I had a Firm looking for Cost Estimating services ask two (2) questions: I will post my discussion on both topics – Continuation from below question —

I added more to the answers on some other areas in an estimate to consider —

Additional note(s):
Cost estimates also took labor productivity into account ranging from 60% to 75% inefficiency, depending on the work.
Labor rates – Rate can be found on AGC websites and if you call local unions. Government wage rates can be found on Davis Bacon websites. Lately labor rates require per-diem for travels due to lack of skilled trades, wage premiums to attract workers and pay skill increases for Apprentices to get help. Apprentices were getting the same pay rate as journeyman. Lots of Government estimators missed a lot of this in the MII estimating tool. If performing Life Cycle cost analysis, you need the OMB circulars.
Material Costs – Discussed above. One other thing to mention was lead times and upfront payments to vendor to hold your order.
Construction Equipment – The demand for construction equipment was also a factor to consider. Inflation was 6% per increase for rentals. Plus, fuel prices were going above $4/gallon for diesel for operation costs. I always revery back to reviewing Equipment Watch an online service that gives a lot of Dozer, excavator, etc. pricing for Rental and Owned equipment going back 20-years. So, if a 1985 John Deer tractor is showing up on site Equipment watch will tell us the amortized value of the equipment is ZORO, but you should only pay for Fuel, oil, lube costs for operational cost.
Mark-up’s – (This an example of a $10M Project) Projects require many more services on a construction site, so I’ll discuss: (Depending on size of project these percentages vary)
(Note these percentages are ranges and are different for all projects, Estimator judgement and experience in the location of the project should be considered for budgeting purposes.)

General conditions (GC’s) – 20-40% depending on size of project.
Prime Contractor HOOH – 7-12%
Prime Contractor JOOH – 15-20%
Prime Contractor Profit – 7-10%
Prime Contractor Bonds – 1-1.5%
Prime Contractor Allowances – Varies % (more contingency)

Subcontractors HOOH – 8-15%
Subcontractors JOOH – 8-15%
Subcontractors Profit – 5-15%
Owner Costs – SIOH – 1-10%
Other Owner Costs – ~ Varies (more contingency or management reserve)
Contingency costs – $ Use difference from Baseline Estimate to the P50 value.
Management Reserve – Dollars from P50 to P80.

Escalation to the Midpoint of Construction from the date of the Estimate.

Having said all of that, I just want to say, this process has been vetted out and works.
It just needs to get out to more Owners, Government agencies and the Estimating community that crashed and burned over the last two years.

Note 1: If you plan to reward estimating work on this type of scale, your estimator will fail, sometimes, depending on the work. Estimating should not be looked at as one size fits all. I tell my customers this is only a gauge, until you show me the work. If you hire CPCII, we can develop a better metric. The hours shown would be for Estimating only. We would have to discuss the software you want, as well.
Note 2: All of the other services and costs recommended below would have to be built-into our billing rate and assess hour for each service on tracking commodities inflation or deflation, escalation, RS Means data, P6 PRA tool, Monte Carlo Simulation, Equipment watch – Blue Book, Global insight, IPA, etc.