tendering is adopted the client and a preferred contractor will enter a contract through
direct negotiation. This method is ideal where the work is of a unique nature and the client is confident
that there is only one contractor suitable to undertake the work
or where the client has a strong preference to use a particular contractor.

Negotiated tendering does not facilitate competition in the tender process but the client, to ensure a
competitive price is negotiated, can use certain checks. The distinct advantage to both the contractor and
the client is that tendering costs are minimized. The method is frequently used amongst private sector
limit the use of this method to project of a unique nature.

TWO STAGE SELECTIVE TENDERING

The majority of negotiated tenders, as stated above, arise from a desire to involve the builder in the
design phase of a project. The Code of Procedure for Two Stage Selective Tendering describes a method
which allows the negotiation of a tender with an element of competition.

First, suitable builders are selected in the same manner as for single stage selective tendering, and a list
is compiled of those willing to take part in the initial competitive stage. The tender documents sent to the
tendering contractors comprise outline sketches of the scheme, a summary of the client's requirements
and a notional bill of quantities. The notional bill of quantities is a document containing an outline
specification and provisional item descriptions and quantities.

The Code states that tenderers should be given five weeks to prepare their tender. It recommends that
the tender is submitted under the same rules as for single stage selective tendering, with the same
procedures for notification, errors etc.

Many design teams, however, do not use the preliminary tender based upon the notional bill as the sole
method of selection. Instead they will invite each tendering builder to a meeting to discuss the builder's
approach to the project. The approach will be discussed in terms of the builder's contribution to the
design, the previous experience of such schemes, the personnel to work with the design team and their
previous experience. The aim is to ascertain whether the builder and the design team can work well
together. It is the combination of these meetings and the preliminary tenders which determines the
successful builder.

An agreement will be made with the successful builder regarding the cost of the builder's input before the
commencement of the design stage. The design stage is undertaken. Bills of quantities are prepared by
the quantity surveyor and where possible priced at the rates in the notional bill. Those items which cannot
be priced on this basis are priced by the builder and are subject to negotiation.

Finally following a successful negotiation the builder will make a formal offer to carry out the work for the
sum of money negotiated, and this is formally accepted by the client. A standard form of contract is
completed.

This method of tendering allows the choice of a builder who is capable and keen to contribute to the
design while retaining the important element of competition.

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