Basics of construction cost estimate
When it comes to estimating costs for construction, methods have changed immensely over the years. However, one thing has not changed, and that is that every good estimate begins with excellent plans. The plans that we are talking about are the plans that each estimator is given to work off, and they include all the specs of the job.
As you are looking at plans, you are going to want to make sure that you are looking at actual plans and not conceptual drawings. The latter are basically rough ideas and have no measurements or guidelines to work with, which means that what you think for each section could be completely different from what the owner, architect, or other person had in mind. The actual plans will have all the pertinent information that you need and want in order to create a bid that will successfully land you the job.
In the old days, stick estimating was popular, because various items could be listed before a markup was added and the estimate was complete. The downside to using stick estimating is that it seems so easy that line items are missed, and the final number is often less than the actual cost of the job. That means that if you use this method, you will be working at a major loss most of the time and will never come close to making a profit.
The best way to estimate the cost of a project for construction is by using unit cost estimation. This estimating process is actually much faster than stick estimating, even though it will not seem that way at first. As you are working on your unit cost estimation, you will list all the line items for each specific part of the job, attach the unit cost to each one of those line items, and then total your numbers together. You will want to have someone double check your numbers to ensure that you didn’t make any mistakes.
There are plenty of estimating books available for you to use, but we must caution you that most of the books in print are considered regional. Therefore, using the wrong one could mean that your projects are not priced properly. Plus, those books may contain average prices, instead of the specific prices that each supplier and subcontractor is currently offering.
Thankfully, technology has come a long way, and there are now numerous estimating systems available. Using one of these programs will ensure that you can complete estimates quickly and accurately. Plus, the information in the estimating program is accurate and you are guaranteed the prices that are available in your area.
As you are completing your estimates, you will find that they will fall into three different categories including design, bid, and control. Design estimates will include screening estimates, preliminary estimates, detailed estimates, and engineer’s estimates. Bid estimates often include subcontractor quotations, quantity takeoffs, and construction procedures. The control estimates include the budget for financing, the budget cost for after the contracting but prior to the start of construction, and the estimated cost for the entire process until the project is completed.
Every construction process is basically the same and these are the steps that you will need to be aware of:
- Commissioning the project – When you commission a project, you are guaranteeing that everything you complete is according to the owner’s requirements.
- Determining those requirements – This is the first major step of any construction project and it is more commonly called the pre-design or planning phase. This is when the requirements are defined.
- Create a design team – During this step, an architect and other consultants will be chosen to create a design team.
- Designing the Building – The design team will then completely design the building, and this is when good plans should be prepared.
- Bidding for the work that needs to be done – The plans of the building will be needed for this step, as it is the only way that you can successfully give an estimate for the project.
- Signing the contract – If you are lucky enough to be the winning bidder, you will be signing the contract at this point.
- The construction phase – Contractors will oversee every single part of this phase, to ensure that everything is being completed according to the guidelines of the contract.
- Finalizing Everything – A complete inspection is always needed before the project can be considered finished.
You may prefer one method of estimating over another, but if you are not currently using one of the new cost estimating programs, you are spending more time crunching numbers than you need to. The old ways of using pencil and paper will lead to mistakes, whether in numbers used, or within the calculation process. Technology has made the entire cost estimating process easy and relatively error free, which means that you have a better chance of earning a profit on every job that you accept.