This guide will walk you through the core components of estimating a construction project and how technology can improve it
Construction cost estimating is the process of calculating the cost of building a physical structure. Estimators use various methods to calculate overall costs, including material and labor expenses. The goal is to provide a budget that will cover all costs associated with the project. Budgeting for a construction project can be daunting, but with a little know-how, it doesn’t have to be. In this quick guide, we’ll walk you through the basics of construction cost estimation so that you can create a realistic budget for your next project.
What is Construction Cost Estimating?
Construction cost estimating is the process of calculating the cost of a construction project.
There are many factors that can affect the accuracy of a construction cost estimate, such as the type of project, the location, the size, and scope of the project, and the experience of the estimator.
Construction cost estimating is an important part of any construction project and can help to ensure that a project stays on budget.
What are the Key Components of a Project Cost Estimate?
As a general contractor, it’s important to have a strong understanding of cost estimating. After all, cost estimates are the foundation upon which all construction projects are built. But what exactly goes into a cost estimate? In this quick guide, we’ll break down the key components of a cost estimate, so you can be sure your next project is on solid footing.
The scope of work and general conditions
The first (and arguably most important) component of a cost estimate is the scope of work. This defines the limits of what will be included in the project and sets the stage for everything else that follows. Once the scope of work is established, you can move on to develop an estimate of the materials, labor, and equipment needed to complete the project.
The second component of a cost estimate is the general conditions of the project. This part will enable you to get an understanding of the items and resources needed for project completion that will not be part of the finished product that is turned over to the owner.
Self estimate
As a project estimator, one of the most important and time-consuming tasks is performing detailed estimates of the project bill of quantity. This process requires a careful analysis of the project drawings and specifications in order to develop a complete understanding of the work to be completed. Once the estimator has a clear understanding of the project, they can begin developing an accurate cost estimate. There are many factors that must be considered when estimating a construction project.
- Have a thorough understanding of the project drawings and specifications.
- Determine the quantity and type of materials necessary to complete the work.
- Identify any special equipment or services that will be required.
- Calculate the labor costs associated with completing the work.
The cost estimation process can be quite time-consuming, but it is essential to generate an accurate project cost estimate.
Bidding with subcontractors and suppliers
In order to receive many quotation requests, it is important to get a lot of exposure from the company, preferably in a marketplace that can enable a faster response when bidding with subcontractors and suppliers. It is good to have the option to produce quotes in various formats, but it is most important to be able to analyze submission statistics, compare proposals, and manage documents in one place.
Indirect costs
Indirect costs are those associated with the construction project, but not directly related to the actual construction bill of quantity. These can include equipment, workers’ salaries, site management, rent, and utilities. Indirect costs can have a significant impact on the overall budget of a construction project. It is important to carefully consider all indirect costs when planning and budgeting for a construction project. If you’re working on a larger project, it’s also important to factor in overhead costs that impact the entire construction company from an administrative and legal standpoint. You should include things like rental space, employee benefits, insurance costs, marketing, legal fees, and recurring tax or property payments.
These costs can greatly impact your bottom line, so be sure to include them in your estimate.
Unexpected costs
Finally, don’t forget to add in a contingency fund to cover unexpected costs that may come up during the course of construction such as spontaneous changes, unexpected accidents, timeline delays, preparation of land and excavations, cost of permits, hazard insurance, bonding, the rising cost of raw materials, other risks in the project and workmen’s compensation.
Profitability
Construction project profitability is determined by a number of factors, including subcontractors and material costs, unexpected costs, indirect costs, and overhead costs. Therefore, it is important to plan ahead and consider all of these factors when setting the desired profit margin.
When considering all of these factors, it is important to set a realistic and achievable profit margin for the project and take into account that things may go wrong. By doing so, you can ensure that the project is financially viable and will be able to generate the desired return on investment.
By taking the time to understand these key components of a cost estimate, you’ll be better prepared to manage your construction projects from start to end.
Accurate Estimating is the Main Key to a project’s Success
As a construction professional, you know that accuracy is critical when it comes to estimating the cost of a project. After all, if your estimate is too low, you could end up losing money on the job. On the other hand, if your estimate is too high, you could price yourself out of the competition and miss out on potential work.
That’s why it’s so important to take the time to develop a well-informed and accurate estimate for every construction project you bid on. In this quick guide, we’ll give you some tips on how to do just that.
There are also a number of different KPIs (key performance indicators) that need to be analyzed when writing an estimate for a construction job. The analysis of pricing indices is critical in order to make informed decisions about the project. Additionally, looking at the historical data for similar projects can give you a good idea of what to expect in terms of cost and timeline.
With these tips in mind, you’ll be able to develop more accurate construction cost estimates and improve your chances of winning more bids.
How Technology Enables to Streamline Cost Estimating and Bidding Processes
Construction cost estimating and bidding software is a tool that can help you accurately estimate the cost of your construction project.
ConWize’s end-to-end solution for tenders departments
Here’s an example of a 4 steps guide for submitting a tender, which can also be viewed in this video:
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Complete the overview information about the tender such as work type, the submission deadline, and a cover letter.
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Choose the relevant bill of quantity rows from your project, or simply copy-paste it from Excel.
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Upload all the relevant documents and specifications.
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Choose the subcontractors and suppliers you wish to invite to answer your tender and click “Send”
Now all you need to do is follow up on the bid status to see who opened and submitted a proposal.
What are the Benefits of Using a Construction Cost Estimating Software?
Construction cost estimating software can save you time and money by providing accurate and up-to-date information on construction costs. By using construction cost estimating software, you can:
– Get an accurate estimate of construction costs – Update your estimates as prices or quantity change
– Compare between versions
– Save time working on a tender
– Mitigate risks and errors
– Make data-driven decisions
– Save the time in shifting tenders data to execution
Construction cost estimating software can help you accurately budget your project and keep track of costs as they change. This can save you money by avoiding overspending on your project.
Conclusion
With today’s reality that projects become bigger and more complex, it is important to gain a competitive edge and be more efficient with project estimating. Using advanced technologies that provide that edge with unique capabilities, enables main contractors to be more agile, and accurate and see the full picture. Switching from manual work or outdated software, that takes longer to estimate and can’t show you an analysis of all the data can many times be the difference between winning or losing a project.
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