14 - COST UPDATE

OBJECTIVE

Once all the resources required by the estimate have been identified, review and update their costs in the Resources table.

The objective of this phase is to replace preliminary, historical, or temporary values with the most reliable current cost information available before performing the final economic analysis.


REVIEW THE RESOURCES USED

Concentrate primarily on the resources that are actually being used by the project.

Review:

• Labor rates.
• Material prices.
• Equipment rates.
• Rental equipment.
• Transportation costs.
• Subcontract quotations.
• Specialized services.
• Testing and inspection costs.
• Other significant project resources.


SOURCES OF COST INFORMATION

Whenever possible, update costs using reliable and traceable information such as:

• Current supplier quotations.
• Subcontractor proposals.
• Recent purchase orders.
• Current equipment rental rates.
• Company historical cost records.
• Labor agreements or current labor rates.
• Transportation quotations.
• Recent comparable projects.
• Market references.

The estimator should always consider the date and applicability of the information being used.


UPDATE COSTS IN RESOURCES

Enter the selected current value in the Cost field of the Resources table.

Because Resources is the central source of resource pricing in ZUCOST, maintaining this table correctly helps keep the estimate consistent.

When the same resource is used in several items, updating its cost provides a common pricing reference throughout the estimate.


PRELIMINARY COSTS

It is acceptable to develop the estimate initially with:

• Historical prices.
• Preliminary prices.
• Budgetary quotations.
• Temporary values.
• Zero values for resources still awaiting quotations.

However, these values should be reviewed before the estimate is considered complete.


PRIORITIZE IMPORTANT RESOURCES

Not every resource has the same economic impact.

When time is limited, begin by reviewing the resources that contribute most to the total estimate.

Pay special attention to:

• High-cost materials.
• Major equipment.
• Large labor components.
• Important subcontract packages.
• Resources used repeatedly in many items.

This approach allows the estimator to concentrate effort where cost accuracy has the greatest impact.


AFTER UPDATING COSTS

After completing the cost review, run:

F5 - CALCULATE ESTIMATE AND BASE

This performs the complete ZUCOST calculation and updates the estimate using the current resource costs.

Then review:

• Labor.
• Materials.
• Equipment.
• Subcontracts.
• Subtotal.
• General factors.
• Unit Cost.
• Grand Total.


VERIFY THE RESULTS

After recalculation, look for unusual changes.

Review resources or items showing:

• Unexpectedly high costs.
• Unexpectedly low costs.
• Zero costs.
• Large variations from previous calculations.
• Values that appear inconsistent with similar resources.
• Significant impact on the Grand Total.


COST TRACEABILITY

For important resources, it is recommended to preserve supporting information in the project folder.

Examples:

• Supplier quotation.
• Rental proposal.
• Subcontractor quotation.
• Price list.
• Purchase order.
• Email confirmation.
• Historical cost reference.

This information may be required later when the estimate is reviewed, revised, or justified.


WHY THIS IS IMPORTANT

An estimate may have an excellent technical structure and realistic productivity assumptions, but its final value will still be unreliable if the resource costs are outdated.

Cost updating helps improve:

• Estimate accuracy.
• Commercial reliability.
• Cost traceability.
• Future revisions.
• Sensitivity analysis.
• Final pricing decisions.


IMPORTANT

Do not update a resource cost without considering what the price includes.

Verify whether the quoted value includes items such as:

• Freight.
• Delivery.
• Taxes.
• Mobilization.
• Installation.
• Fuel.
• Operator.
• Insurance.
• Accessories.

Two apparently similar prices may represent very different scopes.


RECOMMENDATION

Complete the technical structure of the estimate first and then perform a systematic cost review.

Update the most economically significant resources first, run a complete F5 calculation, and review the effect on the final estimate.

Once the resource costs are reasonably current and supported, the estimate is ready for Sensitivity Analysis.