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• Fixed unit prices become outdated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

python
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

python
# 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

python
breakdown = estimator.get_resource_breakdown("03.01.01", quantity=100)
print(breakdown)

2. Regional Adjustment

python
# Apply 15% regional factor
estimator.apply_regional_factor(1.15)

3. Labor Only Adjustment

python
# 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