Building Construction Cost Estimation

Construction cost estimating is the process of forecasting the cost of building a physical structure. … It’s a core component of earned value management, a project management technique that tracks a project’s performance against the total time and cost estimate.

How do you estimate building costs?

Estimation of a Building with Plan
  1. Check dimension of each block is provided or not.
  2. The check Schedule of the opening is there.
  3. Check specification of work.
  4. Check the thickness of the wall is same or changes.
  5. Check Rise and tread dimension of the stair.
  6. Check type of foundation and its details drawing.

What are some typical big ticket items, and how to they contribute to higher cost?  

  • Material cost: There are so many choices in the quality of the materials that you choose to include in your home. It is helpful to decide your priorities in terms of budget versus higher cost items. Just like the choices that you make when you purchase any consumer product, only you know where you are willing to invest more. An example would be MDF (medium density fiberboard made from layers of Grade C or B plywood) versus full wood cabinets.
  • Labor cost: Labor costs fluctuate significantly based on factors such as unemployment rates, time of year and building cycle demand. In a booming economy with a low unemployment rate, you will pay more for workers as a simple matter of supply and demand.
  • Permit fees: Each municipality or town sets its own rate for the fees related to construction and occupancy permits. If you require a variance from a town ordinance, you will need to figure in the cost of the fees, as well as any sort of legal representation or engineering plans that you may need.
  • Site preparation: If you are working from a site that you purchased on your own, you may encounter unstable soils or ledges that require blasting. It is hard to know for sure until you actually get into the ground. The need for drilled well and septic versus public water and sewer will also be a factor.
  • Foundation: Your foundation shape will be impacted by the floor plan of your house. A simple foundation will be less expensive than one that has lot of jogs and uniquely shaped bump outs.
  • Framing: Like the foundation, the complexity of your plan will determine framing cost. If you have multiple roof lines and intersections of space, this will increase the cost. These details can add a lot in terms of dimensions and visual interest, but if you are working with limited resources you may choose to spend your budgeted funds elsewhere.
  • Exterior finishes: Exterior finishes (such as your siding), include the material and style (composite or wood, board and batten, cedar shingles, etc.) and special design elements such as a cupola or a front entry porch.
  • Major systems: Your major systems include your heating, electrical and plumbing. Choices around options like geo-thermal or solar will impact the cost as will water filtration systems, radiant heat and forced hot or cold air, among other costs. Some choices will require more of an upfront expense but will save on energy costs over time.
  • Interior finishing: These are your selections related to the personal details that you will live with every day. Flooring, crown moldings and trim packages, hardware, counter surfaces and cabinets are examples of such items. It is helpful to visit a design center to touch and feel the differences between the materials and decide which is more important to you. You may have your heart set on quartz and then find a marble product that is very similar and easy to procure, or vice versa.
  • Final details: How you choose to furnish and light your space will be elements that contribute to the final aesthetic of your home. If you need a wine cellar to store a wine collection, or art lighting to accent special pieces, these need to be figured into the cost.
  • Size: Although intuitively one would expect that a larger home will cost more, size does not always equate to “price per square foot.” A smaller home that has lots of complexity and detail will cost more per square foot than a large rectangular home with a relatively simple plan.
  • Number of stories: Price per square foot usually goes down when you have two stories to provide more square footage to allocate to the underlying costs of systems and foundation. A single story ranch will often cost more on a per square foot basis than a two story colonial with a similar foundation, since you have much more space that is covering that cost of the same footprint.
  • Shape: As mentioned before, the more complex the shape of the house, the more likely your costs will increase for foundation, frame and trim detail.
  • Type of roof: Shingle rooks are still very common, but more and more buyers are choosing metal as an option to mitigate snow accumulations, to moderate temperatures and as a design preference.
  • Appliances: There are many types of luxury appliances that would increase the cost of the home. These can include premium brands such as Wolf or Fisher & Paykel, or additional appliances such as a convection oven or wine refrigerator. If your budget is limited, you should plan where you are willing to splurge, depending on our lifestyle. Energy efficient appliances should also be a consideration in your decision making if environmental impact is a priority for you.
  • Special design features: The sky is the limit here in terms of your own appetite for luxury or convenience. Need a woodshop with extra power, a sauna/steam room or a heated driveway so you don’t have to shovel in the winter? It is great to dream but consider the price tag that will come along with your special design needs.

Cost Estimation Approaches

Estimators use and gather almost all the same data in nearly 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 relatively 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.

Final Thoughts

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 a proper cost estimate makes it easier to produce a more accurate number. Accurate estimation matters in construction because it determines whether a project will succeed on time and 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.