Construction Cost Estimating: A Step-By-Step Guide

Precise construction estimation is necessary to achieve profitable projects. The construction estimating process is the cost analysis of the construction project. The construction estimating process is a time-consuming and detailed process, which considers the vision of the client, the availability of the construction materials and labourers, input from the design team and also considers all necessary budget requirements.

The construction estimating process can be done by the cloud-based estimating software, which helps to save time on the construction project, as well as helps to make the business look more professional.

Discuss the steps involved in the construction estimating process and practices

Reviewing the bid package

The bid package includes all the documents, which are important for bidding, including general conditions, bond forms, owner-contractor agreements, supplementary general conditions and construction specifications. The project contractors who bid on the construction project have been bound to complete the work laid out in the bid specifications.

Review the construction specifications

In the next step of the construction estimating process, the contractors have to find the construction specifications. This construction document should explain the grade of construction materials to be used, the cost responsibilities lay which may affect the overall construction costs.

Reviewing construction drawings

The contractor should also have to read the technical details from the architectural drawings to get a thorough understanding of the build and the scope of work. Making a 3D picture of the construction project helps to show the elevations and work heights. The contractor should have to compare the drawings with the specs to clarify any kind of discrepancies between the two.

Performing the construction takeoff

With the help of the construction drawings, the contractor must detail every construction material and product, which are required for the successful completion of the construction project.

Determining the construction estimate

By using an accurate construction takeoff, the contractor can add this takeoff to the construction estimate. In the construction estimate, the contractor should include a realistic project timeline. Labour costs, subcontractor costs, a contingency fund and also include other costs like transport, equipment, storage and fuel.

Determining the overhead costs and profits

The overhead costs, soft costs or indirect costs should also be included to add to the overall figure. In addition, the contractor should also think about the profit margins of the construction projects, as without a healthy profit margin, the construction project does not succeed.

Building construction proposal

In the next step, the contractor has to build a professional-looking construction proposal. This construction proposal should be detailed, concise and accurate, which helps to tell the client why they are the right person to lead the construction cost.

Construction contract basics

The construction estimating process should be done on a contract basis, which accompanies the other construction documents in the construction proposal. The construction contract can be a fixed-price contract, cost-plus contract, or time-materials contract.

Handle the change orders

A change order should be created after the construction process has begun. The verbal agreements of the construction project can be changed, so they should be written.

Using construction estimating software

Using construction estimating software in a construction project helps to save time and helps to make more profits in the construction project. It is suggested to use estimating and construction management software to replace the outdated construction estimators, thus getting more accurate results regarding the entire costs of the construction project and ensuring the successful completion of the construction project.

Learn about the key importance of the construction estimating processes

1. Accurate construction estimating is important to achieve the success of any construction project. Both project contractors and owners rely on the cost estimates, which help to move a project from the preconstruction process to completion.

2. After conducting the preliminary estimate, design or scope modifications may be required in order to alter the costs of the construction project. Without understanding the initial costs of the construction project, the project owner can not determine if the project is feasible within the allotted budget of the construction project.

3. The project contractors also depend upon the accurate estimates for preparing bids, which are competitive and profitable. If the contractors underestimate the construction project costs could be forced to cut into their own profit margin to cover the entire project costs.

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Video Source: Tim Fairley

4. Overestimating the actual project costs can also lead a contractor to submit a bid which is too high to be selected. Even in the case of the negotiated bidding scenarios, the construction estimates need to be accurate to strike a balance between the budget of the owners and the profit of the contractors.