8 Tips For Better Construction Project Estimates
When you’re completing a commercial construction job, project estimates can make or break your profits.
An accurate project estimate could allow you to make a nice profit, especially in today’s construction economy, but a poorly executed estimate will most definitely result in unexpected contractor and supply costs.
Overspending on either can be detrimental to your business.
By employing these simple tips, you can insure that your business is insulated from such profit killing costs.
Hire a Professional
Many contractors simply lack the expertise to accurately estimate a job, which can be a serious problem. With commercial construction, there are countless variables to account for, and lack of experience in any one facet poses a threat to your estimate.
Bringing in a professional cost estimator allows for you to confidently present a cost estimate to your client or navigate the costs of your company’s job.
“You need a first-rate estimating process that will protect your savings, give you a competitive edge, and win the right projects for your company,” says David Borean, experienced estimator and founder of Juncture Estimating.
Be Detailed and Precise
Details are everything in the construction estimating process. Without a rigorous estimating process, you’re opening yourself up to gaps in your estimate that can cost you big.
When you’re building an estimate for a commercial construction job, be as detailed and precise as possible.
Further, make sure you’re applying your rigorous processes to your subcontractors, as their participation in the process is crucial to a better construction project estimate.
Develop a Master Checklist
Speaking again to your cost estimating process, make sure you’re using a master checklist. Consider this somewhat of a Standard Operating Procedure (SOP) for creating an accurate cost estimate.
Referencing a master checklist means that no matter what job you’re on, you’re following the same process and including all of the line items every single time.
Estimate Subcontractor and Specialist Rates
The more involved your subcontractors and specialists are, the more accurate your construction cost estimates will be. It’s really that plain and simple.
If you want the most accurate construction project estimate for your job, you need to be including everything, including subcontractor and specialist rates and costs.
By working closely with them, you can include their estimates both in time, labor, and materials.
A quick note here, though. “Beware the underbidders: they’re often low for a reason,” Capterra warns.
Factor in Project Risks
Cost overruns are the most common risks in construction estimating, it’s important to take steps early in the estimating process to mitigate as many risks as possible.
While you should continue to monitor risks and their associated costs throughout the project (to prevent overages at the beginning of the job from causing issues at the end of the job), taking project risks into account during the estimating phase is essential.
Common risks are cost spikes and project delays due to excavation issues, poor soil, or inclement weather.
Make sure you know as much about the project as possible before beginning the project estimate to increase the accuracy of the estimate and allow for as many risks to be factored in as possible.
Plan for Pricing Fluctuations
Price fluctuations are an inevitable part of commercial construction projects, as they can span months or even years.
Properly executing a change order—I talk about that here—is absolutely part of adjusting for price fluctuations, but many can be avoided with additional planning during the project estimating process.
Look at historic price fluctuations, the market value of labor and materials, and cost projections for your industry as clues for your planning.
Don't Forget to Estimate Operating Costs
Operating costs are an indirect expense very often overlooked. These include your overhead and those costs associated with the maintenance and day to day expenses of running your business.
Make sure to factor in your operating costs when creating a project estimate.
Hire a Professional
Yes, I mentioned this before, but it bears repeating.
While the investment of hiring a professional cost estimator can seem large up front, doing so can prevent you from making expensive mistakes in the estimating process that eat away at your profit and/or cause project delays.
We help contractors and architects create accurate cost estimates so you can win more bids and earn more revenue.