Construction estimating is one of the most difficult and important jobs in our industry. A few bad estimates on a single project won’t put most companies out of business, but enough unprofitable projects could do the trick.
Getting accurate cost estimates requires the right mix of skills and experience. The following are a few of the many responsibilities that contractors have for construction estimating:
Design Review
Design reviews are a management technique for thoroughly evaluating a design to determine whether it meets the project requirements. They are typically conducted by the design team and may include stakeholders or subject matter experts in order to gain a more diverse perspective on the project. There are many different types of design review, and they all have their own purposes and goals.
For example, system design reviews are designed to evaluate systems level tradeoffs, technical feasibility and seek buy-in from stakeholders in order to proceed with detailed design. On the other hand, concept design reviews are often used to examine innovative concepts for a facility which have potential to reduce costs or improve aesthetics, comfort or convenience. These type of innovative concepts are highly valued by design professionals because they can provide significant cost savings for the owner, and they require a lot of technical expertise to ensure that they will not create new costly issues in the construction process.
When preparing for a design review meeting, it is important to distribute a tightly structured agenda in order to ensure that the design team can provide useful feedback. It is also helpful to identify the individual who will present the design in advance of the review, and to have a clear understanding of who will be responsible for each item on the agenda. It is also a good idea to end each review item with a clearly defined next step for the design team.
Quantity Takeoffs
Performing accurate quantity takeoffs is a vital part of any construction estimating project. It involves examining construction blueprints and plans to identify and quantify the various materials needed for a particular project.
Depending on the project, contractors can use a unit rate quantity takeoff method, a linear or area-based approach, or a hybrid of both approaches. Each method requires careful attention to detail. Regardless of the methodology used, quantity takeoffs must be performed accurately to ensure that the entire scope of work is considered. Otherwise, overestimating or underestimating material quantities can result in costly overruns.
Precise quantity takeoffs enable construction companies to streamline project planning and reduce schedule delays caused by inadequate or incorrect material supplies. It also helps them deliver cost estimates that are more accurate and detailed. This improves project communication and coordination, facilitating the design stages and project execution.
In the end, a precise quantity takeoff provides important information that is essential to the bidding process. Contractors need this information to prepare competitive and accurate bids. It also facilitates contract negotiations by providing both parties with a clear picture of necessary, realistic expenses.
Bid Estimates
When a contractor prepares a bid estimate, they’re looking at the entire project scope and requirements. The goal is to create an accurate cost estimate that will allow the contractor to win the contract at a profitable price.
A cost estimate includes direct construction costs including field supervision and a markup that covers overhead expenses and profit. Estimators take a number of factors into consideration, such as local labor rates and manpower availability; subcontractor quotations; vendor outsourcing; and historical data pertaining to similar projects. It also takes into account the current market conditions and input prices affecting materials and equipment. In addition, estimators must account for contingencies, which are essentially precautionary allowances that allow the project to adapt to unforeseen circumstances during implementation.
Contractors will also include a breakdown of their proposed pricing for each portion of the work to be performed. This is one of the most critical steps in the estimating process because it allows the general contractor to compete effectively with other companies and submit a competitive bid.
The quality of a contractor’s bid estimate will determine whether they’ll be selected to manage the project. Accurate estimates are key to ensuring that projects are completed on time, within budget and at a high standard of quality.
Control Estimates
Cost estimates are a critical component of every construction project. They drive the entire preconstruction process and provide a foundation for everything that happens during the project. The more detailed the estimate, the better. But, even the most accurate construction estimates are prone to change as project details are finalized and materials prices rise or fall.
When preparing a control estimate, contractors must consider three separate factors: estimating technique, degree of accuracy and data source. They also have to balance competing priorities, such as the need to satisfy an Owner’s request for a requisition of funds and the need to ensure accurate information is available during trade procurement.
Estimators must also consider the mix of labor and equipment necessary to complete a project. This is determined by the Scope of Work and may include items such as equipment rental, travel expenses, and project-specific crew costs. In addition, insurance and bonds are additional direct costs that must be included in the project’s estimated cost.
A contractor’s ability to produce a competitive and profitable bid largely depends on the quality of the project’s estimate. This requires a deep understanding of construction methods, materials and market trends as well as a clear line of communication between a project team’s members. By assembling a strong estimating team and fostering a culture of collaboration, contractors can achieve the highest level of accuracy in their construction estimates.