How to Estimate a Construction Project: A Step-by-Step Guide

A construction project estimate is essential for keeping a project within budget. This tutorial defines an estimate and shows how to make an accurate estimate before starting a project.

Construction budget overruns are nearly unavoidable these days. 

Construction projects are difficult processes, and individuals have the propensity to overestimate their chances of success. Add in the fact that clients enjoy making modifications on the fly, and it’s clear to see why staying on budget is nearly hard in this sector.

But this does not have to be the case. It is possible to control your costs and thus protect your profit margins.

When it comes to cost control in construction, it means getting an estimate done correctly from the start, rather than managing funds halfway through, which is a recipe for catastrophe. By improving your construction cost estimation skills, you may avoid budget overruns that cost your company money.

Construction estimates also make construction project management easier since you can be certain that the actions you are carrying out are budgeted for and will get the project closer to completion without affecting the bottom line. Here’s everything you need to know about estimates and how to create one for your next job appropriately.

Overview of the construction estimates?

A construction estimate is a document that details all of the costs associated with a building project. A decent construction cost estimate will provide both the construction manager and the client with an understanding of the project’s cost so that there are no surprises when the job is finished. 

As a result, this is one of the most crucial aspects of the building project, because a poorly done estimate may result in budget overruns and potentially even delays, resulting in dwindling earnings and dissatisfied clients. As a result, construction managers should commit substantial time and attention at the start of a project to fully flesh out all of the expenses involved with it.

4 building factors to consider while calculating

When it comes to creating your construction estimate, all expenditures typically fall into four major areas.

1. Supplies

Every construction project necessitates the purchase of materials, therefore make a complete list of every type of material with plumbing estimation linked with each phase of the project, as well as the number of materials required and the estimated price of those items at the time of purchase. 

The final factor, the price, is the most difficult to estimate owing to cost swings that are beyond your control. Budget for higher-than-average rates to guarantee an accurate quote.

2. Labor

Labor will consume a considerable portion of your budget, thus any errors in this category will result in a significant overestimation of the entire cost. Include some wiggle space in the construction workflow in case overtime or extra emergency personnel are required due to change orders or unanticipated issues. Don’t forget to account for subcontractors.

3. Resources

Equipment might consume a large percentage of your money or be quite modest. If you already have all of the necessary equipment and only need to make room in your budget for gasoline and maintenance expenditures, your spending in this area will be minimal.

However, tasks that need renting or purchasing new equipment may incur considerable costs, which should be factored into the overall project cost. You should also include wear and tear expenses; even though it will not cost you money out of pocket in this project, including it in the construction estimate will allow you to save money for the purchase of new equipment in the future.

4. Overhead

A building project will have several overhead expenditures, ranging from your pay as a construction manager to temporary on-site amenities to permits and taxes. It might be difficult to recall all of these items, so review previous projects to see where you spent your money, and discuss this topic with your staff.

However, tasks that need renting or purchasing new equipment may incur considerable costs, which should be factored into the overall project cost. You should also include wear and tear expenses; even though it will not cost you money out of pocket in this project, including it in the construction estimate will allow you to save money for the purchase of new equipment in the future.

4. Overhead

A building project will have several overhead expenditures, ranging from your pay as a construction manager to temporary on-site amenities to permits and taxes. It might be difficult to recall all of these items, so review previous projects to see where you spent your money, and discuss this topic with your staff.

How to Make a Good Construction Estimate

When you have all of this information, you can begin creating your construction estimate. This is a straightforward procedure with five main phases.

1. Make a timeline.

Create a construction timetable or construction timeline that divides the project into many bite-sized segments using the project scope to identify what has to be done and when.

2. Carry out a quantity takeoff

Provide a total estimate after listing all of the prices of the materials for each step. The estimate should include a list of all supplies required for the project as well as the projected costs.

3. Calculate labor costs

Compile all labor hours and labor prices for each phase, taking into consideration potential overtime and subcontractor quotations. Add all of them from each step to generate a final project labor estimate.

4. Make use of a template

Add the estimates from each step and enter them into a construction estimate template. There are several building estimate templates available online; select one that best suits your needs.

5. Include equipment and overhead in your final estimate.

To generate your final estimate, add the projected total equipment and overhead expenses for the project, including fuel, maintenance, facilities, and other miscellaneous expenditures, and mix these with the labor and materials costs.

4 construction estimate creation tips & tactics

Is the procedure as straightforward as it appears? Not quite. Construction estimates are difficult for even the most experienced pros. Here are four pointers to help you do it correctly the first time.

1. Allow yourself some wriggle space.

When estimating, avoid being excessively optimistic; pessimism is your friend. While a customer may object to a higher project cost, it will be worth it in the end when you don’t have to annoy your client by informing them that you’ve gone over budget. Even better, you could come in under budget and truly wow your customer. This may be enough to secure future employment with this customer, and

2. Discuss it with your team.

Such important judgments should not be taken in a vacuum. Involve everyone on your team in the estimation process since they’re bound to identify some expenditures you’ve overlooked. When estimating, you want to incorporate every single expenditure to avoid unpleasant surprises at the end of the project – or, worse, in the middle of it.

3. Review previous projects

Do you ever question if your budget is complete? Examining the final expenditure lists for previous projects is an excellent approach to finding out for sure. These are records of what you really spent money on and how much you paid.