Providing accurate construction cost estimation to your clients is probably more important than delivering exceptional customer service. Construction cost estimation is the first and foremost step to building a trustworthy relationship with your client.
Inaccurately estimating construction projects is an extremely common problem that can lead to cost overruns in the future. In fact, persistent incorrect estimates can tarnish your company’s image and brand value.
Thankfully various software tools and app integrations can help you estimate construction costs more accurately. If you are looking for softwares for cost estimation, head over to Bridgit. In this article, we’ll discuss the various construction estimating tips and practices that you can implement to improve estimating construction projects.
Understanding the various methods of cost-estimation
Various methods exist for construction project cost estimation. Depending on your industry and project type, please choose the one that suits them best.
Unit cost estimation method
With unit cost estimating, you can break down the various components of your project into small portions or specific units. For example, suppose you want to estimate an entire residential community project. In that case, you should evaluate the construction cost of a particular home in your project and then combine that cost for the entire construction project.
You can further break down the costs of constructing each home into components like plumbing, electricity, labour charges, flooring, etc.
Production Functioning Estimation Technique
General economics defines production function as a relationship between construction volume and production factors (labour, raw materials, capital). It involves using statistical methods to calculate the accurate project cost estimate.
Estimators can create this statistical production estimation technique formula through experience or for more accurate results using an application. The formula can be reused and fine-tuned for optimal results.
Stick Estimation Technique
With this method, you’ll need to calculate every component of the construction project, such as raw materials, hourly labour cost, etc. This method might get messy with larger projects having innumerable variables.
The Stick estimation technique can also overrun if you miss out on a single item. This method is generally not used by the contractor unless specifically required.
7 Best Practices In Estimating Construction Projects
Now that you understand the various construction cost estimation methods let’s start with the best practices to estimate construction costs with greater accuracy.
Understand The Design Details And Customer Requirement Carefully
Regardless of your project size, you or your project managers must understand every minute design detail involved in the entire construction.
- Each construction requirement and task is connected to the project’s design.
- All these tasks require dedicated time, labour, and other crucial resources that should be part of your construction cost estimation.
- Even the most trivial misunderstanding might lead to substantial problems that might cost you extra.
- Early detection of construction issues or faults in design prevents future complications.
- Better insights can create better plans and estimations for the project construction.
Perform A Risk Analysis and Risk Mitigation Plan
It would be best if you answered questions such as:
- In which season will your company perform the construction?
- Will the negotiations and agreements with the labour union turn out to be successful?
- What other risks might your project face during the construction?
If a construction project is executed during the rainy season or winters, you’ll need to consider bad weather overheads (increased labour costs, transportation, storage of raw materials, etc.)
Similarly, you’ll need to consider objections from labour unions, cheap labour availability, etc.
During the construction phase, several elements might go wrong. Performing risk analysis and having a risk management plan ensure you stick to the estimation shared with your customer and don’t incur expensive overruns.
Various tools such as Bridgit Bench provide risk mitigation solutions associated with people management.
Get professional Help Where You Lack Expertise
Another significant reason that makes you miss the mark during project estimation costs is the lack of expertise.
You need to have an insightful understanding of each design and construction component. For example, if you don’t know every minute detail about plumbing, you’ll miss out on including certain costs in the estimate or encounter unforeseen expenses. Utilize construction estimating checklist and templates
Get An Estimate For The Raw Construction Materials
During construction cost estimation, it is always recommended that you get the most accurate unit figures possible. Don’t just depend on a rough idea of what you think raw material expenses are.
Here are three things that you can follow:
- Refer to previous reports and project databases in construction software to get an insight. Obtain quotes for your order from reliable suppliers.
- Look at alternative sources to understand the accurate market prices.
Get A Clear Idea Estimation Of The Labor Costs
Hourly rates aren’t the only labour cost components you need to worry about! The experience level of your workers, subcontractors you require, and accurate hourly rate are things you need to pay attention to for hiring specialty labour or craftsmen.
Your labour wages and benefits also need to comply with federal and state payroll compliances. As part of your construction cost estimation, you need to analyze your expected labour costs. Assess similar projects and compare costs per square foot.
Maintain A Task Management System
- Segrate your projects into small parts before estimation
- Evaluate every component separately
- Use a task management system for understanding resource availability and the work at hand.
The more insightful, distinct, and refined the individual parts are, the more precise your project estimate will be. Dashboard and project database features in construction solutions can be beneficial for task management.
Implement Good Construction Estimating Software
With technological advancement, you have several tools for estimating construction projects at your disposal. Ensure to implement these tools during your estimation preparation process.
A construction estimation software evaluates every aspect of your project design, streamlines your project management processes, and helps you generate more accurate construction project estimations.
Conclusion
Cost estimation is a crucial component of a construction project since it considerably impacts down the line. If done inaccurately and erroneously, your project might endure heavy loss.
Previously, cost estimation was just an undertaking requiring practice, trial-and-error, and extensive experience to master. While all these elements still matter, construction software has made things easier. Coupled with best practices conducting precise and reliable cost estimation, you can achieve the desired goals while adhering to the original quotation.