An accurate construction cost estimate is crucial to a successful construction project. An accurate construction cost estimate can tell how long a project will take and how much it would cost. However, getting an accurate construction cost estimate can be hard. And the consequences of an overestimate or underestimate can detrimentally harm projects. The amount of time and effort put into a construction cost estimate saves businesses money and time in the end. While the systems are more complex, the methodology for performing a construction cost estimate is fairly easy. This brief guide can help you perform a construction cost estimate.
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Construction Cost Estimation Overview
The American Society of Professional Estimators lays out five levels of system estimates. These levels of estimates also correspond to a level of accuracy. As more data comes in at the other levels, the estimates become more accurate, while ensuring it is the right program for them. After the five levels of estimates, there are the three types of estimates, they correspond to the various levels and project stage.
Design estimates are a construction cost estimate on the design stage of a project. They use the Order of Magnitude level, Schematic Design level, and Design Development level. The Order of Magnitude determines feasibility before the project design starts. Schematic Design estimate uses the schematic design to estimate costs and help determine feasibility. And the Design Development and Construction Document phases use the engineer’s estimate and construction documents.
The Bid Estimate phase presents the bid. It uses multiple data points such as construction documents, take-offs, and other direct costs. With these data points, the estimator determines an approximation of what the job should cost and submits it with the other paperwork ensuring them the potential to work on the project.
Creating Construction Cost Estimates
Creating a construction cost estimate might seem daunting. And when considering that cost estimating used to all be done by hand, it can seem impossible. However, nowadays there are systems and tools that make a construction cost estimate easier. The Uniformat System for building estimation is a government standard for estimating buildings. It starts with the major group elements then drills deeper into individual elements. This helps break up building estimates so they’re in easy to understand and complete parts.
Besides dividing up cost estimation into specific groups, estimators must include a bill of quantities. The bill of quantities is an itemized list of work and materials necessary for the project. For a construction cost estimate, that would include take-off quantities and more to get the accurate number. Estimators use elements like take-offs, construction documents, squaring and abstracting in order to come up with the appropriate numbers for billing.
Construction Cost Estimate Components
One project’s construction cost estimate will use the same elements and methods as another project; however, each project is different. Usually, an estimator will look at the take-off or measure of materials and labor needed to complete the project. Sometimes they’ll include a secondary look at labor hours and rates. They always look at material and equipment costs, these can include the costs of operation and repair or rent. Great estimators will also look at the indirect costs of a potential project. These can include everything from administrative costs, legal fees, permits, bonds, transportation, or storage costs. Of course, there is usually a contingency estimate and a look at what profit should be. These components make up a construction cost estimate.
Cost Estimation Approaches
Estimators use and gather almost all the same data in almost the same way. How they use the data in their estimates differs by their approach to construction cost estimation. Some cost estimators use unit cost estimating. When every unit of work has an associated cost it’s fairly easy to put together all the data into an estimate. Another incredibly accurate measure of estimation is called stick estimating. It uses a complete list of materials, the labor schedule down to the hour, all vendor proposals, costs, profits, all data points. Then the estimator takes the list of items and calculates the total cost and uses that as the estimate. It’s incredibly accurate especially for estimators with many years in the industry.
In this information age, the tools needed for estimation are easier to find, which increases the expected accuracy of construction cost estimation. Understanding all of the elements involved in proper estimation makes it easier to get a more accurate number. Accurate estimation matters in construction because it determines whether a project will succeed on time and on budget or not. With the understanding of a basic construction cost estimate and the right tools, a more accurate estimate will be easier to come by.