Construction estimating and bidding is a crucial skill for any contractor, but it can also be challenging and prone to errors. How do you ensure that your estimates are accurate, realistic, and profitable? In this article, you'll learn about a simple process for improving your future construction estimates, based on best practices and feedback from your past projects.
The first step in improving your future estimates is to review your past ones. Compare the estimated costs, time, and scope with the actual outcomes of each project. Identify where you were on target, where you overestimated, and where you underestimated. Look for patterns, trends, and common sources of error, such as inaccurate measurements, unexpected changes, or inaccurate assumptions. Use this information to adjust your estimating methods, tools, and parameters for similar projects in the future.
The best way to improve estimating- It’s just we need to focus on bigger items. Sometimes we forgot about what cost us more and unfortunately we just not accounted for. Best process to improve estimating is just to review everything before finalising numbers !! Small to large items everything need to be review with Quality Estimating team and Estimator.
The second step in improving your future estimates is to update your cost database regularly. Your cost database is the source of data for your unit prices, labor rates, material costs, equipment costs, and overheads. It should reflect the current market conditions, supply and demand, and inflation rates. You can update your cost database by using reliable sources of information, such as industry publications, trade associations, suppliers, and subcontractors. You can also use historical data from your own projects, as long as you adjust them for any changes or variations.
In my experience we should update cost data base by every quarter so that way we can get more accurate numbers and we will bid more effectively ?!!
The third step in improving your future estimates is to use appropriate estimating techniques for each project. There are different types of estimating techniques, such as parametric, analogical, bottom-up, and top-down. Each technique has its advantages and disadvantages, depending on the level of detail, accuracy, and complexity required. You should choose the technique that best suits the project's characteristics, such as size, scope, design, and specifications. You should also use consistent and standardized methods, formats, and units for your estimates.
Estimating should be always made simple. Any process that will make estimating complex to perform or understand it’s not worth doing, this will only cause issues at a later stage. A simple and standardised process using simple tools to estimate and perform takeoffs like COSTX, Bluebeam, Benchmark, Expert etc. or even Excel which is consistent, understandable and thorough should be the go.
The fourth step in improving your future estimates is to include contingencies and allowances for any uncertainties or risks that may affect the project. Contingencies are amounts that cover the potential variations or changes in the project's costs, time, and scope. Allowances are amounts that cover the items that are not yet defined or specified in the project's design. You should base your contingencies and allowances on realistic and reasonable assumptions, such as historical data, expert opinions, or statistical analysis. You should also document and communicate your contingencies and allowances clearly and transparently.
The fifth step in improving your future estimates is to validate and verify your estimates before submitting them. Validation is the process of checking whether your estimates are complete, consistent, and logical. Verification is the process of checking whether your estimates are accurate, reliable, and feasible. You can validate and verify your estimates by using various methods, such as peer review, benchmarking, cross-checking, and sensitivity analysis. You should also use quality control and assurance procedures to ensure that your estimates meet the required standards and criteria.
The sixth and final step in improving your future estimates is to solicit and incorporate feedback from your clients, stakeholders, and team members. Feedback is the information that you receive about the quality, performance, and outcomes of your estimates and projects. Feedback can help you identify your strengths and weaknesses, learn from your mistakes and successes, and improve your skills and knowledge. You should solicit and incorporate feedback by using various tools and techniques, such as surveys, interviews, focus groups, and lessons learned sessions.