Quantity Takeoff for Conceptual Cost Estimating

You might wonder, why would someone want to take time out of their day writing about quantity takeoff on a cost estimating blog.

Whenever the question “how do you do the quantity takeoff” comes up, the answer is invariably about the methods used: manual or software. I will cover the software for quantity takeoff in a future article. For now, let’s focus on the role the quantity takeoff plays in developing a cost estimate for conceptual cost estimating and how I approach it.

As part of the action plan for developing a cost estimate, the quantity takeoff is tight into the work breakdown structure (WBS) development, the data sourcing strategy and project requirements.

Let’s look at some factors that influence how we perform the quantity takeoff:

1. Type of cost estimate;
2. Level of accuracy;
3. Estimating method;
4. Data sourcing plan;
5. Project delivery method;
6. Project schedule integration.

The first step in the estimating process is the scope definition. The cost estimator will use the Design Basis document to start the first level of scope definition. As the engineering group identifies the design requirements by discipline and level of detail, the cost estimator can develop the scope definition into a more detailed scope of work.

Important to note here is that sometimes the design engineers will reiterate the design to accommodate various requirements or changes across the disciplines involved in the design. Therefore, changes to the quantity takeoffs are very common in the early stages of a project.

Following are the steps performed by the cost estimator to develop the quantity takeoff on a conceptual cost estimate:

1. Collect all the scope definition documents from the engineering team,
2. Develop scoping (details of estimate) for each discipline,
3. Identify all scope items for each discipline,
4. Assign a detailed description of each item. The item description is particularly important. It needs to describe inclusions-exclusions, clarifications for scope boundary, assumptions and adjustments included.
5. Determine the unit of measure for each item.
6. List all sub-items included in each item.

In determining the quantities for each item, the cost estimator must communicate with each engineering discipline within the design team. As it happens in the early stages of a project design, the documentation available to the cost estimator is very limited.

The engineering team can provide valuable information to the cost estimator about the various elements of the design. An experienced cost estimator keeps an open line of communication with the design group all the way until the quantity takeoff is complete.

Some engineering firms have established that the design engineers are responsible for developing the quantity takeoff. The cost estimator provides the templates to each discipline to collect the quantity takeoffs.

I have successfully used both approaches as a cost estimator in my professional experience. They are both very valid approaches. Some factors have to be considered when deciding which group is in charge of developing the quantity takeoffs, the design engineers or estimating:

1. The type of project. For process industries, it is most suited for the engineering group to develop and provide the cost estimator with the quantity takeoffs. Projects for the process industries are equipment based. The design engineers know the most about the equipment, installation requirements, and vendor inclusions/exclusions.
2. The professional services agreement specified hours for engineering and cost estimating. If not enough hours are included in the agreement for engineers to perform quantity takeoffs, there is no choice but to have the cost estimator do it.
3. The level of expertise available within the design firm. If the design engineers are unfamiliar with cost-estimating requirements, it is better to have the cost estimator perform the quantity takeoffs.
4. The type of cost estimate.

Regardless of which party is in charge of performing the quantity takeoffs, I strongly recommend that the cost estimator has an open line of communication with the design group. The cost estimator’s participation in the weekly design meetings and direct communication with each design discipline lead is the key to a successful cost-estimating process. The higher level of the cost estimate, the more this becomes critical.

In a simplistic way, conceptual cost estimating is very much based on being able to understand the project in the absence of sufficient documentation.