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Cost Estimation

Cost Estimation – How I Do It

I’m Engr. Sadam, and I’ve been working as an estimator, mostly focusing on construction projects — especially in the MEP (Mechanical, Electrical, Plumbing) domain. On this page, I’m just sharing how I go about preparing cost estimates.

BOQ Estimator, Labor List & Indirect Manpower

🏗️ BOQ Estimator – Excel Style

Material & Services Estimation

Material List

#BOQ DescriptionUnitQty Material Rate Rs.Material Amount Rs. %Rate %Rate %Rate Material Prime Cost UnitMaterial Prime Cost Total OverheadsInflationUnforeseenNegotiationIncome Tax Total CostProfit MarginSelling PriceUnit Price Rs./Unit

Services List (auto-fills BOQ desc, unit, qty)

#BOQ DescriptionUnitQty Mhrs.Total MhrsAmount Labor Rs. SubContractorSubcontractor Amount Indirect MPE & MFood & Acc.HSE T & PMob DemobPrime Cost OverheadsEOBI/InsuranceUnforeseen NegotiationIncome TaxTotal Cost Profit MarginSelling PriceUnit Price Rs./Unit

Indirect & Direct Manpower Calculator

🏠 Accommodation, Essentials & Miscellaneous Costs

SR. # DESCRIPTION QTY Price / Rent NUMBERS OF PERSONS MAN MONTHS DEPRECIATION % AMOUNT
1ACCOMODATION \ OFFICE1.50.00
1.1RENT - HOUSE for DMP150000162.00.00
1.2RENT - HOUSE FOR IDMP150000192.00.00
1.3Office Container 40'0250001.50.00
1.4Office Container 20'1180001.50.00
1.5Cargo Container 40'0120001.50.00
1.6Cargo Container 20'180001.50.00
1.7HOUSE UTILITY BILLS1745421.50.00
2MISC. ESSENTIALS0.00
2.1TV0500001.5250.00
2.2REFRIGERATOR11200001.5120.00
2.3AC11700001.5120.00
2.4WATER DISPENSER1350001.5240.00
2.5AIR COOLER3200001.5300.00
2.6Chair / Tables4200001.5300.00
2.7PRINTER1154001.50.00
2.8STATIONARY1610911.50.00
2.9BED FOR IDMP16000191.5500.00
2.10BED FOR DMP14000161.5500.00
2.11Laptops21200001.560.00
2.12MISC. L/S0500001.51000.00
3GENERATOR0.00
3.1GENERATOR 50KVA04000001.5200.00
3.2DIESEL06720001.51000.00
4FOOD / REFRESHMENT0.00
4.1SUPV. MANDAYS0500191.50.00
4.2DIRECT. MANDAYS0300161.50.00
4.3CATERING ARRANGEMENT COST LS01.50.00
5WATER0.00
5.1UTILITY WATER COST00.0011.50.00
5.2DRINKING WATER COST1201001.50.00
TOTAL COST 0.00

🦺 HSE Equipment & Expenses

SR. # DESCRIPTION QTY PRICE DEPRECIATION % AMOUNT
1SAFETY HALMETS (MANAGEMENT/STAFF)195001000.00
2SAFETY HALMETS (WORKERS)165001000.00
3SAFETY HARNESS BELT (WORKERS)105800200.00
4CHIN STRAP FOR SAFETY HELMET35501000.00
5SAFETY SHOES (MANAGEMENT/STAFF)1925001000.00
6SAFETY SHOES (WORKERS)1619001000.00
7COVERALLS3218000.00
8GLOVES32500.00
9MEDICAL EXPENSES FOR STAFF & WORKERS355000.00
TOTAL COST 0.00

A. Equipment / Machinery Cost

SR. # DESCRIPTION QTY PEAK SOURCE RENT / MONTH Dep TOTAL MAN MONTH AMOUNT TOTAL (RS) Monthly Working Days Daily Working Hours Total Man Hours Consumption Ltr/Hr Total Fuel Consumption Ltrs Total Fuel Consumption Lube Cost / Month Total Lube Amount Mob / Demob Total Mob / Demob Total Cost PEAK Equipment Deployment M/C MONTHS
1Scissor Lift1Rental120000100%112000030618035401512001000010000100000100000381200111
2Bucket Crane0Rental200000100%003080700100000000000
3Crane 50 Ton0Rental650000100%003080400100000000000
SUB-TOTAL E&M 3 300000 781200 25000 100000 1206200 2 0 2.5

B. Transportation / Indirect Cost

SR. # DESCRIPTION QTY PEAK SOURCE RENT / MONTH Dep TOTAL MAN MONTH AMOUNT TOTAL (RS) Monthly Working Days KM/DAY Total KM Consumption Ltr/Km Total Fuel Consumption Ltrs Total Fuel Consumption Lube Cost / Month Total Lube Amount Mob / Demob Total Mob / Demob Total Cost PEAK Equipment Deployment M/C Months
1Car1Owned50000100%275000305022500.08188525003000450050005000137000111.5
SUB-TOTAL Transportation 7 225000 94500 15000 5000 339500 2 0 0

Grand Total

Total: 1,545,700

Tool and Plant

CODE Description Unit Qty Purchase Cost with Tax LifeCycle Months Man Months Depreciation % Amount Rate / Hr
T&P-001Electric Tools SetHour42730081.4718%20020.0016.41
T&P-002Plumbing Tools SetHour140000241.476%2444.448.01
T&P-003Wood work Tools SetHour100000241.476%--
Sub-Total Cost 273,621

Consumables

CODE Description Unit Qty Purchase Cost Depreciation % Amount
C-001Nos00%-
C-002Cutting Discs 5"Nos122500%3000.00
C-003Cutting Discs 9"Nos123300%3960.00
Sub-Total Cost 35,080

Grand Total

Total Cost: 308,701

What Does "Cost Estimation" Mean in Construction?

In simple words, cost estimation is figuring out how much a construction project will cost from start to finish. It covers everything — from manpower to materials, transport, taxes, and even profit margins. It’s like building the entire project on paper before it actually happens.

For MEP works, it gets a bit technical because you have to understand the systems and how they’re going to be installed, not just what’s written in the BOQ.

My Estimation Process (Step by Step)

1. Understand the Project First

Before touching the calculator, I study the drawings, scope of work, and client requirements. I try to fully understand what the project is about — whether it’s just electrical, or complete MEP, or something more specialized.

2. Break Down the Work

I divide the project into parts: electrical, plumbing, HVAC, fire systems, etc. Each one has its own material, labor, and timeline needs. Breaking it down makes it easier to stay organized and accurate.

3. Manhour Calculation

Next comes labor. I calculate how many manhours will be needed based on task difficulty and project duration. For this, I also estimate how many workers will be required on average during each phase of the job.

4. Material Take-Off

Material takeoff is not the part of cost estimation directly but sometime needed so for that from the drawings and specs, I extract quantities for all the materials — conduits, wires, ducts, valves, etc. I usually do this manually or semi-automatically using Excel sheets, depending on the project size.

5. Costing: Supply & Installation

I divide the estimate into two major parts:

Each cost component is calculated with up-to-date rates, and everything is broken down line by line.

6. Adding Overheads and Profit

After the basic cost is calculated, I apply overheads like admin expenses, insurance (if any), and finally, a profit margin. Taxation (like GST, PST, or Income Tax) is also applied as per the location and project type.

7. Final Review & Summary

At the end, I create a summary sheet — which gives an overview of total cost, cost per manhour, supply vs installation ratio, and final selling price. This summary helps me (and anyone reviewing) to quickly understand where the money is going.

What I Include in Every Estimate

Here’s what I always make sure to cover in my estimation:

Every item has a purpose, and I try to keep the breakdowns clean and traceable.

The Format I Use

I work mainly in Excel, and my sheet usually has the following tabs:

This format helps me stay consistent, and also makes it easier to update the sheet for similar future projects.

Frequently Asked Questions (FAQ) About Cost Estimation

What is cost estimation in construction?

Cost estimation is the process of calculating how much a construction project will cost — from materials and labor to overheads and profit. It helps in planning the budget and making sure everything stays on track financially.

What is included in MEP cost estimation?

In MEP (Mechanical, Electrical, Plumbing) cost estimation, I include: Material quantities and rates Labor (manpower and manhours) Installation costs Transport, food, and accommodation Overheads and profit margins Taxes based on the project's region

How do you calculate manhours in construction?

I calculate manhours by assessing how much time each task will take and how many workers are needed. It’s based on experience, past data, and project-specific complexity. This helps me figure out labor cost accurately.

What tools or software do you use for estimation?

I mostly use Microsoft Excel, where I’ve built customized templates with different tabs — BOQ, Material, Labor, Equipment, etc. These help me stay organized and adjust values easily. For quantity takeoffs, I sometimes refer to drawings directly or use semi-automated tools.

Do you include profit and taxes in the estimate?

Yes, always. After the base costs are done, I add: Overheads (admin, insurance, etc.) Profit (based on project type) Taxes (like GST, PST, or income tax depending on location) This way, the final estimate is complete and realistic.

What’s the difference between supply cost and installation cost?

Supply cost includes the price of materials, fittings, and delivery. Installation cost covers labor, tools, food, accommodation, safety, and other on-site requirements. I keep both separate to better understand and manage each component.

Is material takeoff part of cost estimation?

Technically, material takeoff is a separate task, but it’s often required for estimation. I do it when needed — extracting quantities of wires, conduits, ducts, etc., from drawings. It helps ensure the cost estimate is based on real numbers.
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