Cost Estimation - Resource Method
Business Case
Problem Statement
Traditional costing challenges:
- Fixed unit prices become outdated
- No visibility into cost components
- Difficult to adjust for conditions
- Limited cost analysis capability
Solution
Resource-based costing separates physical resource consumption (norms) from prices, enabling accurate, adjustable, and transparent cost estimation.
Technical Implementation
import pandas as pd
from typing import Dict, Any, List, Optional
from dataclasses import dataclass, field
from enum import Enum
class ResourceType(Enum):
LABOR = "labor"
MATERIAL = "material"
EQUIPMENT = "equipment"
SUBCONTRACTOR = "subcontractor"
@dataclass
class Resource:
code: str
name: str
resource_type: ResourceType
unit: str
unit_price: float
currency: str = "USD"
@dataclass
class ResourceNorm:
resource_code: str
consumption: float # Units per work item unit
waste_factor: float = 1.0 # 1.1 = 10% waste
@dataclass
class WorkItem:
code: str
name: str
unit: str
resources: List[ResourceNorm] = field(default_factory=list)
@dataclass
class CostLineItem:
work_item_code: str
work_item_name: str
quantity: float
unit: str
labor_cost: float
material_cost: float
equipment_cost: float
subcontractor_cost: float
total_cost: float
class ResourceBasedEstimator:
"""Calculate costs using resource-based method."""
def __init__(self):
self.resources: Dict[str, Resource] = {}
self.work_items: Dict[str, WorkItem] = {}
self.overhead_rate: float = 0.15
self.profit_rate: float = 0.10
def add_resource(self, resource: Resource):
"""Add resource to database."""
self.resources[resource.code] = resource
def add_work_item(self, work_item: WorkItem):
"""Add work item with resource norms."""
self.work_items[work_item.code] = work_item
def load_resources_from_df(self, df: pd.DataFrame):
"""Load resources from DataFrame."""
for _, row in df.iterrows():
resource = Resource(
code=row['code'],
name=row['name'],
resource_type=ResourceType(row['type'].lower()),
unit=row['unit'],
unit_price=float(row['unit_price']),
currency=row.get('currency', 'USD')
)
self.add_resource(resource)
def load_work_items_from_df(self, items_df: pd.DataFrame, norms_df: pd.DataFrame):
"""Load work items and norms from DataFrames."""
# Group norms by work item
norms_grouped = norms_df.groupby('work_item_code')
for _, row in items_df.iterrows():
code = row['code']
resources = []
if code in norms_grouped.groups:
item_norms = norms_grouped.get_group(code)
for _, norm_row in item_norms.iterrows():
resources.append(ResourceNorm(
resource_code=norm_row['resource_code'],
consumption=float(norm_row['consumption']),
waste_factor=float(norm_row.get('waste_factor', 1.0))
))
work_item = WorkItem(
code=code,
name=row['name'],
unit=row['unit'],
resources=resources
)
self.add_work_item(work_item)
def calculate_work_item_cost(self, work_item_code: str, quantity: float) -> CostLineItem:
"""Calculate cost for a work item quantity."""
if work_item_code not in self.work_items:
raise ValueError(f"Work item {work_item_code} not found")
work_item = self.work_items[work_item_code]
labor_cost = 0.0
material_cost = 0.0
equipment_cost = 0.0
subcontractor_cost = 0.0
for norm in work_item.resources:
if norm.resource_code not in self.resources:
continue
resource = self.resources[norm.resource_code]
resource_qty = quantity * norm.consumption * norm.waste_factor
resource_cost = resource_qty * resource.unit_price
if resource.resource_type == ResourceType.LABOR:
labor_cost += resource_cost
elif resource.resource_type == ResourceType.MATERIAL:
material_cost += resource_cost
elif resource.resource_type == ResourceType.EQUIPMENT:
equipment_cost += resource_cost
elif resource.resource_type == ResourceType.SUBCONTRACTOR:
subcontractor_cost += resource_cost
total = labor_cost + material_cost + equipment_cost + subcontractor_cost
return CostLineItem(
work_item_code=work_item_code,
work_item_name=work_item.name,
quantity=quantity,
unit=work_item.unit,
labor_cost=round(labor_cost, 2),
material_cost=round(material_cost, 2),
equipment_cost=round(equipment_cost, 2),
subcontractor_cost=round(subcontractor_cost, 2),
total_cost=round(total, 2)
)
def calculate_estimate(self, items: List[Dict[str, Any]]) -> Dict[str, Any]:
"""Calculate full estimate from list of items."""
line_items = []
totals = {
'labor': 0.0,
'material': 0.0,
'equipment': 0.0,
'subcontractor': 0.0,
'direct': 0.0
}
for item in items:
code = item['work_item_code']
qty = float(item['quantity'])
line = self.calculate_work_item_cost(code, qty)
line_items.append(line)
totals['labor'] += line.labor_cost
totals['material'] += line.material_cost
totals['equipment'] += line.equipment_cost
totals['subcontractor'] += line.subcontractor_cost
totals['direct'] += line.total_cost
# Calculate overhead and profit
overhead = totals['direct'] * self.overhead_rate
subtotal = totals['direct'] + overhead
profit = subtotal * self.profit_rate
grand_total = subtotal + profit
return {
'line_items': line_items,
'totals': {
'labor': round(totals['labor'], 2),
'material': round(totals['material'], 2),
'equipment': round(totals['equipment'], 2),
'subcontractor': round(totals['subcontractor'], 2),
'direct_cost': round(totals['direct'], 2),
'overhead': round(overhead, 2),
'overhead_rate': self.overhead_rate,
'subtotal': round(subtotal, 2),
'profit': round(profit, 2),
'profit_rate': self.profit_rate,
'grand_total': round(grand_total, 2)
},
'summary': {
'item_count': len(line_items),
'labor_pct': round(totals['labor'] / totals['direct'] * 100, 1) if totals['direct'] > 0 else 0,
'material_pct': round(totals['material'] / totals['direct'] * 100, 1) if totals['direct'] > 0 else 0,
'equipment_pct': round(totals['equipment'] / totals['direct'] * 100, 1) if totals['direct'] > 0 else 0
}
}
def adjust_prices(self, factor: float, resource_type: ResourceType = None):
"""Adjust resource prices by factor."""
for code, resource in self.resources.items():
if resource_type is None or resource.resource_type == resource_type:
resource.unit_price *= factor
def apply_regional_factor(self, factor: float):
"""Apply regional cost factor to all resources."""
self.adjust_prices(factor)
def get_resource_breakdown(self, work_item_code: str, quantity: float) -> pd.DataFrame:
"""Get detailed resource breakdown for work item."""
if work_item_code not in self.work_items:
return pd.DataFrame()
work_item = self.work_items[work_item_code]
data = []
for norm in work_item.resources:
if norm.resource_code not in self.resources:
continue
resource = self.resources[norm.resource_code]
resource_qty = quantity * norm.consumption * norm.waste_factor
resource_cost = resource_qty * resource.unit_price
data.append({
'Resource Code': resource.code,
'Resource Name': resource.name,
'Type': resource.resource_type.value,
'Unit': resource.unit,
'Consumption': norm.consumption,
'Waste Factor': norm.waste_factor,
'Total Qty': round(resource_qty, 3),
'Unit Price': resource.unit_price,
'Total Cost': round(resource_cost, 2)
})
return pd.DataFrame(data)
def export_to_excel(self, estimate: Dict[str, Any], output_path: str) -> str:
"""Export estimate to Excel."""
with pd.ExcelWriter(output_path, engine='openpyxl') as writer:
# Summary
summary_df = pd.DataFrame([estimate['totals']])
summary_df.to_excel(writer, sheet_name='Summary', index=False)
# Line items
items_data = [{
'Code': item.work_item_code,
'Description': item.work_item_name,
'Quantity': item.quantity,
'Unit': item.unit,
'Labor': item.labor_cost,
'Material': item.material_cost,
'Equipment': item.equipment_cost,
'Subcontractor': item.subcontractor_cost,
'Total': item.total_cost
} for item in estimate['line_items']]
items_df = pd.DataFrame(items_data)
items_df.to_excel(writer, sheet_name='Line Items', index=False)
return output_path
Quick Start
# Initialize estimator
estimator = ResourceBasedEstimator()
# Add resources
estimator.add_resource(Resource("L001", "Carpenter", ResourceType.LABOR, "MH", 55.00))
estimator.add_resource(Resource("L002", "Laborer", ResourceType.LABOR, "MH", 35.00))
estimator.add_resource(Resource("M001", "Concrete C30", ResourceType.MATERIAL, "CY", 150.00))
estimator.add_resource(Resource("M002", "Rebar #4", ResourceType.MATERIAL, "TON", 1200.00))
estimator.add_resource(Resource("E001", "Concrete Pump", ResourceType.EQUIPMENT, "HR", 250.00))
# Add work item with resource norms
estimator.add_work_item(WorkItem(
code="03.01.01",
name="Cast-in-place Concrete Foundation",
unit="CY",
resources=[
ResourceNorm("L001", 1.5), # 1.5 carpenter hours per CY
ResourceNorm("L002", 2.0), # 2.0 laborer hours per CY
ResourceNorm("M001", 1.0, 1.05),# 1.0 CY concrete with 5% waste
ResourceNorm("M002", 0.08), # 0.08 ton rebar per CY
ResourceNorm("E001", 0.25) # 0.25 pump hours per CY
]
))
# Calculate estimate
estimate = estimator.calculate_estimate([
{"work_item_code": "03.01.01", "quantity": 100}
])
print(f"Direct Cost: ${estimate['totals']['direct_cost']:,.2f}")
print(f"Grand Total: ${estimate['totals']['grand_total']:,.2f}")
Common Use Cases
1. Resource Breakdown
breakdown = estimator.get_resource_breakdown("03.01.01", quantity=100)
print(breakdown)
2. Regional Adjustment
# Apply 15% regional factor
estimator.apply_regional_factor(1.15)
3. Labor Only Adjustment
# Increase labor costs by 10%
estimator.adjust_prices(1.10, ResourceType.LABOR)
Resources
- DDC Book: Chapter 3.1 - Resource-Based Costing
- Website: https://datadrivenconstruction.io