Estimating is one of the most difficult jobs in construction. It is also one of the most important. Profits are typically won or lost based on how accurate your estimates are and how closely they match up to your final project costs.
Reliable Cost Tracking Through Efficient Takeoff Services
Try to manage your significant expenses involved in a construction project, but the difficulty is to collect all the essential material costs that involve a substantial portion of several expenditures. Managing your costs also portrays a vivid picture of a specific amount to spend and a separate fee to save it. It is mainly precise and results in accurate takeoffs. Having accurate estimates through reliable takeoff services will help you elevate your position and improve decision-making. It also manages to prevent an excessive amount of budget overruns of your construction project.
It also helps you and manages to leave ample space for several unexpected expenses that fulfil the demands within no time. The process of construction estimating involves maturation in design and several construction details to be accurately shaped. A precise construction estimate helps several team members anticipate labor, material, equipment, and subcontractor cost for all the building elements.
Main Challenges in Construction Cost Estimation
The construction process of a building uses a wide variety of materials, and many of them are shipped from remote locations. Some of these materials have volatile prices in the international market, and a key example is steel. Also keep in mind that construction requires a significant input of man-hours, fuel and electricity.
Another limitation when estimating construction costs is time. In theory, estimators can break the list of materials down to exact quantities of bolts, nuts and nails. However, this approach demands a prohibitive amount of time, especially in large projects. This is also an expensive approach, since it consumes many hours of work that are paid for.
In modern construction practice, cost estimators use software-aided methods to speed up the process. A common approach is using unit prices, where construction costs are calculated for a discrete amount of work and then multiplied by the project total. Competitive bidding normally has a deadline for participating contractors, which means they can lose the job for being late.
Why are accurate estimates so important?
A recent study of transport infrastructure projects cited by the Project Management Institute found that actual costs were, on average, 28% higher than estimated costs. Due to lack of visibility into job performance data on previous projects, eagerness to win a client bid, or internal pressures to get a project approved, it’s commonplace for businesses to underestimate the amount of time and resources that will be required to complete a project.
Seeing that cost estimates provide the foundation for planning the job’s schedule and budget, the accuracy of an estimate can determine if the project is able to meet its objectives.
Some of the benefits associated with producing accurate cost estimates include:
- More accurate planning: When you’re able to accurately predict what tasks and resources are required to complete work, you’ll be able to efficiently produce a work breakdown schedule, assign work to staff, and adhere to projected timelines.
- Improved profit margins: Several factors (such as unexpected events, poorly scoped work, and inflation) can cause job costs to increase throughout a job’s life cycle, which presents a risk to completing the work within budget and hitting profitability targets. Accurate estimating accounts for expected and unexpected costs and helps protect your profit margins.
- Improved resource management: With greater insight into the tasks and timelines required to complete work, you can ensure you have the specific skills needed to complete each deliverable, identify resourcing gaps, hire additional people as needed, and take on new projects with confidence.
- Stronger client relationships: When clients understand the ‘why’ behind a project’s cost, they’re more likely to trust your expertise and expect changes to the cost estimate as the project progresses, resulting in better working relationships.
- Better reputation and repeat business: When projects are delivered on time and on budget, you’re likely to create happy customers, win repeat business, and gain more referrals.
Tips and Tricks for Manual Estimates
Estimating by hand is, to put it charitably, not ideal. Handwriting may be illegible. If work is interrupted, finding your place later may waste precious time. Errors of omission may be more common. Estimating by hand should be a bygone practice, but if you must estimate by hand, here are some ways to do it more effectively:
— Write on only one side of a page.
— Keep each type of document (quantities, materials, equipment, etc.) separate and filed in order by division number.
— Keep the entire estimate in one or more compartmented folders.