Purpose of Estimation:
- To have an idea of overall construction cost.
- Estimation for public construction is needed to have administrative approval, technical sanction and funds.
- For timely procurement of materials as per the estimated quantities.
- To make a construction programme and prepare schedule
- To set a deadline for various construction activities
- Determine requirement of tools, equipment and plants
How to write an estimate for construction?
This means, at the very least, you need to include:
- A comprehensive description of the job and the work that you’ll be doing
- An overview of the estimated materials and labor that will be involved
- The total cost of the project
- The payment terms and conditions, particularly if you require money upfront for materials
- You company’s contact information, including phone number, email, and address
What does a construction estimator do?
What does a Construction Estimator do? Construction estimators examine and estimate the work of particular construction projects. They conduct this estimation by gathering proposals, blueprints, specifications, and other related key documents and explore them to gain a deeper understanding of a project and its requirements.
How to estimate building construction costs?
How to create a successful construction estimate
- Create a timeline. Using the project scope to determine what needs to get done and when, draw up a construction schedule or construction timeline that breaks down the project ...
- Perform a quantity takeoff. List all of the materials costs for each phase, and then provide a total estimate. ...
- Estimate labor. ...
- Use a template. ...
How to estimate house construction?
How to use House Construction Cost Calculation Excel Sheet
- Calculate area of your plot ( Lenght x width)
- Convert area in sq.ft. (only enter the area in sq. ft.)
- Enter the area of your plot in red-colored excel cell below the enter your house area in sq. ft.
- Enter your area construction cost per sq. ft rate.
- Check your construction cost at the bottom of the table.
Why do construction estimates need to be accurate?
Why do contractors use cost estimates?
What is bid estimate?
What is the purpose of level 2 estimate?
How accurate are cost estimates?
What is a control estimate?
Why is accurate estimate important?
See 2 more
What's the purpose of estimation?
The purpose of estimating is to determine the cost of a project before you actually do the work. Estimating must take into consideration variable job conditions, the cost of materials, labor cost, labor availability, direct job expenses, and management costs (overhead).
What is the purpose of estimating and costing?
The purpose of cost estimation is to predict the quantity, cost, and price of the resources required to complete a job within the project scope. Cost estimates are used to bid on new business from prospective clients and to inform your job and budget planning process.
Why is estimating so important for a project?
Estimating costs as accurately as possible can mean the difference between getting projects up and running quickly or encountering delays or cancellations. Cost estimation strategies help project managers forecast the resources necessary for each step of a project and ensure that projects stay on track.
Why Is Construction Estimating Important? | ProEst
Getting An Accurate Estimate From A Qualified Estimator: What To Expect. As we’ve reviewed, when it comes to any construction project, getting an accurate estimate from an experienced estimator is an invaluable service to your company.
What is construction cost estimating?
Construction cost estimating is a foundational principle in forecasting the cost of construction of a structure. Project owners also use construction cost estimation to determine a project's feasibility, scope, and the necessary budget allocations. Proper construction estimation practices prevent the contractor from losing money and the client from overpaying.
Why is estimating important?
It is practically impossible for the initial construction estimate to match the final project cost. However, this does not negate the usefulness of a comprehensive construction estimate.
Who creates cost estimates?
Construction estimators produce and revise estimates for a project. They are familiar with the design and expenses incurred in the project. They’ll also create multiple assessments on the pre-design and design phase. With each design phase, the estimates become more accurate.
Why are cost variations common?
Cost variations are common when an estimator fails to factor in the risks. The higher the probability of a threat is, the more detailed the risk analysis should be. The experienced cost estimators assess the risks and determine whether a project is feasible for their firm or not.
What are the factors that a cost estimator considers?
Therefore, it is imperative to have a set of data points that a cost estimator should investigate. These factors include materials, location, machinery, and labor.
Why is it important to review the base estimate?
Reviewing the base estimate is necessary to ensure all the assumptions and basis of a project are correct. It also means that all the base cost estimates are an actual reflection of the scope of work and schedule.
What is cost estimation?
Cost estimation provides the foundation for the planning of a job schedule. The accuracy of an estimate determines whether a job meets its objectives or not. Some of the benefits in cost estimation include:
What is needed to be an estimator?
In order to be an effective estimator, they’ll require a robust knowledge of the blueprints, as well as the costs of necessary building supplies and labor.
What factors should an estimator take into consideration?
Additionally, there are other factors that estimators must take into consideration, including the availability of gas, electricity, water and sewer, surface topography, drainage, and the specific materials required to complete the project.
What happens if your estimate is faulty?
After you’ve entered the construction phase of a project, if your estimate is faulty, you may not have enough money to complete your building. In order to meet your budget, another option may entail making concessions to allow for additional expenditures.
Why do you go over the estimate?
However, because your construction estimation is one of the most important pieces of criteria used to hire a contractor, it must be as accurate and possible.
What is the objective of commercial construction?
No matter what type of commercial construction project you’re about to embark upon, the objective will always be the same: to fulfill your vision and accomplish the goals you’ve set out to achieve. However, before your ambitions can become a reality, your company needs to carefully examine real-world finances in order to determine ...
Why is it important to compile detailed data points?
According to the United States Census Bureau, commercial construction estimators are capable of completing accurate estimates by gathering information on a number of factors. Because these components directly impact the total cost of a construction project , it is important to compile detailed data points.
Is construction the largest component of capital cost?
It is vital for design professionals and construction managers to realize that while the construction cost may be the single largest component of the capital cost, other cost components are not insignificant. For example, land acquisition costs are a major expenditure for building construction in high-density urban areas, and construction financing costs can reach the same order of magnitude as the construction cost in large commercial projects.
What is construction cost estimating?
Construction cost estimating is the process of forecasting the cost of building a physical structure. Of course, builders and clients both worry about the financial impact of cost overruns and failing to complete a project. That’s why they devote time and effort to estimating how much a project will cost before deciding to move forward with it. Clients considering large projects often seek multiple cost estimates, including those prepared by contractors and those calculated by independent estimators.
Why is estimation software important?
Estimating applications make cost estimates faster and easier to produce, which is crucial in a construction market that’s immensely competitive. They’re also more accurate than human estimators working on their own, as long as you use up-to-date cost data. Estimation software has become a must-have for anyone generating complex construction cost estimates.
What is cost exponent?
The cost exponent is an indicator of whether a scale economy or diseconomy exists. For a discussion of how to calculate cost exponents in construction, consult Project Management for Construction. If the exponent is greater than zero but less than one, an economy of scale exists. If it is greater than one, a diseconomy of scale exists. If it is equal to one, the cost-capacity relationship is unaffected by scale.
What factors affect the cost of a project?
One of the primary factors that influences cost is the building site. Waterlogged soils, previous construction, geological formations and the nature of the rock, native animal species, and the presence of historical or natural heritage sites are just a few of the things that can affect materials and labor requirements, delay the issuance of permits, and increase the time needed to complete the project. Similarly, the location of the construction site relative to economic centers can also be significant. Contractors may have to transport workers and materials for a long distance if the site is remote. In a bustling urban area, the wages may be higher. Furthermore, regulatory requirements may be stricter, and hence more expensive to fulfill or comply with, at some construction sites than at others. Lastly, certain construction sites require the completion of feasibility or impact studies, which are likely to prove expensive.
What is level 1 in construction?
Level 1: Order of Magnitude Estimate: Made when project design has not yet gotten under way, you only use an order of magnitude estimate to determine the overall feasibility of a construction.
What are indirect costs?
Indirect Costs: Indirect costs are expenses not directly associated with construction work, like administrative costs, transport costs, smaller types of equipment, temporary structures, design fees, legal fees, permits, and any number of other costs, depending on the particular project.
What is the role of an architect in design?
The architect is generally responsible for overseeing and coordinating the design process , though for some projects (such as industrial construction), an engineer may be one of the people overseeing design. 4. Designing the Structure: This step deals with the architect creating a series of designs.
What is construction estimate?
Construction estimating is the process of forecasting a project’s costs. However, true project costs are only known once the project is completed. There are several types of construction cost estimates.
Why is it important to have a good estimate?
A good estimate prevents the contractor from losing money and helps the customer avoid overpaying. The purpose of an estimate has a different meaning to different people involved in the process. To the owner, it provides a reasonable, accurate idea of the costs.
What are consumables in construction?
Consumables are real project costs and should be included in the estimate. Following are some examples of consumables for the average project: bandsaw blades, drill bits, electrical tape, phasing tape, rags, and threading oil.
How to get an estimator to do a good job?
1) Get the work. 2) Do the work. 3) Get paid for the work. When a company can sign a contract with confidence and the project manager has a plan to execute the project profitably, all three of these steps will be fulfilled — and will serve as proof that the estimator has done a great job.
How to do contracting in project management?
Contracting in the simplest form is a three-step process: 1) Get the work. 2) Do the work. 3) Get paid for the work.
1. Increased understanding of costs
The purpose of cost estimation is to give project stakeholders accurate information concerning the related project costs. It is easier to make lasting decisions if there is information to back them up. Cost estimation also gives clients value-aided options and helps clients minimize expenses.
2. For funding requirements
It is common in the construction industry for contractors not to receive payment up to three months after construction kicks off. Even with these delayed payments, contractors need to ensure the timely progress of projects by having adequate funding to run the project. Most clients also operate their projects on loans.
3. To understand material requirements
Residential, industrial, and commercial projects have unique material requirements. The cost estimator, therefore, has to select the proper materials that fulfill the industry requirements. The estimation process needs a lot of accuracies.
4. To aid preconstruction
Preconstruction is the stage in a project before actual construction takes place. This process involves budgeting, planning, and scheduling activities. The projects struggle to get back on track when projected timelines and costs fall outside the estimated parameters. Cost estimations help the plans in preconstruction.
5. To know equipment and tooling requirements
The construction process requires a lot of equipment such as cranes, forklifts, generators, and excavators. Some equipment is consumable in a project. These are electrical tapes, threading oils, bandsaw blades, and drilling bits. Sometimes, if a contractor does not own this equipment, they might need to rent them out.
6. To pre-plan labor requirements
A contractor needs a good understanding of all the labor units required for a project. A project has several units that run concurrently with each item in cost estimation having an associated labor unit. The labor requirements are pre-planned depending on the project's specifications.
7. To understand the cost to benefit ratio
A cost-benefit ratio is an indicator that shows the relationship between the foreseeable relative costs and expected benefits. If a cost-benefit ratio is more than one, a project is expected to deliver a high net value to its firm and investors.
Why do construction estimates need to be accurate?
Construction estimates need to be accurate because profit margins are typically razor-thin in the industry, so even a slight miscalculation on costs can determine whether a contractor makes or loses money on a project.
Why do contractors use cost estimates?
Contractors also use cost estimates to determine whether they should bid on a project. Architects and engineers usually provide input for these estimates to ensure the project remains within scope and budget. Project managers use cost estimates to track a project’s performance.
What is bid estimate?
Bid estimates require an unusually large amount of research that’s typically drawn from a variety of sources. They include direct costs, take-offs, subcontractor quotes and the cost of supervising the project.
What is the purpose of level 2 estimate?
The Level 2 estimate is commonly known as the intermediate estimate. Its primary purpose is to determine the project’s general feasibility. It’s typically used to determine if a large project should proceed as planned.
How accurate are cost estimates?
Cost estimates generally become more accurate as the project progresses and estimators gather more information. Each estimate, therefore, begins with a wide range that becomes more narrow with a more precise definition of the project’s scope. For example, the American Society of Professional Estimators (ASPE) defines five levels of cost estimates.
What is a control estimate?
These estimates serve as a baseline for accessing and controlling the actual construction costs. Control estimates also allow contractors to plan for their upcoming costs in advance and determine the total cost of completing the project.
Why is accurate estimate important?
Accurate estimates are critical in construction because unlike other sectors where businesses set the price for their products and services, contractors must routinely bid on projects and the accuracy of the estimate can be the decisive factor in determining whether a project is won or lost.
