Regardless of the commercial or residential development scale, the accurate budget estimation can’t be understated in construction. It doesn’t matter if you work in a specific trade or are a builder-architect. Precise budget estimates are critical in breaking down the project scope, enabling you to determine its overall feasibility and profitability.
In short, estimation is paramount for effective project management. In this article, we’ll shed light on the crucial importance of estimation in construction comprehensively.
The Purpose of Construction Estimating for Construction Project
Construction estimation helps forecast the project costs. However, there are two primary types of estimates – detailed cost estimates and preliminary cost estimates. Architects solicit these estimations from contractors. It helps their customers analyze if the construction can move forward. With accurate calculations, you can avoid money loss.
The main purpose of estimation for the building project is that it provides an exact and reasonable idea of costs. So, if you want to end up with profitable contracting. Then, accurate estimating is a worth considering option here. This is how estimates can provide contractors with the necessary confidence to enter into a lawful agreement.
The Importance of Construction Cost Estimation
Estimates help determine how much the construction project cost. It also provides a clear idea of how much profit businesses can expect to make in the end. Also, you can use these calculations to ensure the project is completed without exceeding budget.
Let’s discuss some reasons why considering cost estimation is of significant importance.
Predict Profit Margins
Do you want to predict profit margins for the project? You can easily do it by performing the correct cost estimation. It enables you to justify charging more regardless of the project’s cost to make a profit. So, if you want to earn a guaranteed profit from the construction work. Then, the estimate must consist of all costs plus lost materials.
Keeps Your Budget In Check
Keeping the budget in check is imperative for a flawless project completion. For this reason, construction estimates can help you generate and maintain the overall budget. Clearly, estimation lays the foundation of your budget. If you have accurate estimates to follow in the building process. Then, it will be easier to stick to your expected budget.
Provide Precise Bids
Higher bid ratios can assist you in winning more construction work in the future. Thus, with the cost calculations, you can provide your customers with the most precise bids. In addition to this, accurate construction estimating allows for a lower bid price point. As a result, you can attract more potential customers to your construction work business.
Determine the Project Scope
If you want to determine your building project’s scope, cost estimation can significantly help you. Also, you can figure out that the project has become immense, materials are costly, and the timeframe is too short. By doing so, you can make the necessary changes before starting the construction. It also helps you determine the labor costs.
Why Accurate Estimates Matter?
You might be wondering why accurate estimates matter. It offers the following benefits:
Better Project Planning
Precise cost estimating helps you to plan the project’s sub-tasks required to finish the work properly. You can also produce a detailed project breakdown structure. Consequently, it helps your team members to stick to the task schedules effectively.
Identifying Various Issues
Many issues can arise when constructing any structure. Therefore, having proper knowledge of the timescales and tasks can assist you in discovering resource shortfalls. Additionally, you would be capable of recruiting employees as per requirements.
Helps in Risk Mitigation
Unforeseen circumstances and improper planning can make completing the project within budget and on time unfeasible. So, if you want to account for unnecessary expenditures and protect the profit margins. Then, ensure to make precise estimates.
Ensures Project Efficiency
Ensuring the efficiency of a project is equally important at the same time. If you are able to finish the project within budget and on schedule, it shows the project’s efficiency. Furthermore, it helps strengthen the builder-client relationship, boosting trustworthiness.
What to Expect When Getting an Estimate from a Qualified Estimator
Cost estimation is a critical job in the construction industry. So, if you’re thinking to hire a qualified estimator for that purpose, it is advisable to consider the following factors:
Blue Print Reading Skills
An estimator who knows how to read blueprints properly improves the chances of project success. However, the candidate must also have a know-how of project specifications. He must be capable of interpreting the drawings’ specifications as well.
Understanding and reading blueprints is the key role of a professional estimator. Construction documents provide the information required to estimate the project. Because the candidate can’t perform his duties without an understanding of blueprints.
Strong Communication Skills
When looking for an estimator, you must also check if he has strong communication skills. Therefore, it is considered the most overlooked attribute of the expert estimator. If we talk about estimating, verbal and written communication is the crucial aspect here.
If you want to ensure the utter success of your building work. Then, it is imperative to collaborate and coordinate with all project stakeholders. It is critical that estimators can extract and articulate the most accurate budget calculations even under pressure.
Even-Tempered
There is no denying that construction is a challenging task, having many challenges. So, you must invest in an estimator that is even-tempered. He must be capable of meeting deadlines, revising, tracking each change, and managing various projects.
Of course, dealing with project stakeholders at a time can be hectic. Panic is bad, but urgency is good. So, the candidate must know how to handle difficult situations appropriately. Also, the estimator must do his best to deliver the accurate estimates.
Broad Field Experience
Real, on-site field experience is also the prime characteristic of an expert estimator. Also, estimators must have a tangible knowledge of putting together the construction project effectively. Having an understanding of labor and time required is also important.
Aside from this, you must also ensure that the estimator has insights into which factors can lead to inaccuracies. Getting estimates from an experienced estimator is essential.
How to Deal with an Inaccurate Estimate
Estimating the project completion time is the most challenging part of the planning. Different factors, including dependencies, unforeseen risks, and scope changes, can affect the project’s efficiency. What if your budget calculation is inaccurate?
Don’t stress yourself. Following are tips that will help you handle such a situation:
Create A Piece-By-Piece Approach To Your Work
One of the other causes of incorrect estimates is the lack of granularity and clarity of the construction work. But you can easily avoid it by dividing your work into measurable, manageable, and smaller pieces. Not only this, but you can also use WBS (Work breakdown structure) for that purpose. It’ll help increase the accuracy of your project.
Ensure to Review the Quote Before It Is Submitted
Even if you’ve successfully generated estimates, it is better to double-check before submitting. You need to check out for inaccuracies, if present. Reviewing the budget estimates means analyzing the effects and causes of several variances. Moreover, you can quickly review estimates by using some metrics or tools, such as variance analysis.
Take Into Account Risk And Uncertainty When Estimating
Estimates are possibilities or ranges that reflect the risk and uncertainty of the work. So, if you want to deal with inaccuracies, it is best to adjust estimates for uncertainty. You can do it by adding some contingency to the baseline cost estimates. Also, you can use methods to quantify inaccuracy risks, like PERT analysis and Monte Carlo Simulation.
Make Use Of Effective Estimation Methods
Many methods can be used to estimate the project’s efforts or duration. For example, parametric, top-down, bottom-up, or analogous. However, it is advisable to choose the method that best adheres to your project characteristics, constraints, and goals. The top-down method is best to allocate a fixed amount of resources to each deliverable.
Key Takeaways
When it comes to the construction businesses, estimates are critical. Therefore, they must be timely and accurate to ensure that you win more projects in the future. Thanks to the professional estimators, they have made the cost calculation much easier. Estimators possess years of experience and broad knowledge in estimation. Hence, they know which strategies and methods to follow so that you get error-free estimates.
FAQs
What is the goal of estimating the cost of a construction project?
The primary goal of estimating the cost is calculating the total budget required to finish the building project flawlessly. So, as important as other crucial phases, preconstruction estimates influence the investment rate at the end. However, there are not any shortcuts to a lucrative endgame.
Why is it important to accurately estimate the cost of a construction project?
If you don’t consider any unforeseen expenses during the construction or underestimate project costs. Then, it can be highly detrimental to your business. For this reason, it is crucial to calculate the cost of the construction project accurately. Also, precise estimates help ensure that your work ends at the designated time and within the budget.
What are the consequences of inaccurate estimates?
Inaccurate estimates leave many consequences. For instance, overestimating revenue and underestimating costs can erode project profit margins. This means your building project will become financially unsustainable. Furthermore, unexpected delays and cost overruns can lead to extra expenses, potential legal issues, and contractual disputes.
What to expect when getting an estimate from a qualified estimator?
There are many things you must expect when hiring a qualified estimator. You must know that project planning is paramount. Therefore, the best estimator must be capable of reviewing the work scope and planning it properly before diving into the construction.
How to handle an inaccurate estimate?
There could be many factors leaving you with inaccurate estimates. However, you can handle them easily by following the tips shortlisted below:
- Get professional help immediately
- Take out your low-priority construction tasks
- Reduce the high-priority tasks’ scope
- Be calm, and no need to rush the code
