How can you create precise construction estimates?

1 Understand the project

Before you start crunching numbers, you need to have a clear and comprehensive understanding of the project. This means reviewing the plans, specifications, contract terms, site conditions, and client expectations. You also need to identify the project goals, scope, deliverables, and milestones. This will help you define the work breakdown structure (WBS), which is a hierarchical representation of the tasks and activities required to complete the project.

2 Gather the data

Once you have the WBS, you need to gather the data that will inform your estimate. This includes the quantities, rates, and prices of the materials, labor, equipment, and subcontractors that you will need for each task. You can use historical data from similar projects, industry standards, supplier quotes, or your own experience to estimate these costs. You also need to consider the overhead costs, such as permits, insurance, taxes, and administration, that are not directly related to the tasks but are essential for the project.

3 Apply the methods

When creating an estimate, there are various methods and tools you can use, depending on the level of detail and accuracy required. Unit cost estimating involves multiplying the unit cost of each task by the quantity of work needed, while assemblies estimating groups related tasks into assemblies to estimate the cost as a whole. Parametric estimating uses statistical formulas or models to estimate the cost based on key parameters, and bottom-up estimating estimates the cost of each task in the WBS from lowest to highest level. Unit cost estimating is simple and fast, but may not account for variations in quality, complexity and productivity. Assemblies estimating is more accurate and detailed, but requires more data and analysis. Parametric estimating is useful for preliminary or conceptual estimates, but may not reflect specific features and conditions of your project. Bottom-up estimating is most accurate and detailed, but also takes the most time and effort.

4 Adjust the estimate

After you have calculated the cost of your project using one or more methods, you need to adjust your estimate to account for the uncertainties and risks that may affect your project. This means adding contingencies, allowances, and markups to your estimate. Contingencies are funds that cover the unexpected costs that may arise from changes in scope, design, or conditions. Allowances are funds that cover the costs that are not yet defined or specified, such as finishes, fixtures, or appliances. Markups are percentages that you add to your estimate to cover your profit, overhead, and risk. The amount of contingencies, allowances, and markups that you apply depends on the complexity, size, and duration of your project, as well as the level of confidence and accuracy that you have in your estimate.

5 Present the estimate

The final step in creating a precise construction estimate is presenting it to your client, stakeholders, or partners in a clear and professional manner. This means preparing a detailed and organized document that shows the breakdown of your estimate, the assumptions and methods that you used, the contingencies and allowances that you included, and the markups that you applied. You also need to explain the scope, schedule, and quality of your project, and how they affect your estimate. You should also be prepared to answer any questions, clarify any doubts, and negotiate any changes that may arise from your estimate.