Reasons why clients require estimates before embarking on construction

Reasons why clients require estimates before embarking on construction

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TECHNICAL UNIVERSITY OF KENYA SCHOOL OF ARCHITECTURE & BUILT ENVIRONMENT CONSTRUCTION MANAGEMENT YR 4 I ST SEM 2015 PROCUREMENT ASSIGNMENT BY: 112/01244
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Reasons why clients require estimates before embarking on construction: To assess the financial cost of the proposed project to have an ideal budget to look forward to. To check on appropriate ways to finance the project for example through loans mostly. For financial viability of projects in case they are investment opportunities with expected returns 1. Estimated cost- A cost estimate is the approximation of the cost of a program, project , or operation. The cost estimate is the product of the cost estimating process. The cost estimate has a single total value and may have identifiable component values. 2. Tender sum- The tender sum is the overall pricing figure proposed by a tendering contractor in accordance with the tender pricing document. 3. The contract sum is the price agreed with the contractor and entered into the contract. The contract sum should be calculated and checked very carefully as errors are deemed to have been accepted by both parties. i. Unit method- is a method of estimation based on the functional unit in a building i.e. beds in a hospital. The total estimate is gotten by multiplying the total no. of units accommodated in the building by the unit rate. A unit rate is calculated from analysis of other currently completed buildings of similar type irrespective of variations, difference in design, form of construction and materials. Unit rate= total cost of building / functional unit Demerits This method lacks precision and can only be used as an early estimation tool.
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