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Conceptual Direct Cost Estimates
Sketches A and B are essentially the same, except Sketch B contains two less lots fronting on Direct Street. This could be the
result of a permanent easement, physical feature or planned park, etc. This simplistic example gives a visual explanation,
as to why the lot costs of a specific project do not readliy transfer to other future projects. Infrastructure costs
are reflected in the length of street, which vary from phase to phase or development to development. These variances result from differences
in street patterns, terrain, frequency of intersections, parcel shape and open space requirements, to name a few factors. Conceptual
direct costs projected on the basis of street length are the superior and scalable medium for estimating, at the concept stage.
For an on-going operation, an in-house accounting data base can be used to assemble actual direct costs for similar products.
The actual direct costs and street lengths from previous developments, are utilized to derive actual direct costs, on a foot
of street basis. Another source of cost information can be consulting engineers, who often retain cost information on their design
projects. One word of caution; consultants may not maintain records for items not directly related to their designs. Examples
might be costs for review fees, electric distribution, signage, other consultants fees, fees for bonds and warranty repairs. The actual
direct costs for the previous development, once assembled, verified and adjusted for inflation, are applied to the Development's measured
street lengths, on each phase, to obtain the Conceptual Direct Costs for the new Development.
Earthwork is generally considered a common cost, unless the Development is compact in size or suffers other special considerations,
such that phasing of the grading is not practical. Assuming earthwork is a direct cost, it will not be related to street
length, therefore requiring independent estimation. The best solution is to perform a preliminary grading plan on the conceptual layout,
especially if the proposed Development has some topographic relief. For a compact development, a preliminary grading plan
and quantities can usually be accomplished quickly. Lacking that, an in-house or consultant study, comparing the Development with
previous developments of similar terrain and geotechnical requirements can
provide ball park estimates.
Lastly, be vigilant for any special circumstance not accounted for. Such as, terrain forcing dual sanitary mains and special
valving or pressure devices in the water system. Discussion with a geotechnical engineer, over the preliminary grading plan and a
soils map, can reduce the risk of encountering rock or special grading hazards without cost provisions.
(James R. Gorman. All Rights Reserved 2008)