Understanding the nuances of different pricing methods and techniques is crucial in construction and architectural projects. This article delves into unit pricing, subcontractor pricing, and conceptual estimating, providing valuable insights into the best practices of project pricing.
Key Insights
- Unit pricing involves identifying the specific unit for a particular item, such as cubic yards for concrete foundations or square feet for concrete slabs. The labor cost, however, may vary even if the material cost doesn't change.
- Subcontractor pricing and outsourcing could provide better overall pricing especially in areas where expertise is lacking. Subcontractors, equipped with specialized knowledge and skills, can provide detailed and accurate pricing.
- Conceptual estimating, which involves estimating the entire assembly or unit cost, can be used when clear information is unavailable. It is crucial to base these estimates on some rational assumptions and be ready to justify these to the client.
Note: These materials offer prospective students a preview of how our classes are structured. Students enrolled in this course will receive access to the full set of materials, including video lectures, project-based assignments, and instructor feedback.
Now, regarding pricing methods and techniques, let's look at unit pricing. You have to identify what the unit is going to be for that particular item. So for example, concrete foundations—you may work with cubic yards of concrete.
But if it's a concrete slab, you're going to be pricing it out in square feet. Now, the cubic yard price might be the same when you're purchasing it, but the labor price would be different. Therefore, you'll look at the material cost for concrete in cubic yards, but you'll look at the labor cost for concrete possibly by the square foot, if not by the cubic yard, depending on where it's being placed in the building.
Subcontractor pricing and outsourcing often occur when you're working in a portion of the project where you may not have expertise and you're reaching out to a specialist who knows more about it than you do. You may actually have a general idea of what the pricing may be for—let's just say—grading.
But depending on the specifics or the specifications for that portion of work, a subcontractor can give you better pricing overall because they may know more about the particular soil that's involved. They may have the skill set to digest and understand what the soil report is telling us, and they'll know more about the excavation of it, the recompaction if required, and also what needs to be hauled out of there. So reach out whenever you can and get a second opinion—or the only opinion, for that matter—with subcontractor pricing and potential outsourcing.
Just keep in mind that when you reach out to contractors, they're more than willing to help whenever they can. They just want a piece of the action whenever an opportunity comes along to work with you—and rightfully so. Conceptual estimating is when you try as hard as you can to avoid reaching out to others.
%20(1).png)
Learn Construction Estimating
- Nationally accredited
- Create your own portfolio
- Free student software
- Learn at your convenience
- Authorized Autodesk training center
And conceptual pricing could be—let's just say—you have an interior partition, and it's got drywall on both sides, it's got wood or metal studs on the inside, you have the spacing at 16 or 24 inches on center, and it has a specific height. So conceptual estimating will look at that entire assembly at a unit cost of $70 per square foot. It contains, possibly, scores, if not hundreds, of individual costs that, when combined, give you a total unit cost for that assembly or unit of that wall.
So conceptually, when you have a general idea of what a partition typically costs—let's just say it's $2.75 per square foot—on most projects that are not fully or completely designed, that might be a reasonable placeholder price to use. And you use that until you have more information about what partition type that is. Sometimes you have to plug in a number until you learn more about the project.
Some examples in our estimate of conceptual estimating are plumbing: $22,000, and HVAC: $23,000. They are conceptual prices because there's no clear information on them, but we have to have an allowance for some costs. The conceptual estimate for plumbing was done per fixture count.
This would include piping, valves, etc., for each fixture—everything pretty much associated with the installation of that fixture. So plumbing, piping, and fixtures are conceptual.
But notice underneath that there's also this water heater that takes up two line items. Those are alternates. So even though it's conceptual, that's how we arrived at our price for the alternate.
Look down below that and you'll see under HVAC we also have conceptual pricing. The conceptual here is a square foot cost to come up with a budget number for ductwork, insulation, registers, and so on. You can see that we have 504 square feet in the guest room and we priced out $2.50 for labor and $7.50 for material per square foot.
This is a budget number that's carried through the estimate. They may or may not remain in the estimate, depending on whether you have a subcontractor bid that comes in to replace it. If you do get a bid from a subcontractor, you then replace your budget number or your conceptual estimate with their total dollar amount, which replaces all items identified in the scope of work for the HVAC.
So this is what's referred to as conceptual estimating, but there still has to be a basis for the cost you came up with—how you came up with that cost. It's an assumption that you made. It's an estimate—right or wrong.
You based it on something, and you usually have to validate or confirm to your client or the owner what it is that you're pricing and why you priced it that way.
