What techniques are used in construction cost estimation?
The cost of any construction project needs to be established for the successful completion of such a project to be realized. In most cases, construction cost estimates are used to establish the real cost of such projects and various techniques are applied in this case as discussed herein.
Bottom up cost estimation
This approach considers small project activities since it assumes that they largely impact on the total cost of a construction project. Once the cost of these activities is aggregated, the total estimated cost of the project is realized.
Parametric cost estimation
Cost estimation through this technique is based on unit costs and these details are sourced from published sources, previous projects and statistical data. This technique can be combined with another cost estimation technique for more accurate results to be realized and though it is considered a reliable way of estimating construction cost, the accuracy of results obtained through this technique is based on the accuracy of the source data.
Top down cost estimation
Project cost estimates, in this case, are based on a work breakdown structure (WBS). This technique assumes that the cost of a construction project should be known in the very early stages of the project.
Analogous cost estimation
This approach focuses cost estimation on each section of a construction project in combination with other techniques used in estimating such costs. The actual cost of earlier similar projects is a major reference point in this approach as far as estimating the cost of the current project is concerned. This technique is also referred to as historical data analysis.
Use of these construction cost estimating techniques will be instrumental in establishing the total cost of specific projects and a combination of these techniques can yield more accurate results.