The construction industry has always been one of the top revenue-generating industries in the world, with the U.S. construction market being one of the largest. Despite the size and scope of the industry, it constantly adapts to the ever-changing economic and social climate. The construction industry also responds to changes in human behavior and technological advances. Major innovation can lead to a flourishing market.
In recent years, the construction industry has grown to new heights, becoming one of the primary contributors to the U.S. economy. Between more than 680,000 employers, the construction industry employs more than 7 million people within the U.S.
No matter what type of commercial construction projects your clients propose, your chief objective will always be the same: to cut down on cost while maximizing profitability. For every prospective construction project, you’ll need to examine its feasibility based on accurate, up-to-date financial data. To inform their decisions, construction companies often rely on a construction estimator for trustworthy figures.
What is Construction Cost Estimating?
Construction cost estimating is the process of forecasting the expense of building a physical structure. Of course, every construction company worries about the financial impact of cost overruns or failing to complete a project. With money and their business reputation on the line, construction companies need to take the time and effort to come up with an accurate cost estimation before moving forward with a project.
In general, construction cost estimates are prepared with the input of both architects and engineers to ensure a project is in accordance with both budget allotment and scope requirements. Typically, an accurate cost estimate will prevent a builder from losing money on a project or overpaying for materials.
Once a company has an estimate for a given project, they can analyze their budget and allocate resources based on projected costs. Then, they can choose whether or not to bid on or accept a potential project.
How to Accurately Estimate the Cost of a Build
With so many factors in play, estimating construction costs can be a long, complicated process. This skill isn’t easily acquired—becoming proficient in construction cost estimation requires extensive study, training, and experience. Proper cost estimation includes the following steps:
1. Identify the Scope of Work
- This is a detailed statement explaining what’s expected of a particular construction project. It also defines the who, what, when, where, and how of a project. The scope includes everything from the required materials and equipment to project milestones and deliverables.
2. Identify the Number of Employees Needed
- List the number of employees needed to complete a particular construction project. You should also identify the labor rate and hours of every skilled artisan on the site.
3. Visit the Construction Site
- You should regularly visit the project site to address specific issues that may not be apparent from reviewing the plans. While on the job site, ensure you look for site access, proximity to utilities, and material resources as well as adequate space for storage and equipment.
Consider Using Professional Cost Estimator Software
While it’s nearly impossible to predict the cost of a project with absolute precision, failure to prepare a feasible cost estimate analysis can lead to catastrophic consequences in cost overruns. Although a project can go astray for a variety of unforeseen reasons, with enough data research, you can provide your clients with close estimations.
However, this process requires great attention to detail and often a lot of time. To make the process more efficient, many construction companies invest in construction cost estimator software. These estimators have extensive databases and can take into account constantly-changing factors such as market conditions. Rather than manually researching every small detail of a project yourself, you can use this software to come up with comprehensive estimates for any client.
The Added Benefits of Proper Estimation
- Mastering manual cost estimation or using an estimating tool will increase efficiency. The quicker you can come up with estimations, the quicker you can deliver them to your clients.
- The added value generated by relevant estimates, accurate details, and presentation clarity can make a favorable impression on your clients and boost your company’s reputation.
- Clients often focus on price when selecting a potential constructor. Having professional, detailed estimates based on a lot of data can give your business a competitive edge.
Proper cost estimation can have a profound impact on your construction business. Not only do estimations help you to plan financially, but they also instill greater confidence from your clients. When competing with other construction companies, a quality, in-depth cost estimation may be what sets you apart and secures you a new project.