Mar 26

5 Ways of Calculating Construction Estimating Fees

5 Methods of Charging Construction Estimating Fees

The overall stages of a construction project are well laid out in the SACQSP and ASAQS guideline for Tariffs of Professional Fees. The breakdown allows the consulting quantity surveyor / estimator to set fees for the pre-contract and contract phase. The pre-contract stage is whereby the original estimate is produced. This estimate will change as drawings are developed, so the concept estimate will differ from Bills of Quantities based on fully developed working drawings, which will be used for tendering purposes and contract administration. The question is how does an Estimator calculate fees for taking off quantities and pricing an estimate?

Professional estimators calculate fees in different ways, which can be based on negotiation with the client. A professional estimator will not under-price their work, which is the case with most self taught and uncertified estimators. Uncertified estimators also tend to miss many items of cost which should be included in the estimate. The following are methods in which quantity surveyors and professional estimators determine their consulting fees in the planning and cost advice stage:

1 – Tariff of Professional Quantity Surveying Fees

This is a guideline for charging consulting fees based on rules and structure set by a professional quantity surveying body. This guideline is usually used in high value projects run by government departments, top level organizations and corporations. If an estimator or client has doubts about how their project should be charged for quantity surveying fees, the Tariff of Professional Fees is the best guideline to follow. It is published by the QS body and also found in annual government gazettes.

The ASAQS and SACQSP method entails a Basic Fee, a primary charge and marginal rate for projects within a particular value range, tabled in the schedule of tariffs. The primary charge is a lump sum (fixed sum) and the marginal rate is a percentage. The sums are combined to arrive at the Total Fees for a project at a specific phase. To calculate the Fees Due at a specific or current stage, a percentage rate quoted from an Apportionment table is applied. This is multiplied by the Basic Fee. If the design development at a specific stage is not complete, i.e. halfway through, the Estimator should apply a percentage for work in progress (e.g. 50%).

2 – Charge Per Hour

If a building project does not necessitate the use of a Tariff of Professional Fees, the Charge Per Hour may be used. This is a common method of charging consulting fees. Most professionals like Quantity Surveyors, Architects, Engineers, Tutors, Programmers, Lawyers and Attorneys use this method. Anyway, for accounting purposes and production costs, every worker has their basic wages and salaries set in pay per hour. Thus, a low level worker like a painter will have their labor rates at something like US$15.65 per hour. An Office Administrative Assistant will earn somewhere between $11.47 and $21.39 per hour.

Construction Cost Estimator Salaries – GlassDoor

The following are hourly rates for professionals in the construction industry:

Construction Estimator (USA)

Range $17.25 to $49.64 per hour. Average -$29.71 per hr

Annual Wage: $35,870 to $103,250 per year. Average – $61,790 per year.

Professional Quantity Surveyor (South Africa)

The SACQSP Tariff of Professional Fees contains hourly time charges for registered professionals and other employees in the quantity surveying office:

  • Up to 5 years experience – R850 per hour
  • 6 to 10 years experience – R1,700 per hour
  • 11 years or more in experience – R2,400 per hour
  • 10 years or more in specialist work – R3,000 per hour

The rates don’t include disbursements described in clause 10.14 of the SACQSP guide (i.e. travelling, accommodation, documentation, printing, photocopying and other administrative tasks)

Hourly Rates for other Employees – 17c per R100 of gross annual salary.

 

3 – Charge Per Square Metre of Gross Floor Area

In the pre-construction period (Estimating and Cost Advice stage), a Quantity Surveying Technician can also charge their fees based on the gross floor area of the buildings in the blueprints.

The Estimated Contract Value is used as a basis for calculating fees. In this case, the Professional Estimator will assess an appropriate percentage charge for consulting services rendered in the pre-contract stage. There are many ways of assessing this percentage. The consultant can find out what other consultants are charging or refer to a Professional Fees Tariff such as the SACQSP or the US Federal Bureau of Labor Statistics.

Below is a rough example of converting Contract Value Percentage Fees into Rates Per Gross Floor of Building Area.

Cost of newly completed building or past project – R$2,177,500.00

Gross floor area of newly completed building or past project – 347m2

Find pre-contract professional fees – 5% of construction cost = R$108,875

(R$2,000,000.00 to R$4,000,000.00 Range)

Contract Value/Building Gross Floor Area =

2,177,500.00/347m2 = R$6275.22 per m2

Pre-contract professional fees – 5% of R$6275.22 = R$313.76 per m2 of gross floor area

Stage A – 7.5% of R$313.76 = R$23.53 per m2   (US$1.81 per m2)

Stage B – 42.50% of R$313.76 = R$133.35 per m2  (US$10.26 per m2)

 

4 – Percentage Charge Based on Value of Project

As you already know by now, the first and third method make use of percentage rates to charge consulting fees. The Professional Fees are based on the Estimated Contract Value of the project.

5 – Lump Sum Charge

A Lump Sum is a fixed cost for total work done. It can be charged per project, per phase or stage. The Estimator can arrive at their own cost based on past or similar projects. The scope and size of the project is taken into account, so it’s not an arbitrary fee.