Construction cost estimating techniques

Written by wesley tucker | 13/05/2017
Construction cost estimating techniques
Keep track of all costs on a building project. (IPGGutenbergUKLtd/iStock/Getty Images)

Construction cost estimating involves pricing materials, labour, overhead, subcontractors and equipment needed to complete a project. Estimates come in two forms: hard money and cost plus. A hard money estimate is the final cost for a project. Cost plus is determining the total cost for all aspects of the project plus adding profit margins. It's important to balance giving an attractive estimate with being able to turn a profit on a project.

Estimating materials

Construction materials range from the big items such as timber, stone, brick, concrete and plumbing to small basics like nails and screws. A good technique is to source as much material as possible from one supplier to have leverage to negotiate an overall lower cost. Buying wood from a timber merchant, brick from a brick dealer and nails from a hardware shop may lead to greater overall costs. Always include enough overage to cover lost materials from anticipated waste and possible uninsured theft.

Labour

Labour is the biggest expense on any construction job. When estimating, assume a margin for overtime and also lost time because of adverse weather. Balance the cost of sufficient labour to meet specified deadlines with fewer workers working additional overtime. Labor costs consist of more than just the hourly wage. A single worker labouring through overtime might be less expensive than two workers labouring during regular hours.

Overhead

Overhead costs such as securing planning permission, deposits for utilities, connecting utilities, job site insurance and extraneous expenses (security, fencing, etc.) should also be factored in to the estimate. Some items, such as office operations or mandated workers' compensation payments, are considered the "cost of doing business," and it is up to the estimator to balance what to absorb and what to add to the estimate to ensure getting the job.

Estimating subcontractors

Just as the estimator is working for the customer, subcontractors -- plumbers, electricians, etc -- are working for the estimator. Receive all quotes with specific terms and deadlines. Insist on penalties for missed contract terms. When including subcontractors' costs in the final estimate, calculate reasonable markup for profit.

Job site equipment rental

Construction estimating means bringing in equipment not always owned by the general contractor. Skid steers, forklifts, generators, pneumatic tools and compressors and power lifts are examples of rented equipment. Include in the estimate the time needed to complete the job plus a reasonable markup for profit.

Successful estimating attitude

Construction estimators walk a fine line between losing the job or getting the job and not making enough money. A successful estimator is confident, thorough and -- most important -- has the integrity to do both the company and the customer right. Approach each estimate with the attitude of providing the best price to satisfy everyone associated with the project.

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