Book Reviews: Introduction to Estimating for Construction


Title:      Introduction to Estimating for Construction
Categories:      Construction
Authors:      Brian Greenhalgh
ISBN-10(13):      0415509866
Publisher:      Routledge
Publication date:      2013-01-21
Number of pages:      216
Language:      English
Picture:      cover           Button Buy now

This book is entitled an introduction to estimating for construction and under that umbrella of ‘introduction’ it is wide ranging. Estimating is a word that has to be used with care and it is necessary to specify who is estimating and for what purpose. The clients or their professional representatives estimate to determine the commercial viability of a project, to control the design as it develops and to evaluate contractors’ bids. Contractors estimate their costs of constructing a project in order to develop a tender and to set up the cost control budgets for use during execution. The approach to estimating of these two clients and the contractors is different. The clients’ approach is frequently based on past comparisons. The contractors’ approach is always based on identifying the resources, the usage of the resources and the costs of the resources. So when reading about estimating it is always necessary to know whose estimate you are reading about. As this book covers both these estimating practices the question it raises is why try to deal with both sides in a single text. The answer is that the central aim of the book is too introduce estimating and its key role in the construction process and to highlight where estimating takes place in the complete construction process from inception to construction. This elevates estimating to a discipline in its own right encompassing both clients’ estimating and contractors’ estimating. This is almost a novel approach.

The opening chapter ranges over the purposes of both client and contractor type estimating and the uses to which these estimates are put. The second chapter details the nature of costs in construction that are included in a contractor’s estimate. The third chapter argues the case for early involvement of contractors in tendering procedures which comes from the clients view. The fourth chapter details the stages of development of construction projects. This could well have been an opening chapter setting the framework for the construction project and spelling out where estimating fitted into each stage. The fifth chapter is estimating at inception and design stages. The sixth is estimating at design completion and is described from a contractors’ viewpoint starting with the development of a method statement. The seventh chapter is the conversion of a contractor’s estimate to a tender. This leads to two other words that need to be used with care cost and price. The contractor’s price is the client’s cost and the contractor’s price is based on the contractor’s cost estimate plus additions for overheads, risk and margin. Chapter eight describes contractor’s cash flow and cost control. Whereas the previous chapters dealt with cost that mainly arise from labour, plant, materials and sub-contractors the ninth chapter deals with other costs. These other costs are predominately professional fees for design and other services which are met by the client.

The book is an introduction. It sets estimating in the context of the construction process and provides an insight into the nature of estimating and the related issues. As an introduction it will not instruct the reader how to estimate nor leave them with the competence to be an estimator. However alerting the readers to the importance of estimating and the key role of estimating in how the business of construction is conducted it may well encourage a student or young professional to consider developing the skills of estimating.

The book is clearly aimed at the student market as each has a set of questions that could be used in a tutorial or discussion session.

I’ve had an interest in estimating, specifically contractors’ estimating, for all of my professional life. It started as a student engineer in the sixties when I was required to calculate the costs of our working methods on site and compare these costs with the ‘price’ that the estimator had put in the bill of quantities. This spelled out very clearly, at a very young age, that if you couldn’t carry out the construction work for less than you were being paid then there were consequences. Were our construction methods not efficient or was the estimator’s ‘price’ unrealistic? In those days estimating was presented as a black art with the knowledge held secretively and jealously guarded by the estimators. How the estimator had arrived at their ‘prices’ was less than explicit and so the comparisons that I was conducting were not easy to achieve. In particular the distinction between ‘price’ and ‘cost’ was not as well understood as it should have been. From that time onwards there has been a great education effort to improve estimating. This was stimulated by several developments such as contractors adopting modern planning techniques which required them to design working methods and not just doing as they had been before with such knowledge being held in the site foreman’s head only. The design of the working methods required identifying the resources involved in production. At the same time work study was introduced, at least in the leading companies, and a much more disciplined approach to production management was adopted. What was now clear was that an estimate was the determination of the resources such as labour, plant, materials and sub-contractors required for construction, the usage of those resources that would be needed an the cost of those resources When these were combined the resultant calculation provided a cost estimate for the contract.

It was now well understood that the estimate was the estimate of the cost to the contractor of construction. To turn this into the price that the client would pay additions for site management, overheads, risks and margin would be added.

This gave rise to the simple formula that the tender or bid=cost estimate + overheads+ mark-up or margin.

This in turn lead to much more disciplined estimating, contractors developing data files on resources employed in working methods and eventually the computerisation of estimating. The black art had been replaced by a sound, rigorous and explicit process.

Also emerging in the sixties were the concepts of bidding theory where the probability of winning a contract was analysed and predicted on the level of margin added to the cost estimate. This was a topic that also interested me and I had the privilege of studying some 600 contracts to determine the pattern of winning bids. My conclusion, it was not the margin that was determining whether you won or lost a bid it was your estimate. In the equation bid=estimate+mark up the far larger number and contribution to the bid total was the cost estimate. The variability in estimates was determining the outcome of tenders not the much smaller variations in mark ups. The message was clear the estimate had to be sound and reliable otherwise a bid was built on shaky foundations.

This led me to develop estimating systems and to get involved with the CIOB in developing their estimating manual and in the eighties publish a book on estimating. Also we developed a simulation of managing a construction company, still in great use today, this features estimating the cost of a project as a key management function (see

This latest book is a recent addition to explain the importance of estimating and is a welcomed contribution.

Ronald McCaffer