Everything You Should Know About Construction Estimating

Any planned construction project, whether it's a new commercial development, an office building refurbishment, or expanding an existing hospital, must first be financially feasible. If not adequately analyzed and accounted for, the sheer breadth of complexity and expenditures required in conducting a significant construction project can have disastrous consequences for ROI, profitability, and overall project success.

The most secure approach to assess the financial viability of a large-scale building project is to obtain an accurate, independent construction cost estimate. Construction estimating is a great technique for gaining a practical grasp of the costs connected with a proposed project and then carefully controlling those anticipated costs throughout the design process.

What is Construction Cost Estimating?

Cost estimating in construction is the methodical forecasting of all costs associated with executing a project within a specified scope. The construction estimate acts as a road map for the project's design, bidding, and construction. It may be used to determine financial viability, budget for expenses, monitor project spending, and even indicate costs that are not within budget.

When planning a development, there are several factors other than labor and materials that have a direct influence on the overall project cost and must be considered and accounted for. For example, a customer may be ignorant of the impact bad weather might have on a project's bottom line, or he or she may fail to consider the financial impact of required specialist equipment. A well-researched, realistic construction estimate will take into account all of these expenditures, as well as materials, labor, location, climate, project duration, building codes, equipment, and utility availability, among other things. Surface topography, soil conditions, and material lead times are all taken into consideration.

With an accurate cost estimate, you may realistically analyze the financial viability of the proposed project, make necessary changes, define the scope, create a budget, and closely monitor the budget throughout the design phases. A building estimate also allows you to compare builder quotations and independently verify the accuracy of estimates and material prices. It may even assist put a project with cost overruns back on track by addressing quantity and price problems, as well as reducing unneeded contingencies and scope overlaps.

The main advantage of a construction estimate is that it may greatly reduce the degree of risk. Each projected project expense is accounted for, and costs that do not match the budget can be marked for additional review. Accurate cost estimate provides clarity, certainty, and peace of mind for big and complicated building projects.

Cost estimates are typically prepared by a team of experienced cost estimators, including Certified Professional Estimators (CPEs), engineers, quantity surveyors, and project managers who are well-versed in the costs associated with all design stages and construction disciplines, such as architectural, structural, civil, mechanical, electrical, and plumbing. They generate precise and reliable estimates using cutting-edge project cost control approaches, estimating, and BIM (Building Information Models) technology.

The Importance of an Independent Cost Estimate

Taking on a large construction project eventually involves managing significant complexity and risk. The bottom line is constantly at stake; deadlines are tight, and disagreements among project team members might arise.

Typically, an owner or developer may seek estimates/bid bids from competing construction companies to determine the project's cost. These construction businesses may offer cost estimation services in-house or through a third party. In any case, it is critical to choose an independent cost estimating business that is not linked with your organization or the proposed project to conduct an unbiased cost estimate and provide an objective assessment of the project budget. This third-party estimate serves as a benchmark for comparison and aids in establishing the reasonableness or unreasonableness of the bid or proposal(s) under consideration. As a result, it reduces your risk and provides more certainty for the project.

For example, suppose a customer is planning a substantial renovation to a healthcare facility and requests an estimate from a construction firm on the project's cost and length. This customer may then opt to have an independent cost estimate made to ensure the accuracy and fairness of the construction firm's estimated expenses. If the quotes are relatively equal, the customer may opt to move on with the project. If the difference between the two estimates is large, the customer may want to renegotiate or obtain other estimates from rival construction firms.

In any case, an independent cost estimate reduces risk and gives significant piece of mind throughout design. It may also help you address any cost-driven changes early on, minimize problems during bidding and construction, and ultimately steer the design and construction stages in the most cost-effective way possible.

Main Construction Estimating Benefits

As we previously stated, receiving an accurate estimate from an expert construction cost estimator is critical to any business project. Let's look at the key advantages of cost estimation.

More precise budgeting. Commercial building projects are quite complicated. If the project exceeds the scope of the budget, you will need to find another means to cover the additional costs or forego a feature to save money. Obtaining a construction estimate is the most effective technique to identify the project's closest genuine cost and is required for creating a well-researched, accurate budget.

Improved risk mitigation. A major advantage of a cost estimate, especially an independent one, is that it can significantly reduce your degree of risk. Each expense is accounted for, and it serves as a foundation for assessing the reasonableness or unreasonableness of the offer or plan under consideration.

Improved Client Relationships and Team Collaboration. A successful project requires strong connections between the owner, general contractor, subcontractors, and the rest of the project team. Cost estimation provides clarity, consistency, precision, certainty, and peace of mind, allowing all parties to create trust, promote confidence, and form solid working relationships.

Ensures reasonable contractor pricing. An independent cost estimate provides an accurate, unbiased, and objective assessment of the project's cost and all predicted expenses. It provides a foundation for comparison, allowing you to price-check bids and assess the fairness of the bid(s).

Finding a Qualified Construction Cost Estimator

As previously said, getting a construction cost estimating services from an expert estimator helps assure the success of your project. Here are some of the characteristics and qualifications to look for in an estimating firm:

A proven track record of considerable estimating experience, preferably in the same industry or project type.

 
A tried-and-true process for creating accurate cost estimates that incorporates the most recent project cost control, estimating, and BIM technologies.

A cost management team that understands the expenses of all design phases and construction disciplines, such as architectural, structural, civil, mechanical, electrical, and plumbing. They should have special competence in the areas listed below:

• Architectural drawings.
• Construction methods, building materials, building codes and market trends.
• Cost of materials, lead times, hourly output of workers, and overhead expenses. 
• The value of the service fee in relation to the project cost.

Understanding the Core Estimating Stages

Understanding the various steps or tiers of the cost estimating process will provide you with vital insights into how your project budget is put up.

Order of magnitude. This is a preliminary estimate and the first serious attempt to foresee the construction project's total cost and financial viability. During this phase, the project scope is discussed, building methods are considered, and alternatives are investigated. 

Conceptual design. During this step, a more detailed cost estimate is created to compare to the budget and feasibility decisions. More specific design criteria are investigated, such as building materials, drawings, renderings, conceptual designs, foundation and utility needs, and so on. 

Design phase estimation. This phase involves the development of the project scope and design, as well as the selection of materials. Floor drawings, engineering design requirements, preliminary schedules, equipment layouts, and other relevant information may be required for this estimate. Estimates are generally created at three design milestones: schematic design (SD), design development (DD), and construction document (CD).

BID Evaluations and Analysis. This estimate is used to assess contractor proposals. Probable costs are produced and compared against bids to assess if the bid being reviewed is fair or unreasonable.

Change Order Review. A change order modifies the scope of work that was originally specified. At this stage, an independent estimate is created and compared to the change order request.

Conclusion

Before beginning a commercial construction project, an independent cost estimate from a skilled construction cost estimator is required. With this information, you will be able to analyze financial viability, create a budget, address errors early on, price-check quotations, and guarantee that the design process proceeds in the most cost-effective manner.

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