The construction industry is a pillar of the US economy, contributing $2.1 trillion in 2021 alone. While this industry is bustling, it also means that construction companies and contractors have to contend with the cut-throat competition that comes with being in such a large industry.
Having a solid cost estimating process can give you an edge over your competition. However, making an accurate project estimate is no easy task.
So, what should be included in a construction estimate?
There are so many factors to consider, and it can be tough to predict the cost of a project accurately. However, you can improve your estimating practices and become more accurate in your predictions with a few simple tactics.
In today’s post, we’ll discuss a few ways you can improve your construction estimation process.
What Is a Cost Estimate in Construction?
A cost estimate in construction is the process of approximating the probable cost of a project. A professional estimator usually does it after analyzing the work required, site conditions, materials, labor, and equipment needed to complete a task.
Construction estimating can be used for several purposes:
- Creating a budget for the project
- Comparing bids from different contractors
- Monitoring actual costs incurred during construction and comparing them against the estimate
If you are a contractor, there are several things you can do to improve your estimating practices:
What Should Be Included in a Construction Estimate?
A good construction estimate should include all the costs associated with the project, including:
- Overhead and profit
It should also consider any special conditions that may affect the project, such as bad weather or a shortage of materials. A good estimate is accurate and complete so that the contractor can make proper financial arrangements before the project kicks off.
Tips for Improving Your Construction Cost Estimates
Although construction estimation is complex, the right cost estimation tips should help make it a breeze. Here are a few tips for improving construction cost estimation.
1. Examine Your Previous Projects
Analyzing previous projects will help give you a clear idea of what current projects are likely to cost. This will ensure that your construction company puts enough money aside to complete future projects.
Review all the projects your company has undertaken in the past and compare the actual cost against the initial budget. Doing this will help you understand where you went over or under budget and why you did so. This analysis will give you a better idea of estimating the cost of ongoing and future projects.
It will also help you fine-tune your construction company’s budgeting and cost management processes. If you’re constantly going over or under budget, make changes to your estimating process.
2. Create a Template for Your Projects
Creating a template for all your projects will give you a framework for making accurate project estimates. This will also save you time, as you’ll only need to make minor adjustments for each new project.
Your template should include all the elements that are required for every project, such as:
- Materials & Materials Cost
- Equipment rental
- Permits and fees
- Contingency allowance
Using the conventional paper pen format to keep up with these different costs is too cumbersome. You should consider using construction estimating software. This leads us to our next point.
3. Assess Labor Costs and Your Team’s Productivity
Labor costs mostly go hand-in-hand with your workers’ productivity. The more productive your workers are, the faster you’ll be able to finish the project. The faster you finish the project, the less money you spend on labor costs.
Remember, labor costs mean more than the hourly wage. You also have to account for taxes, benefits, tools, equipment, and training. To get the actual labor costs, you’ll need to add up all these expenses, then divide them by the number of hours your worker’s labor.
Doing so will give you an accurate estimate of the labor costs. You can then optimize your team’s productivity to help reduce construction costs.
4. Use Invitation to Bid Software
While paper and pen can get the job done, construction cost estimating software will make your life much easier. Cost estimation software is designed to help contractors estimate the cost of a project quickly and accurately.
It allows for digital templates, meaning you can easily adjust for each new project without starting from scratch. It also offers a range of other features, such as the ability to:
- Manage a database of construction projects
- Access a library of materials, labor, and equipment costs
- Create templates for future projects
- Generate reports
- Track actual costs against the estimate
- Managing subcontractors
- Share projects with clients
Benefits of Cost-Estimating Software for Construction
Cost-estimating software has completely revolutionized construction and reduced the time it takes to estimate costs by more than half. If you’re a construction estimator and still on the fence about investing in estimating software, here are a few reasons why you should.
Improved Efficiency and Accuracy
Software options can offer an efficient way to track expenses and generate estimates for current and future projects. This will save you tons of time and a lot of money too. The initial investment in the software will be worth it in the long run.
Integration With Other Software Solutions
One of the best things about cost-estimating software is integrating it with other software solutions. For example, you can integrate it with your project management software to have better insight into your construction project.
This is extremely helpful because you’ll be able to track the progress of your project and see how much it’s costing you simultaneously.
Improved Collaboration and Visibility
Some software options can be super convenient because Cost estimating software is super convenient because you can use it anywhere with a stable internet connection.
You can also share your estimates with clients easily with the click of a button. This makes it easy to keep everyone in the loop and on the same page.
Construction Estimation Made Easy
In short, the key to a good estimate is accuracy and efficiency. Use cost-estimating and bid analysis software to help save you time and money.
If you’re looking for an easier way to manage your construction estimates, reach out to Bangert! We can help you see what systems would work best for you and your company.