Within the U.S. alone, nearly $1.3 trillion worth of structures are built every year. However, due to the high cost of materials and labor, many construction businesses struggle to maximize profits. When contractors don’t properly allocate their resources, they often can’t maintain a gap between earnings and expenses.
Construction businesses need to understand each expense in great detail to reduce costs. This is where construction cost estimators come into play.
What is Construction Cost Estimating?
Construction cost estimating is the process of calculating the total cost of a construction project based on the individual price of materials, labor, and all other expenses that a project requires. To come up with an accurate estimate, construction businesses first visualize the overall scope of the project. Next, they break the project down into individual quantities and research unit costs. Before submitting cost estimates to clients, construction businesses carefully review their assessments to make sure they are as accurate as possible, given the current market prices.
What Steps Should Construction Companies Take to Accurately Estimate the Cost of a Build?
- Visualize the Project Scope – Determining the scope of a build involves analyzing the plans and specifications of the project created by the project architects and engineers. Estimators also need to consider variables such as weather, soil conditions, site layout, safety, security, access, environmental protection, and ongoing operations.
- Build the Project Mentally – After visiting the site of the project, estimators need to think like a contractor and build the entire project in their minds. This exercise helps construction businesses decide what resources they will need to complete the project successfully.
- Quantify the Scope – Next, the project manager or whoever is in charge of estimation needs to convert the scope into quantities. They have to pay great attention to the minutest of details and account for the number of employees the project demands. Quantifying the materials and labor required allows construction businesses to apply unit prices.
- Apply Unit Costs – Once a project manager knows exactly what materials they need for the project, they can get quotes and negotiate deals with vendors, suppliers, and subcontractors. They then apply the final unit cost of each item to the scope of the whole project. Construction companies then factor in the price of labor, subcontracting, and insurance.
- Price the Project – Pricing a project correctly is all about getting the aggregate right. Estimators need to consider all the direct and indirect costs associated with the project, including their own contractor fees. To make this process easier, a lot of construction businesses use software for construction estimating at this point.
- Double-check the Results – Lastly, estimators need to go back and confirm the accuracy of their final estimate. This includes checking the estimate against the cost of previous projects and even having another estimator review the numbers. Every detail needs to be checked to ensure that no cost goes unaccounted for.
The Added Benefits of Proper Estimation
Whether a business chooses to use construction cost estimating software or completes the task manually, a proper cost estimation can benefit the company in several ways:
- Accurate cost estimation saves time.
- Detailed estimates keep clients happy by minimizing surprise expenses.
- Cost estimation helps guide and direct the building process, making the execution of a project smooth and glitch-free.
- Comprehensive cost estimation gives companies more control over costs and overheads.
- The process allows construction companies to analyze the associated risks of a given project.
- Estimations reduce waste and increase efficiency.
For more tips on accurately projecting construction build costs, check here.
How to Make Construction Cost Estimating Easier
Considering all the factors involved, coming up with a construction cost estimate is not an easy task. Especially when it comes to complex or large-scale projects, the process can take significant time to complete. In order to avoid delays, many businesses use a software system to get the job done faster and with more accuracy.