Estimating Construction Costs Like A Pro

When you take your construction cost estimation beyond science, it becomes an art. You’re no longer just focusing on the details; you’re seeing the estimate from a high level. What that means in practice is that you’ll not only get the details right, but you’ll also account for the non-estimating factors affecting the details. 

The artful practice of construction cost estimation doesn’t just come from your technical excellence. It requires a thorough understanding of construction materials, methods, business practices, and markets. Here’s the disciplined way to make your construction cost estimating an art.  

How To Make an Estimate for Construction

Tactics for Assessing the Project’s Scope

Before doing anything, a construction cost estimator needs to understand the project’s scope. Your understanding should go beyond the details in the plans and include the expectations the client has for the project, both short and long term.

For instance, an owner might think they’ll add on to the building once the initial build is fully occupied. When you understand that, you are more sensitive to the design details that will allow future additions. The design and engineering teams will provide the details, but you must know the intention behind them to artfully prepare an estimate.

Start by reviewing the contract documents containing the project’s purpose, use, and future plans. Talk to the project manager and ask questions about details that aren’t clear. Make notes about all unusual project aspects. 

Tactics for Accurate Quantity Takeoffs

If you do both the quantity takeoff and the estimate, then you have only yourself to blame when the estimate isn’t accurate. The takeoff determines the work breakdown structure while informing the costs of everything. Accuracy depends on your thorough understanding of what’s planned for the build and your careful attention to how you measure and calculate dimensional information. 

Use a takeoff tool that either fits your style or is easily adaptable. Double-check dimensions and cubic volumes as you proceed, and watch for telltale signs of errors in the dimensions on the plans. 

Many errors will make your job tougher, but if you don’t catch them now, they’ll cause problems later.

You should find out why any rectangular room has opposing walls of different lengths, or why a contiguous space has two different volumes. Like everybody, design and engineering make mistakes, so cushion yourself and your projects from those mistakes by finding and noting them quickly.

All the above applies if you don’t do the quantity takeoff yourself, and you’re now double-checking someone else’s work. In one way that can be good because you’re less familiar with the details so errors will stand out more. However, you’re also at the mercy of the skill level of the quantity surveyor. Many errors will make your job tougher, but if you don’t catch them now, they’ll cause problems later.

Tactics for Building Accurate Work Breakdown Structures

Once you have the dimensional aspects nailed down, the WBS gives you another opportunity to practice estimating as an art. Review the specifications so you thoroughly understand the materials and features in the build. Pay attention right down to the fasteners. 

But, what about when there is no specification? What’s with all the notes saying to use “generally acceptable workmanship and materials?” 

This is one of the biggest gray areas in construction. 

The good news is that often when you estimate an assembly based on materials and practices that people have used for a long time, you’re covered. So, just watch for instances where there are no specifications or there are no specifications for assemblies that are not usual. Then, either note them for clarification or get some answers right away.

Strategies for Preparing an Accurate Construction Cost Estimation

With the preliminaries done, you’re ready to get into the thick of it. Accurate construction estimating hinges a lot on paying attention to details. That starts with the work environment.

Prepare the Construction Cost Estimator Work Environment

Though often overlooked, the environment where you do your estimates directly affects your concentration and focus. Noisy offices, constant interruptions, and uncomfortable working conditions conspire to ruin your best efforts. 

If you don’t have a dedicated place for estimating, ask management to consider supplying one. They’ll recover costs quickly when you win more bids and complete more jobs within budget. Your company will have fewer claims, fewer change orders, and better customer relationships.

For yourself, adopt habits that aid focus and concentration. This is a matter of preference. Some people find they concentrate better when they’re wearing a headset listening to their favorite tunes. Others, pop in earplugs to drown out distractions. Others still, lock themselves away in a quiet room. Set up the conditions that help you focus and concentrate. 

Use Specialized Software for Estimating Construction Costs

If you’re doing simple estimates for small projects that don’t have a lot of moving parts, a spreadsheet might suffice. But once you get over 10 activities, you’re in specialized software territory.

No choice is wrong if it supports your effort to complete accurate estimates.

Learn about the typical features included in these solutions and decide which ones matter most to you and your style of estimating. Try demo versions. If your firm doesn’t have its own detailed cost database derived from previously completed projects, you’ll want to be sure the estimating solution you choose has one.

You must choose between desktop-installed, cloud-based, or hybrid. Pick a solution based on your existing hardware, security concerns, internet infrastructure, and preferred way of estimating. No choice is wrong if it supports your effort to complete accurate estimates.

Rely on Verifiable Local Labor Production Data

Labor cost is about half of any construction project. When you use a third-party database for estimating, you rely on general labor productivity numbers. Usually, you can make your database more accurate by using adjusting factors for your region. 

Don’t neglect to do that. Then, if you have labor productivity data from your own company and your subcontractors, further adjust your labor costs with that data.

Finally, for each estimate, consider the labor productivity factors likely to apply. For example, a project built during the winter will have lowered productivity from the hassles of dealing with the snow and ice and people don’t perform as well in cold weather. There might also be project-specific factors that will affect labor productivity. A project built in the inner city often has more downtime than a project in a less congested place.

Verify Non-standard Materials and Fabrication Prices

Look for the normal. Everything else requires special considerations. New materials and new methods need people trained in their use. Anything built offsite and then brought on site for installation requires careful estimating. Factor in the fabrication time and the time needed to tie the item into existing work. Adopt an attitude of questioning, and factor in ways to overcome delays.

Spot Check and Compare Specialty Contractor Estimates for Accuracy

Compare industry-standard installation costs if you must include subcontractor prices in your estimate. You can get these from your cost database, and they can help you spot areas where subs may have made mistakes in their estimates. You need to determine if subcontractor pricing is reasonably in line with typical installations.

Cost Estimation Techniques in Construction Projects

You’ll have three main types of estimates. They have subtle but important differences.

Construction Cost Estimation for the Design Phase

Estimates you do for the design phase help to inform the project’s design and the materials and methods used. You’ll do these mostly when working on design-build projects. These are high-level estimates usually covering the major components of the project.

Estimating Construction Costs for Bids 

The most common estimate is the one for bidding. These estimates must have a high level of detail and accuracy. They determine not only who will get the project but also whether that company will turn a profit at the end. You will also usually include prices from subcontractors.

Construction Estimates for Project Control

Project control estimates help managers understand how the overall project is progressing from a budget perspective. They might include re-estimates of certain project aspects to check for accuracy. They might also include new estimates for factors like changes or additions to the scope. 

Estimating Construction Costs Long-Term Strategies

Whether you are a one-person show or you work in a large company, a key aspect of turning out highly accurate estimates remains the same. Define strategies that will help you continually improve your estimates.

Collecting Project Data to Inform Future Construction Estimates

You collect valuable data from every project you do. If you track labor productivity, you can have a more accurate estimation of how much it costs for a particular crew to do particular work. If you track machine and operator productivity, you’ll have valuable insights into those costs. You can apply these insights to new estimates. This is a sure way to improve your estimating accuracy.

Estimator Continuing Education

Nothing stays the same, and new ideas and new tools for estimating crop up all the time. When estimators take time to follow construction trends in materials and labor, they have new information that can enhance estimate accuracy. When estimators do self-study or advanced classes in estimating, they take a step closer to estimating as an art. 

Conclusion

The road to artful estimating does not differ from the road to an advanced degree in the subject of your choice. You are taking your skill to a higher level, gaining new experience, and becoming the master of your chosen profession.