What are Cost Estimate and Cost Estimating in Construction Projects?
What is Construction Cost Estimating?
Estimating construction costs is one of the most time-consuming but crucial aspects before beginning any building project.
A detailed and accurate construction cost estimate is essential for determining the project’s financial viability. Additionally, pricing estimates ensure that the project will be completed most cost-effectively and efficiently for both the property owner and the contractor.
Who is in Charge of Estimating Costs?
A construction cost estimator creates and revises cost estimates for a project. In the cost estimation process, he is the most important person. He’s also in charge of estimating the many aspects and phases of a project.
Methodology for Estimating Construction Costs?
Following are some of the methods for estimating construction costs:
- Unit Cost Estimating
Unit cost estimation is a popular method used to estimate the cost of constructing a single home and then extrapolate that cost to the entire project.
- Production Function Estimating
Production function estimating involves putting material and labor expenses into a pre-defined formula to determine the final total cost. The formula can then be used on other projects with minor tweaks to ensure accuracy based on the findings.
- Stick Estimating
Stick estimation is a simple method. It involves making a list of all the potential costs involved with a project. For smaller projects, it’s a convenient method. On larger projects with many variables, it could get out of hand.
- Empirical Cost Inference Estimating
Empirical cost inference estimating is one of the most complicated methods of estimating a construction project’s cost. This method evaluates key characteristics through the lens of regression analysis.
What Are The Levels of Estimates?
Construction estimates are classified using a five-tier methodology. As you progress through the stages, the details grow more comprehensive, making the estimation more accurate.
- Concept Estimate
This estimate is usually calculated using the conceptual design and historical per-square-foot prices. The technique helps set the client’s expectations by establishing estimated expenses and the project’s overall viability.
- Schematic Design Estimate
A schematic design is the architect’s first attempt at comprehending the client’s concept and putting it on paper, which will help the project team balance the client’s design goals with their financial constraints.
- Design Development Estimate
It will help the customer track expected budget expenditures and understand how their design decisions link to cost as the design evolves.
- Construction Document
Once completed, the estimate can use the construction designs and specifications to fine-tune its conclusions.
- Definitive or Bid
Now that all expenses are known, this is your most exact and dependable figure, and it may be used to build bids and cost baselines.
How to Get a More Accurate Estimate of Construction Expenses?
Here are some methods to get a more accurate estimate of construction expenses:
- Track your resources
- Get expert insight
- Be careful in calculating labor fee
- Learn to estimate construction materials
- Track spending
- Know your specialty work hourly rates
- Identify the most important risk factors
What Challenges Does a Construction Cost Estimator Face?
A construction cost estimator’s job is not easy. Here are the other common challenges faced by a construction cost estimator:
- Fixed Budget
False cost reporting frequently results in additional costs for the owner, negatively impacting the project’s completion.
The cost estimator’s job is all about accuracy. Inaccurate estimations would harm the client’s trust and working relationship with the builders.
- Time Limitations
Good estimators make it a point to visit the job site and investigate aspects that influence the project’s cost. When pressured for time to submit their findings, estimators are prone to making mistakes.
Why is it Important to Estimate Cost?
- Estimating helps owners and clients to know the suitability and viability of a project.
- Builders and Contractors in determining a project’s profit potential.
- The project team’s capacity to make critical design or material decisions that could positively or negatively impact the project’s cost.
- Accurate budgeting to determine the venture’s closest actual cost improves risk mitigation.
What Are The Advantages of Cost Estimating in Construction?
Some of the advantages of cost estimating in construction include:
- Accurate Planning
- Increased profit margins
- Management of resources
- Better reputation