How to estimate construction costs | 3 tips for fast, accurate project forecasts

Contractors care about providing quality services at a competitive price. But in order to yield the profits needed to succeed, they must know how to estimate construction costs quickly and accurately.

What is construction cost estimating?

In an effort to win the right construction bids, contractors perform construction cost estimating to forecast the scope and price of a project before work begins. Accurate estimates are crucial for generating revenue.

Create a plan, know your budget

Construction cost estimating starts with detailed and accurate planning for the project. This will help ensure you’re meeting the customer’s expectations in regard to material, labor and time.

It’s also important to set a budget. You want to know roughly how much the customer is willing to spend.

Choose which estimate approach to take

Here are two of the most popular approaches to construction cost estimating:

Stick estimating is a very accurate approach, but it’s also very tedious. It involves listing the costs for every single component of a project, including the hours it will take to complete each portion, materials that will be used, subcontractors that will be needed, list permits, rentals and similar factors. Listing every part of a job could take weeks to complete, which tends to be too long for customers.
Unit cost estimating, on the other hand, is an approach that is twice as fast and just as accurate. You associate unit costs with each assembly that’s part of the construction process. Often ideal when paired with quality estimating software, this approach helps get estimates to the customer sooner – usually within a week. Here are the steps to take with unit cost estimating:
- Compile all line items (assemblies) for the job.
- Attach a unit cost to each line item.
- Total your numbers and have them checked by a qualified reviewer.
- Apply your markup to yield the final price.

Avoid these common pitfalls

There are a number of mistakes that can be made during the construction cost estimating process, such as:

Failing to read project documents carefully
Forgetting to incorporate certain costs
Not visiting the site to evaluate conditions
Failing to seek help in areas where you lack expertise
Forgetting to evaluate the experience level of crew members

Know how to estimate construction costs

If you want to generate quality construction cost estimates, be sure to consider these tips when forecasting for your next project. In order to yield the profits needed to succeed, you must estimate a project quickly and accurately.

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