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What Is a Construction Cost Estimate?

Cost Estimating

A construction cost estimate in land development is an itemized breakdown of the costs of the site work for a proposed project. Besides being able to see what a major cost of the development can be expected to be, a reviewing municipality might also require this kind of estimate to be prepared as a condition for final plan approval before construction can begin.

The municipality would use the total cost of the site work to add to a construction escrow account that would be created for the developer. This account would be created to ensure that the municipality would have enough funds available to complete at least the site work for a new project in the event that the developer decides to stop construction.

The escrow account is sort of like insurance for the municipality that the stopped construction will not leave an unappealing undeveloped site behind. The cost estimate is itemized because as the site contractor completes certain portions of the site construction, the developer will get paid back certain amounts out of the escrow account until everything in the account is paid back toward the end of construction.

What Is Included in an Estimate

As mentioned earlier, a construction cost estimate in land development involves the site work for a project. Site work refers to the work within a construction site outside of the buildings.

The following are common items that might be included in a construction cost estimate.

1) Erosion and sediment control measures such as rock construction entrances, silt fences, and erosion control matting.

2) Earthwork – This would include grading, the importing of any fill material, and the exporting of any excess cut material from the site.

3) Paving for driveways, roads, and parking areas.

4) Installation of utilities and storm sewer pipes and structures.

5) Lighting structures.

6) Landscaping plantings.

7) Costs associated with having an as-built survey prepared.

8) Costs associated with construction inspection.

Who Prepares the Construction Cost Estimate

It is usually the civil engineer who designed the land development plans who will prepare the cost estimate.

There will also be most likely a civil engineer hired by the reviewing municipality who would have to review and approve the estimate. The estimate would be checked for accuracy of measured quantities and for appropriateness of the costs used. It would also be checked to be sure that all required items are included in the estimate.

How to Prepare an Estimate

The following are the main steps involved in preparing a construction cost estimate.

1) Create a list of items to include in the estimate.

2) Determine the costs for each item. Some costs will be per item and some costs will be per unit (such as some amount per so many feet or cubic yards).

3) Determine the quantities of each item.

4) Determine the individual cost of the individual items.

5) Figure out the total cost for the estimate.

A construction cost estimate can be prepared using a spreadsheet or specialized software designed for construction cost estimating.

One of the Final Steps in the Land Development Design Process

As one of the final steps involved in the design of a land development plan, a construction cost estimate and the associated construction escrow that could be required by the reviewing municipality is something you should think about during the planning phase of a project.

You would want to be sure you will have enough funds available to hand over to the municipality in a lump sum before you even start construction.

Related: 10 Common Costs of a Land Development Project

Related: Recommendations for Construction Cost Estimating Books

Posted in Land Development

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