How to Estimate Construction Costs Like a Pro
Estimating construction projects isn’t everyone’s favorite part of the job. It can be both tedious and time-consuming.
It is, however, an essential part of the job.
In this guide, we’ve covered how to estimate construction costs and laid out the steps of costing a building project so that you can estimate projects like a pro and save time and money.
- CM Fusion: We’ve Revolutionized the Bidding Process in the Construction Industry
- Understanding the Importance of an Accurate Construction Cost Estimate
- Creating a Detailed Construction Cost Estimate: 5 Phases in the Estimation Process
- Manage Your Estimates With Ease Using CM Fusion’s Cloud-Based Construction Management Software
CM Fusion: We’ve Revolutionized the Bidding Process in the Construction Industry
With CM Fusion’s cloud-based construction bidding management software, we’ve made keeping track of your projects easy and stress-free.
With this software, you’ll be able to:
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Create and track bids from anywhere at any time
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Manage projects with ease and flexibility
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Increase workload and profitability
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Save time and money with the automation of tedious tasks
CM Fusion has made it easy for you to estimate projects as well as create bids, invoices, and other documents in minutes.
Our revolutionary cloud-based construction management software could be exactly what your business needs to take it to the next level.
Ready to ditch the spreadsheets and paper trails? Contact us to schedule a call or start your free 30-day trial today.
Understanding the Importance of an Accurate Construction Cost Estimate
The primary goal of a construction cost estimate is to provide a general idea of how much a project is going to cost in terms of labor and raw materials needed to complete the project.
Accuracy plays a huge role in the success of the project.
If an estimate isn’t accurate, you risk:
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Wasting time
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Wasting energy
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Wasting money
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Hurting the relationship with the client
How Do You Calculate Construction Costs?
When calculating construction costs, you want to be as accurate as possible. One way to improve overall accuracy is by consulting the resources you have available to you.
For example, helpful documents might include:
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Designs, drawings, and technical specs for the project
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Historical cost data
If none of these helpful resources are available, you’re likely going to end up with a broad estimate where you run the risk of having to adjust the numbers later on.
Read on to find out how to create a detailed construction cost estimate.
We’ve provided a phased approach to estimating construction costs from the beginning all the way to the end of the project.
Creating a Detailed Construction Cost Estimate: 5 Phases in the Estimation Process
The more details you can include in your estimate the better.
Details and specifications often translate into a more accurate construction cost estimate.
Not all projects are going to be the same.
There are several variable factors that can impact the estimate. Some of them include:
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Unique client vision
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Availability of materials
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Availability of labor
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Budget restrictions
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Design elements and input from design team
Following a five-step approach to creating a detailed construction cost estimate can be a really useful way to consistently create accurate estimates and secure more business.
Phase #1: Understanding the Scope of the Project
In this first phase, the estimator works to understand the scope of the project. To do this, they will spend time learning from the client as well as the project architect or design team members.
During this phase, an estimator might assess things like:
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The client’s expectations
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What obstacles the builders might encounter at the building site
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Logistical concerns (storage, shipping, etc,)
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Regulatory concerns (federal, state, or local ordinances)
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Environmental regulations and standards
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General timelines
Simply put, this phase is a crucial step in laying a strong foundation of communication with everyone involved on the project.
Phase #2: Creating a Detailed Cost Analysis
Once the scope of the project has been established, the estimator can begin creating the ‘material takeoff’, or list of necessary materials.
This second phase entails costing the materials needed to complete the project and creating a timeline to give to the client.
Creating the cost analysis is often the most crucial part of the estimation process. It requires the estimator to gather lots of information and think through the logistics of the project that might impact the overall cost.
Using tools and taking the time to properly assess cost can save a lot of money down the road.
For example, an estimator can use advanced drone technology to estimate the cost of dirt needed for a project.
With drone technology:
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The estimator can create a route around the building site
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Take snapshots to create a model; and
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Use the model to calculate the volume of dirt needed
Accurately estimating the amount of dirt needed for the job on the front end can save hundreds or even thousands of dollars in the long run.
Got your takeoff?
CM Fusion’s construction management software has cost tracking features to help you stay on budget, keep track of labor, materials, fixed costs, and more.
Start your 30-day free trial today.
What Is a Construction Cost Estimator and Why Do You Need One?
Construction cost estimators are there to ensure the most accurate estimate possible. They work closely with clients, architects, and vendors to create an estimate that outlines the costs of a project in as much detail as possible.
A skilled estimator is likely to have a background in various aspects of the construction process.
For example, many great estimators are highly skilled in mathematics and have experience in construction design or engineering. A good construction cost estimator does not generally come cheap, however.
The Role of Construction Cost Estimate Software in Creating a Detailed Construction Cost Estimate
One way to expedite the process of creating a detailed construction cost estimate is by utilizing cost estimate software.
While a software doesn’t entirely replace an estimator, using it as a tool can save you valuable time and money and enable you to pursue other business opportunities.
Generally, with cost-estimating software, you can expect to be able to:
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Analyze blueprints
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Enter measurements and quantities
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Streamline and automate the takeoff process
Software can be an incredibly helpful tool in other aspects of your business as well.
CM Fusion’s cloud-based software allows you to efficiently and easily manage all your project tasks in one place.
Phase #3: Determining the Labor Requirements
The next phase of the estimation process is determining how much labor the project will require.
This generally involves working alongside construction managers and subcontractors, as well as union representatives, to estimate how many workers will be required to get the job done properly.
When estimating labor costs, you may want to consider:
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If specialized labor is required and if it’s available
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Local, state, and federal regulations and ordinances
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Union labor requirements
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Holidays that need to be observed
It is in this phase that the estimator should apply any markups. Markups ensure a profitable bid. Read more about markups and cost-plus documents here.
What Is the Labor Burden and Why Does it Matter?
A labor burden is an important piece of the construction cost estimation process. The labor burden assesses the benefit of sustaining an employee.
It takes into consideration the direct and indirect costs associated with employing a worker.
Indirect costs could include:
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Insurance benefits
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Vacation time
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Training
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Payroll taxes
Some companies find it best to allocate a certain percentage to the labor burden. Others will use estimation software to determine the labor burden.
For a given project, you’ll want to compare bids from various subcontractors to determine which is best-suited for the job.
Phase #4: Presenting a Detailed Construction Cost Estimate to the Client
Once all the costs have been estimated with as much accuracy as possible, the estimate is presented to the client (and the architect and project managers, if applicable).
Because clients often see multiple estimates, the level of detail in your estimate can make or break a deal.
This presentation to the client will usually include:
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A comprehensive estimate
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History of the contractor’s previous projects
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A completion timeline
The quality of the presentation as well as how the challenges of a project are communicated are also crucial.
Clear communication also gives the client assurance that a builder will meet and overcome the challenges that arise throughout the life of the project.
Phase #5: Completing the Project
Once the client has agreed to the estimate provided, the project can commence. The estimator’s job is not finished, however.
The estimator must provide oversight to the project and make adjustments as needed. Ideally, fewer adjustments will be needed, assuming due diligence has been given to the estimate on the front end.
That said, all projects are different, and there are almost always unforeseen circumstances during the completion of a construction project.
Manage Your Estimates With Ease Using CM Fusion’s Cloud-Based Construction Management Software
If you run your business well, chances are you are sending out estimates all the time.
With CM Fusion’s cloud-based management software, you can keep track of all the estimates you have out there with no difficulty or hassle.
You never have to worry about losing important documents or misplacing proposals.
CM Fusion will store and organize everything you need in one place so that you’re never without what you need to move forward with a project.
And the best part is -- you can try it for free for 30 days.
Schedule a call with one of our team members at CM Fusion to see how our cloud-based construction management software can help you and your business.
Try CM Fusion, risk free for 30 Days – Your first project is FREE!
If you are trying to figure out where to look now, our company CM Fusion offers a free version of Construction Project Management Software. Not to mention, our customers brag about it’s ease of use, so you should be able to sign up and start managing your projects in minutes.