Construction estimate services provide accurate, timely project cost information. These estimates help both clients and contractors achieve their project goals within budget.
The estimating process includes various categories of costs: direct costs, overheads and profits, equipment costs, subcontractor quotes, and contingencies. These are all added together to create a bid estimate.
Pre-Construction
Construction estimate services offer pre-construction planning for projects to reduce costs, improve schedules and mitigate risk before the first shovel hits the ground. This process involves working with clients to define their project’s scope, develop visualizations and schematic designs, establish work packages for estimating purposes and determine the best way to achieve their goals.
A detailed understanding of the construction process helps a company provide accurate estimates and competitive bids. This is especially true if the construction business has a rigorous estimating process, which includes job costing data and a thorough knowledge of indirect and overhead costs. This information can help a construction business determine what to expect in the form of pricing and delivery dates for all materials.
Estimators can also use this information to determine a sales price that covers all direct and indirect field costs, equipment and labor, and contingency for projects with varying levels of risk. The profit margin varies by industry and size of the construction business, but is typically calculated so that it will cover overhead costs and allow for some growth or flexibility for future projects.
A pre-construction plan can also help a construction business anticipate long lead items, which are needed for the entire project but may take a certain amount of time to order and receive from suppliers. This can save money by allowing the contractor to place bulk orders and potentially get a better price because of the volume.
Post-Construction
Construction estimates are a vital part of the preconstruction process. They help clients and contractors establish realistic budgets and project costs, allowing them to make informed decisions about whether to move forward with a construction project.
Getting estimates right requires a great deal of research that is often drawn from a variety of sources. Estimators must consider direct field costs, indirect field costs, overhead costs and contingencies. They must also account for profit and a reasonable margin that will allow the contractor to bid competitively.
Material prices are a major cost driver. Demand is high for many building materials and uncertainty over tariffs has made it even harder to accurately predict prices. That’s why it’s important to maintain relationships with suppliers, who can help you lock in pricing and steer you towards alternative products that might fit your project better.
The work packages that a construction estimator creates for each portion of a project are another key aspect of the estimate. Each one should include all of the necessary materials and labor to complete that particular piece of the project. If the estimator misses a cost item or fails to incorporate a particular type of cost (like a long-lead item like steel) into a work package, that will impact the final estimate later on in the construction process.
Contingency Planning
Construction estimating services offer an affordable way to mitigate risk and ensure the success of your projects. By creating realistic timelines and contingency plans, you can reduce the chances of unexpected costs and delays. By setting aside a set amount of money for potential risks, you can avoid costly project overruns and protect your budget.
A cost estimate is a detailed breakdown of the estimated costs for an entire project, including materials, labor, equipment and overhead. It is usually based on a document called the Scope of Work, building plans and specifications, as well as a quantity takeoff survey that uses on-screen software. The unit prices for each component of the build are then calculated and added to produce the total estimate.
The process of preparing accurate estimates can be time-consuming and complex, but it is the key to successful project management. By hiring a professional firm to prepare the estimates, you can focus on other aspects of your business and leave the rest to experts.
The main difference between a retainage and a contingency is that a retainage is money that has been earned, and a contingency is a risk allowance. Whether it is for weather-related delays, design changes or material price increases, contingencies are vital to construction project budgets. The size of the contingency depends on the overall project risk and the company’s tolerance for losses.
Contract Negotiation
Besides direct field costs, estimators also have to factor in indirect project expenses such as bonding and insurance. These costs are annual expenses that contractors must pay regardless of whether they have a job or not, so they need to be wrapped into their project estimates. Estimators also need to consider general overhead costs that are not specific to a single construction project like rent, utilities and payroll.
Estimators can help clients win more tenders and bids by delivering accurate estimates that are competitive. This saves contractors money on overhead and allows them to turn a profit faster, making it easier for them to invest in new boom lifts, power tools or an on-site computer cabinet. It can also make it easier to win more projects and beat out the competition.
An estimator can help a contractor win a contract by performing quantity surveys, budget preparation, full-cost estimating and material takeoffs. For complicated projects, the estimator may perform a site visit to get a feel for the actual conditions of the work. For smaller projects, such as a remodel or addition, an estimator will most likely rely on drawings and photographs of the existing structure and foundation. The estimator will also subdivide the project into “work packages” which can later be assigned to specialty contractors. This ensures that all aspects of a project are accounted for and that no work is unnecessarily duplicated.