The most important part of any business’s survival is keeping overhead low and profits high. The same stands true in construction industry. Being a contractor or a builder, if you don’t have enough money coming in, you won’t be able to expand or even maintain the business you currently have running.
On the other hand, if you have too much overhead, you won’t be able to make a profit off what little work you can find, so your profits will also suffer. That’s why it’s vital to avoid making mistakes while doing construction cost estimation for your projects.
Material and cost estimates in the construction industry are crucial. You had to estimate a project before in order to evaluate its feasibility and allocate enough resources. You also need to do cost estimation while submitting quote or bidding on formally.
However, building an accurate estimate can be difficult and time-consuming, especially if you don’t have all the information you need at your fingertips. It goes without saying that underestimating costs could mean losing money on the job, while overestimating costs could mean losing the client to another contractor altogether.
Fortunately, there are several common mistakes that people tend to make and repeat when estimating their projects. So you can avoid them yourself and potentially save yourself some money in the process.
Typical Mistakes in Construction Cost Estimating
Not visiting the site before estimating cost
If you’re estimating the cost of a construction project, one of the first things you should do is visit the site. This will give you a better understanding of the scope of work and can help you avoid potential problems down the road.
Every construction project is unique and can be challenging. The best way to tackle unexpected is to know what to expect.
To avoid this mistake, be sure to visit the project site and assess the conditions for yourself. It’s also important to get detailed information on all costs involved, including materials, labor, permits, and more.
So, try to analyze the job site and visualize the sequence and jot down any hurdles or extra efforts. For example, if you’re on a remodeling project, make sure to include cost for demolishing and clearing any part of the building.
Rely on inaccurate cost data during estimation
Your cost estimates are as accurate as the source of cost data. You need accurate material and labor costs specific to project location and nature. So, don’t always rely on the cost data you’re paying for. So, double and triple check the material and labor cost data to avoid costly oversight.
You can’t always rely on national averages – as inflation and time-based costs are always varying. The best approach to handle cost data is to maintain your very own cost book. The more projects you complete, the more data you have. So, trust your experience and flag anything that doesn’t match it.
Not incorporating contingencies
Failing to account for risk and contingencies is another costly mistake. Unexpected events can happen at any time during a construction project, so it’s important to plan for them in your estimate. A contingency is an allowance for unforeseen circumstances, such as bad weather or delays. When estimating construction costs, be sure to include a contingency of 10-20% of the total project cost.
Always relying on software
Relying entirely on software is also a mistake. While software can be a helpful tool, it’s not always accurate. Try to rely on software that can optimize your workflow and offers collaborative environment. In construction estimation, software only offers you the tool to takeoff and prepare sheets but still you need experts relevant to the trade – like electrical, civil, plumbing, and mechanical. So, expertise is crucial to avoid cost estimation mistakes.
Inaccurate measurement and takeoffs
One of the most important steps in the cost estimation process is creating an accurate takeoff. A takeoff is simply a measure of all the materials and labor required for a project. If your takeoff is inaccurate, your estimate will be as well.
Accurate takeoffs will offer exact quantities needed for the labor and supplies. If you miss an item or more during takeoff you’re likely to be surprised at the time of bidding or during project execution. That’s where reputable takeoff estimation company like Real Estimate Service comes handy. They’ve got the right tools and takeoff software that can help us do takeoffs in a matter of time.
Making Uneducated Guesses
Always relying on guesses or doing uneducated guess-estimating is never a recommended approach. This can lead to big problems down the road – resulting in under or over estimating. Try to track job cost on all projects to ensure the accuracy of your estimates. Always rely on most current data for costs of labor, material, and equipment. Also make sure to include overhead and business costs like permitting and inspections.
Not Reviewing Your Work
As with any important document, you should always review your work for errors before you submit it. This is especially true for construction cost estimates, as even a small mistake can have major consequences. Be sure to check your math and make sure all your assumptions are accurate. It’s also a good idea to have someone else review your work to catch any mistakes you may have missed.
Not Reviewing Subcontractor Estimates
As a general contractor, it’s important to review the estimates provided by your subcontractors. After all, they are the ones who will be doing the work and should have a good understanding of the costs involved. However, many contractors make the mistake of not reviewing these estimates carefully. This can lead to problems down the road when the actual costs come in higher than expected.
The bottom line
No matter how carefully you go through the construction estimating process, you’re bound to make mistakes in your estimates. If you’re still unsure how to avoid these common construction cost estimation mistakes, we’re here to help. We’ll make sure your bids are accurate and you get hired on more projects.
At Real Estimate Service, we’ve got a dedicated team of construction professionals that are devoted to avoiding cost estimate mistakes. We always make sure to include up-to-the-minute cost data specific to geographic location, modern practices, and on-site research.