Estimating Page 2

The equipment costs vary tremendously by the type of project involved and the type of work conducted by the contractor. Some firms have limited equipment needs (such as a generator or compressor), while others have extensive requirements (such as large earthmoving equipment).

The first step in the estimating process for equipment is to identify the work that will require the use of specialized equipment. Next, the work involved must be matched to the particular type of equipment best suited to the work. After determining the type of equipment needed, calculate the number of hours or days required for the project.
The equipment needs of a given project may be satisfied by the following methods:
· using the contractor's own equipment,
· renting the needed equipment, or
· subcontracting the equipment portion to another contractor.

The calculations used to find the cost of the equipment needed on a project vary depending on the method
used to fill the equipment needs. For example:

Loss of construction materials through theft can be minimized by taking the following steps:
· keeping inventory levels as low as practical by scheduling materials for delivery as close to their use as possible;
· using locked storage trailers for small items;
· bundling wood products and like items into large, heavy clusters;
· fencing the job site; and
· hiring security guards.

Besides the hard cost components of an estimate, an allowance must be made for the overhead costs associated with contracting. Overhead costs consist of project overhead costs and company or administrative overhead expenses.
Project Overhead
Project Overhead costs are costs that relate to the construction activity itself, but are not easily identifiable costs of a given project. They may consist of costs associated with several projects. For example, project costs generally include the following items:
 supervisor salaries,
· permits and fees,
· construction supplies,
· small tools,
· cleanup costs,
· barricades,
· bonds,
· sanitary facilities,
· storage trailers, and
· temporary utilities.

Company Overhead
As opposed to project overhead costs, which occur only when construction work is underway, company overhead expenses continue even when no work is underway. Company overhead expenses consist of the costs of running a business. Typical company overhead expenses include the following:
· office salaries,
· office rent,
· company insurance,
· accounting and legal fees,
· telephone,
· office utilities,
· postage,
· taxes,
· advertising costs, and
· office supplies.

You should base the calculations of the project and company overhead rates on historical data.

Owned Equipment
The cost of owned equipment is the cost to operate the item. It includes:
· a replacement cost factor based on the expected useful life of the item;
· operating costs, including fuel, oil, and lubricants;
· insurance;
· taxes and licenses; and
· operators.

Rented Equipment
Rented equipment cost is generally easier to calculate than for owned equipment, but it may be higher. Rented equipment costs consist of:
· the hourly, daily, weekly, or other rate for the equipment;
· any operating cost not included in the rental agreement; and
· the cost of operators.

Other Equipment Costs Subcontractor equipment costs come from the bids received from subcontractors
for the particular work involved.

Generally, project overhead includes the cost of tools required in the construction of the project and comes
from the historical data for similar projects. If unusual requirements exist for tools on a particular job, they
should be included in the equipment estimate