According to Murphy’s law, “anything that can go wrong will go wrong.” It is important for estimators to build contingencies into their estimates so they are prepared for unforeseen challenges during construction.
Often, these unforeseen challenges are the result of mistakes in estimating. Let’s take a look at some common construction estimating mistakes and how to avoid them.
1. Incomplete or Inaccurate Take-Offs
Having complete and transparent construction plans is essential for estimators to generate accurate work estimates. A lack of precise plans will result in time mismanagement, cost overruns, and even project failure. To avoid this, estimators should use specialized software that will help with precise planning and design of projects.
Another important step in estimating is completing a material takeoff list. This helps the estimator determine what equipment, materials, and labor are needed for a particular project. A poor or incomplete material takeoff will throw off an estimate by a significant amount. It can also lead to overbuying, which will cost more in terms of money and time spent on the job site.
A common mistake that estimators make is forgetting to include indirect costs in their estimates. These include expenses such as travel, indirect labor, supplies, and rent. These types of expenses can change monthly, so it’s important for estimators to keep up with them. However, this can be difficult if the estimator doesn’t have a standard estimating process or multiple people are contributing to the estimate.
Unforeseen challenges on a construction project can significantly drive up costs. This is why it’s important to include a contingency reserve in your estimates. This can cover costs if there are any unexpected changes to the project’s design, a sudden increase in materials prices, or unforeseen challenges on-site.
2. Ignoring Site Conditions
Even though construction projects are complex and no two sites are the same, it’s important to remember that site conditions can dramatically impact the project. Whether it’s the presence of underground utilities, soil condition or access limitations, failing to factor in existing site conditions can result in cost overruns.
One of the most common construction estimating mistakes is not making a site visit. Visiting the jobsite allows an estimator to take measurements, inspect the land and topography, see what materials will be needed, look at road access and traffic, evaluate how much space there is for staging and equipment delivery, and determine any environmental protections that may be required.
Another crucial element to consider is labor. Estimators need to know how many people will be required for the job, what their experience level is and how much they will cost per day. This information will then be used to calculate the number of hours estimated for the work to be completed. Using a building estimating software can help to ensure that this step is not overlooked.
Finally, it’s essential to be aware of the pricing changes that can occur over time when sourcing costs for labor and materials. Often, historical data is utilized when making estimates and fails to account for systematic increases over time in relative prices. This can lead to inaccurate cost estimates that will ultimately have negative effects on the overall project budget and timeline.
3. Using the Wrong Wage Rates for Labor
According to a recent survey by QuickBooks and TSheets, labor is one of the most difficult construction expenses to estimate accurately. This is largely due to the fact that there are many variables involved in estimating labor, such as each worker’s experience level, rate of pay, and productivity. This is why it’s so important to consider all these factors during the estimation process and use a construction estimating software to ensure that they are being calculated correctly.
Another common mistake that estimators and contractors make is underestimating labor costs. This can be caused by using incorrect wage rates or not considering all the required man-hours for a project. It is also common for estimators to use a flat labor rate or simple hourly calculation when estimating and not taking into account additional costs like overtime, travel expenses, and equipment rental fees.
Additionally, it is important to always update your unit cost database with the latest information available. This will help to avoid any discrepancies between your estimated materials and the actual costs of the building materials once they are delivered to the jobsite. This can be caused by unexpected price increases, delays in shipments, or other factors outside of your control. Ultimately, this can cause your estimates to be inaccurate and lead to missed tenders, lost profits, or projects that go over budget.
4. Using the Wrong Materials
Creating an estimate involves tracking all the necessary project costs, including overhead. However, it can be easy to forget certain expenses or underestimate others. This can lead to a final cost that is significantly higher than the original estimate.
One of the most common errors in construction estimation is using the wrong materials. This often happens when the estimator doesn’t visit the site, which is crucial for determining material requirements. This can also be a result of a lack of experience with new techniques and materials.
As a result, it’s important for contractors to establish relationships with building product manufacturers and suppliers. This can help them lock in accurate prices for building products during the estimation process and ensure that they are using the right materials on a project. It can also help them find alternatives for high-priced items that are impacted by tariffs and volatility in the marketplace.
It’s also important for construction estimators to double-check their calculations and entries. This can be done by having someone else review their estimates and/or performing a full review of the estimate before it is submitted. In addition, it’s helpful to have a standard estimating template that can be used for comparison purposes. This can help to eliminate mistakes caused by miscalculations or the use of incorrect units of measurement.