Construction Law

The Unit Cost Method of Estimation featured image

The Unit Cost Method of Estimation

Breaking down your project into billable elements allows cost estimators to develop comprehensive estimations that clearly detail the total cost of construction. Establishing “units” of work ensures that every provision of labor and materials is accounted for independently before reaching a financial sum for an entire project. However, in order for cost estimators to utilize the unit cost method of estimation, the exact design specifications for a project must be specified.

If you have spoken with an Asheville construction lawyer about ways to legally reduce costs on your projects, you might want to consider employing the unit cost method of estimation to eliminate the guesswork from your next estimate. This method, which can be applied to design estimates and bid estimates, is one way contractors can cut costs on projects and ensure that they don’t exceed their budget.

The Unit Cost Method for Design Estimates

Design estimates often employ the unit cost method to divide projects into elements organized by function. For example, a cost estimator might quantify the value of installing one roof at $150,000. In this scenario, if the contractor was responsible for building five identical units, they would simply multiply this unit of cost by five to account for the entire project. This method is typically used for estimates including:

Preliminary Estimates: The project is divided into major structural systems (floor, roof, etc.) or production equipment items like a cooling system.

Detailed Estimates: The project is further divided into units based on major systems, such as the cost of a single floor panel or one specific component of a cooling system.

Engineer’s Estimates: The project is divided into detailed items based on the available cost data. These include slabs and beams in a floor panel or the piping and connections for a cooling system.

The Unit Cost Method for Bid Estimates

The unit cost method can also be applied to bid estimates. Basically, the contractor or cost estimator divides the project into billable units of work to develop a comprehensive breakdown of your project’s expenses. Instances where the unit cost method can benefit bid estimates include:

Subcontractor Quotations: Dividing a project into subcontractor items eases the general contractor’s workload, but depends on the accuracy of the cost estimates proposed by the subcontractors.

Quantity Takeoffs: Dividing a project into units of quantities that are measured prior to construction and derived from the engineer’s plan.

Construction Procedures: Dividing a project into items like labor, materials, and equipment needed to complete different tasks.

The unit cost method of estimation is a valuable tool for contractors and cost estimators who wish to re-examine their spending habits and cut costs without compromising quality.

If you would like to speak with an Asheville contractor attorney, please contact us today.

Disclaimer: The information contained in this article is for general educational information only. This information does not constitute legal advice, is not intended to constitute legal advice, nor should it be relied upon as legal advice for your specific factual pattern or situation.