What is Construction Cost Estimating? A Complete Guide
Before you take on any construction project, you must determine the project’s financial practicality. The project's financial projections can be assessed through accurate construction cost estimating and will enable you to find the ROI of the project. This will help you ensure profitability and overall success of the project.
If you're already wearing too many hats, estimating can be very time-consuming to take on as a founder. You may want to consider outsourcing your estimator using fractional talent.
What Is Construction Cost Estimating?
Construction cost estimating is the process of forecasting the costs associated with a construction project. It acts as a roadmap for managing and forecasting the costs, budgets, design, and building of the construction project.
Construction cost estimating is done by taking into account factors such as materials to be used, labor to be employed, location of the construction project, climate of the project’s location, project duration, building codes to be maintained, types of equipment to be used, and the availability of utilities in that location, etc.
Different Types Of Construction Estimates
The construction cost estimating process can be categorized into a couple of different types. They are as follows:
Rough Order of Magnitude (ROM) Estimates - Rough Order of Magnitude is a type of construction cost estimating process. This is where you can find a rough cost of a project when you have limited information about the project.
Cost per Square Foot Estimates - Cost per square foot estimates let you find the construction cost estimates of a proposed project depending on the cost of previously completed projects. It is a more accurate method of finding the total cost of a construction project than a rough order of magnitude estimate.
System Estimates - A system estimate will let you find the specific details of a particular project including the electrical and mechanical systems that will exist in the final and proposed project.
Unit Costs Estimates - Unit cost estimates are the most time-consuming and will include details such as materials used, the costs of labor, and the types of equipment to be used. It is more accurate than all the other different types of construction cost estimates and will help you get a more exact construction cost estimate.
5 Different Stages In Construction Cost Estimating
You can use these steps to develop a construction cost-estimating process. This will give you valuable insights into how your cost estimation comes to life.
Preliminary Estimate - During this stage, you make a preliminary estimate of the overall costs of the proposed construction project. This will help you determine its financial feasibility by considering the construction methods to be employed and the different alternatives available.
Conceptual Design - The conceptual design phase, lets you make a detailed budget and feasibility study by considering factors such as which construction material to be used, utility and foundation requirements for the project, etc.
Project Scope Estimation - During this stage, you will take into consideration the full scope of the proposed construction project including its floor plan, equipment layout, outline of the project schedule, etc.
Bid Analysis and Evaluation - This stage lets you compare and evaluate different contractor bids for the proposed construction project to get a proper construction cost estimate.
Change Order Review - During the change order review stage you can estimate the change in the cost of construction due to a change in order or the original scope of the project.
Conclusion
Accurate construction cost estimation is an important step for the success of any construction project. If you can undertake an accurate construction cost estimating process before starting a proposed project then you will be able to properly negotiate bids and cut down project costs as well as increase profit margins.
