Your success starts with accurate project estimates, but depends on solid execution. To help you stay ahead of the game, we've also created a reference guide about keeping control of the construction project schedule.
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Written by Building Solutions. Currently Reading Construction Costs. Is demand high for a specific material or product? Do you have specific delivery challenges? Is the product or material custom? Are there seasonal limitations that dictate logistics and adjustments to price? Some common costs include: Administration and project operation costs Land acquisition costs Architectural and engineering services Legal services Staffing Job site offices Utilities Shipping and storage Be sure to account for these costs in your estimation.
Accurate Project Estimates Are Just the Beginning Your success starts with accurate project estimates, but depends on solid execution. Building Solutions. Sign up to receive daily updates in your email. Developers face many challenges to deliver projects on time and on budget. Construction When President Trump took office in January , one of his promises was to renegotiate, and, if needed, alter trade agreements with the goal of helping Keep Reading. Connect Facebook Twitter LinkedIn. Similar to the specifications, the project drawings will need to be studied in order to get a holistic view of the entire scope of work.
First, you will need to examine the architectural drawings to ensure you are across all aspects of the project and how they will affect construction costs such as labor, material pricing and equipment. Attention to detail here is key as if you can spot even a minor error it can save you a huge amount of time further down the line. If you do in fact notice that there is some conflicting information, you can write up a request for information RFI to get clarity as to which document takes precedence and how to proceed.
Having a paper trail here is important as it will avoid any disputable change orders further down the line that can otherwise leave you liable. Depending on the complexity of the project, construction takeoffs can be quite time-consuming. For this reason, construction estimating software is becoming increasingly popular as it saves time and reduces the risk of human error.
Your takeoff will include a comprehensive list of all the essential materials needed to complete your project. It is essential that construction takeoffs are carried out correctly, hence the growing trends towards the use of estimating software. If insufficient materials are ordered, it can result in project delays. Conversely, if the takeoff overestimates material figures, it can result in the project incurring additional costs for your business.
Once you have the full list of materials and quantities needed, the next step is to calculate the cost for each individual item. From here you will be able to determine the total cost for materials, labour and the totals for each task. Construction estimates are important as they provide an in-depth description of the project and the associated costs needed for it to be successfully completed. Make sure whoever is in charge of the estimate process makes at least one visit to the proposed site.
A strong estimator will be able to spot important considerations that will impact direct costs such as surrounding buildings, local infrastructure and weather patterns. The final step in the estimating process is to determine your overheads and profits. Both are added as a percentage to your overall project costs for the bid.
A common mistake that some businesses make is underestimating their overheads. Failure to account for these costs will make it very difficult to run a profitable business. Everyone in the construction industry knows that costs often run beyond the scope of the project. Always check that either you or the estimator has applied appropriate markups to the estimate to ensure that a profitable bid is submitted. We suggest working with an accountant with expertise in this area who can calculate your average overhead costs.
As your business grows, these figures should be reviewed and updated to reflect your on-going overhead costs. This document will detail the estimated cost, scope, and work timeframe of the project which will hopefully result in winning the contract against competing developers.
The client will usually put the bid out to tender to a number of builders and evaluate which proposal best reflects their budget and aspirations, and ultimately, who they think is best suited to carry out the job. A well-written and well-presented construction bid is essential, as it can make or break whether or not you succeed in winning the contract. Moreover, a clear and concise bidding proposal will help avoid miscommunications at later stages in the project.
However, this does not negate the usefulness of a comprehensive construction estimate. 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.
These are the apparent factors, but the estimator should also consider hidden factors such as the possible market fluctuations that affect the costs of materials.
Estimators also need to assess the project-specific materials as an eco-friendly building would need different materials than an ordinary building.
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:. Construction estimators produce and revise estimates for a project. They are familiar with the design and expenses incurred in the project. With each design phase, the estimates become more accurate.
During the creation of estimates, the contractor oversees the link between the budget and schedule. All projects benefit significantly from following a deliberate and thoughtful process in cost estimation. The cost estimating process requires good judgment and planning to achieve the best results from a project.
One needs to have a basic understanding of the construction process to understand the cost estimation process properly. The following steps provide a guideline when making a construction estimate.
The parties involved must agree based on cost estimation of the project before starting the estimation process. This activity entails obtaining project information such as previously developed scopes and schedules from which the estimator can come up with cost estimates. The level of the scope is always dependent on the project type, complexity, design matrix, and criteria. The cost estimator should clearly outline and document all assumptions in this stage.
The cost estimator should also record additional and subsequent information to give a traceable history for each of the estimates made. A base estimate covers all the estimated costs of a project apart from the foreseen future escalations. These estimates are usually calculated depending on different techniques such as scope definition, size, and complexity of a project.
In contrast, detailed estimates vary depending on the development phase of the project. More details come to light giving a more detailed cost estimate as the design progresses.
The critical inputs required in this stage are scope details, inflation rates, material take-offs, unit cost databases , and market conditions. The construction take-offs give the client an outline of the necessary material costs. Construction take-offs vary depending on the project's size and scope. Collecting and interpreting all scope documents can be challenging, but the project team must fix the scope documentation from the start to estimate the direct costs. The cost estimator also notes all the cautionary notes, assumptions, and exclusions while preparing the base estimate.
The estimate can also be attached and included as an attachment for reference for the remaining project activities. 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.
It prevents the double counting of items and ensures components are not missing. This stage reviews cost-based estimates and historical data or project-specific conditions by applying the necessary location and productivity factors. The estimator also checks indirect and overhead costs with the direct costs as the basis. An integral part of project planning is developing a risk and contingency plan.
Risk management is always an ongoing process for maximizing the possibilities of opportunities and minimizing the probabilities of threats. In addition, the estimator needs to include the cost impacts of hazards in the total project costs. Cost estimators should communicate the cost estimate data to all the necessary parties. A good communication approach determines the information that should be shared and who should receive the information. It also determines the information channels that information should pass through.
Thus, communication is just as important as numbers, and the information can be used as an effective critical tool to ensure the project's success. Another construction estimator should always review a cost estimate. They perform spot checks to verify quantities and costs and check the scope completeness of a project. Project success is often hidden in the details and uncovering those can require calls to suppliers, collaborating with other contractors, RFIs requests for information with the GC, or extracting the critical information during meetings.
Analytical — This trait seems obvious. However, an estimator should be more than quick with numbers, good at math, and understanding the sequence of a project. The truly analytical mind will learn from previous work and apply those lessons to future projects. As a project is going through the estimating process, the true analyst will begin looking for pockets of profit through logistics, assembly, scheduling, and many other facets to ensure the company is maximizing its ability to be competitively priced and securing profit for future work.
Perseverance Persistence — Interviews might not reveal this trait, but this hidden gem can mean the difference between single-digit and double-digit profit growth. They follow through on every aspect of the bid, meet deadlines, and ensure success regardless of the time needed. Multi-tasker — Juggling multiple bids is a requirement for sustained growth.
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