Estimates are a critical component of planning a project’s schedule and budget. An inaccurate estimate can lead to higher-than-expected costs and may prevent a company from meeting its profitability goals.
Estimating involves using a rough design to establish an expected budget for a construction project. It also includes overhead costs such as insurance and bonds, which must be covered by contractors in order to keep their businesses running.
Scope of Work
Professional estimators use defined techniques to create project cost estimates. These estimates can be used to assess the financial feasibility of projects, budget for project costs, and monitor project spending. An accurate cost estimate is critical to the success of a project. The more detailed the scope of work, the more accurate the resulting estimate will be.
When preparing a scope of work, it is important to include all the tasks involved in the project. This includes any materials needed for each task, and it is also helpful to add a point of contact for each task. This will help to avoid any misinterpretations that might occur during the project.
Scope of work documents can be very complex, and they are usually broken down into smaller units called tasks. This helps to ensure that each individual task is well-defined, and it can be referred to at any time during the project. It is also a good idea to add any milestones or milestone dates into the scope of work, so that everyone knows what needs to be done and when it is supposed to be completed by. This will make it easier for contractors to bid on the project and it will help to avoid any costly delays.
Cost estimates can be complicated and require the use of many different types of data. Using the right tools can make the process more efficient and accurate. A good estimate includes all the necessary costs, including labor, materials, and equipment. It also includes any services that the project requires. These include engineering, design, construction, and operation and maintenance.
Labor is a key component of any building project. A good estimate will consider all the labor involved in performing the work, including any overtime that might be required. It will also account for any other costs associated with the labor, such as travel expenses and accommodation.
Material prices can be unpredictable and volatile. A good estimator will be familiar with the local market for the type of project being estimated, and will select the most appropriate material to fit the budget. This can include sourcing locally-produced materials, such as wood from regions close to lumber mills.
Performing accurate cost estimates can improve the profitability of a project by preventing overruns and increasing project milestone billing schedules. It will also help to ensure that the project is completed on time and within budget, which can boost client confidence in your company.
Whether a contractor’s crew is composed of specialty tradespeople, project-specific managers or general workers, their time must be included in the estimate. This also includes costs associated with training and equipment. The more experienced estimators know how long it takes employees to complete specific tasks, so they can accurately predict labor rates.
The first step of estimating is validating the project Scope of Work and reviewing building plans, blueprints and specifications. This helps an estimator understand the scope of the job and what materials will be required. Using this information, an estimator can compile a list of materials, known as a quantity takeoff, that will be needed to construct the building.
Estimators must also include the cost of insurance and bonding in their estimates. These expenses help mitigate risk for contractors, but they also add up and need to be paid. Because they are an ongoing expense, these costs must be spread out over the course of a year and included in every new project. This can prevent a company from being underfunded and overworked, which could lead to a poor reputation and fewer referrals. With accurate estimates, a construction company can save money on overhead and still meet profit goals.
In addition to determining the materials needed for the job, an estimator will also consider any equipment that will be necessary to complete the project. They will then contact equipment vendors to determine pricing for renting, leasing, or purchasing the equipment for the duration of the project. They will also take into account any associated depreciation and maintenance costs.
Estimators can choose to work primarily from their office, but they may visit construction sites to gather information and analyze proposals, blueprints, specifications, and other documents. They will use these documents to prepare detailed total cost estimates for the project.
A service business’s ability to produce accurate cost estimates is critical for winning new jobs. It also determines how much to charge for a job, how to plan tasks and resources, and how to adhere to projected timelines. Over time, inaccurate estimations can lead to budget overruns and eroded profit margins.
Construction estimating services help you eliminate headaches and wasted time by handling all the heavy lifting for you. No more chasing copper prices up or down, calculating metal material pricing based on location, or spending days agonizing over a single estimate. You only pay for the services when there is a project to estimate.
When preparing an estimate, a contractor will look at the project blueprints and determine what materials will be needed. This process is known as quantity takeoff, and it’s a key step in developing an accurate estimate. If steps in the process are not followed carefully, the resulting estimate may omit important materials and costs. Ideally, the estimator should also visit the construction site to evaluate the scope of work.
Often, estimators will create “work packages” to assign specific project details to contractors. This helps ensure that all work is accounted for, and that no contractor will end up being on the hook for unaccounted project costs later on.
Estimators should also factor in the cost of insurance and bonding for contractors. These are not direct project costs, but they must be included in the estimate because they are necessary for contractors to operate.
For accurate estimates, a good estimate service will use an integrated software program to reduce rework and error. This can speed up the estimating process by as much as six to ten times. Ideally, this software should also integrate with your existing takeoff solution. This will allow your team to get the takeoff data into your estimates quickly and accurately.