Learn about some common estimating terms and their meanings.
- [Instructor] If you have some of my previous courses on construction estimating, you may be familiar with some of these definitions. Also, if you are just beginning in the path of becoming a construction estimator and don't have any formal training, you can view our library of construction estimating courses. We will review a few basic terms used when costing or estimating a project. You see, it's important that a team use the same terms to describe the components of an estimate so there's no confusion as to what the true costs are and are not. To begin, we should explain that cost data is the price or prices of the materials, the labor, and the equipment of a specific construction process.
Those may include unit cost, which is what you would pay for an individual piece of material for a project. Items such as a window, a concrete block, or a light fixture are examples of material units. Assembly cost, that means a group of material units that are commonly sold, shipped, and installed as a group. Items such as an elevator, stairs, or fencing are examples of assemblies. These are normally ordered and shipped in pieces or assembled, but as a group of individual units.
Some assemblies have per unit costs, that is to say the whole group of items for an assembly, such as a set of stairs, has a particular cost. Other assemblies may be priced based on their unit of measurement, such as per foot, per square foot, or per cubic foot. Labor costs, that's simply the value of employees installing the material or operating equipment. Crew type, the number and classification of workers needed to install a particular item or assembly. RSMeans specifically uses the crew column to designate the typical trade or group of tradespeople used to install the item.
If it an installation can be accomplished by one trade and requires no power equipment, the trade and or number of workers are listed. If an installation requires a composite crew, a crew code designation is listed. You'll need to reference the crew listings to find full details on composite crews. Some material costs may include labor or may not include labor. You should always consult the cost data source that you are using to be sure. Cost and price. Price is the amount of money a customer pays for that product or service.
The difference between the price that is paid by the owner and the cost that is incurred is the profit the business makes when the item is sold. If a customer pays 1,000 dollars for an item that costs the company 750 dollars to produce and sell, the company's profit is 250 dollars. Overhead, profit, and markup. Overhead is the fixed cost that a business pays to administrate and run the business. They are not costs affiliated with a particular job or project. Profit is a reasonable amount of money the company expects to make above and beyond their cost.
And markup is the amount added to a cost price of goods to cover overhead and profit. And lastly, pricing. Historical, dynamic, and predictive pricing. You'll hear these terms a lot, especially when using construction cost data and specifically RSMeans construction cost data. Historical pricing is the pricing of labor, material, and equipment from past months and years that is collected and compiled into a usable format. Dynamic pricing is basically the pricing of material and labor at today's market value.
Not yesterday and certainly not tomorrow. We'll talk more about this later in the course. And last, predictive pricing. This is the projected cost of material, labor, and equipment for the future. It's very important to understand what the impact of rising and falling costs are to a project. A project can suffer huge financial losses if this is not taken into consideration.
- Common estimating terms
- Different types of construction costs
- Using a printed unit page and a printed area page
- Finding and using city indices
- Working with RSMeans Online
- Creating an estimate
- Adding items and assemblies to an estimate