Cost Estimating Basics: 8 Main Aspects to Know If You Are an Estimator or Contractor

Construction consists of three main phases. One of them is pre-construction when all the essential preparations take place. Among these arrangements are estimates and bids. You need to understand all the costing peculiarities and the ways to provide the most accurate financial predictions for your building. Cost estimating basics that are related to the pre-construction phase include many aspects at once. All of them are necessary for your successive performance in the present-day market.

Construction quoting software and using other specific digital tools for costing, bidding, and estimating is win-win strategies most contractors use for their sound representation. You kill two (or even more) birds with one stone – saving time and improving the accuracy of your forecasts. Better budget planning, higher profit margins, and satisfied workers set free from their routine manual tasks accompany the digital-friendly tactics with estimating software implementation.

What other basic rules about construction estimates should we know? There are eight of them to take into consideration if you are a result-driven estimator or contractor. Together with the best-matching software, use these helpful recommendations to pick sides with your productive step-by-step algorithms for pre-construction, construction, and post-construction phases.

8 Principles That Form Cost Estimating Basics in Construction

Construction as other industries and business niches is notable with the step-by-step execution of tasks and precise algorithms to follow. It means that contractors can be ruled by the same tactics and strategies to achieve success in the market as reliable performers. For example, cost estimating basics will come in handy if you are a contractor or an estimator with the desire to have less work but high salaries for zero errors in the reports and predictions.

Take a closer look at the 8 top aspects that form the basics of cost estimating in construction. Pay attention to the cornerstones and adapt your approaches according to the new realities, needs, and rules in the building industry.

1 – Select the Proper Work to Bid

Be precise with your competence areas and always bid on work you can do professionally. It is better to bid on the orders you make a specialty out of. Do not use for bidding those building projects that are too complicated. If you are a contractor without much experience, it is better to start with simple and far from time-consuming orders.

2 – Review Construction Specifications

Do not forget about reviewing specifications in the context of construction projects. For example, it can be a meeting with your team members not to miss any detail. Remember that reviewing construction specifications includes many parameters. That is why it is reasonable to group and structure these data entries.

3 – Review Drawings

Meet with your architects and designers to review construction drawings and estimate all the costs at the very beginning. It goes without saying that the project drawing at the starting point is far from one at the final stage (right before the construction). But you can start your cost estimating with the initial specifications and drawing showings right here and now.

4 – Perform a Building Takeoff

The next step is also essential for estimating performance and bidding in general. Your construction takeoff depends on the data entries gathered during previous stages and phases. It means that you need to combine all the information and form the first serious report concerning takeoff.

5 – Create Your Estimate

It is high time to create your construction estimate and analyze it together with your team members. You can move step by step one more time starting with one cost and ending with others. At this stage, the most important cost estimating insights are about:

• Labor costs;
  
• Supply costs;
  
• Rent costs;
  
• Permits & paperwork;
  
• Machinery costs, etc.
  

Estimating heavy construction equipment rentals, supply, labor costs, and other factors is essential for creating a comprehensive construction estimate, as they can significantly impact a project’s overall budget.

When this stage comes to an end, it is possible to undertake the following analytical research while taking a closer look at overhead and potential profit margins.

6 – Determine Your Overhead & Profit

Each contractor will agree that your profit margins matter. That is why determining your overhead and profits from the project to project is the intermediary of the cost estimating process in construction. This way you will compare your expectations with potential revenues and project profits you are going to get.

7 – Get Ready with Your Construction Proposal

This is a very important stage for contractors and their estimators. The bid proposal should attract customers and be an appetite for your potential clients. Be sure that it contains accurate data and zero errors. Practice fact-checking and proofreading that will make this proposal perfect.

8 – Explore Construction Contract Basics

Yes, you should be ready for the contract beforehand. It is not about optimistic views. We speak about your potential pitfalls, benefits, and challenges in the context of the agreement. That is why you need to explore the contract you are getting ready to sign with the client in the final stage of the cost estimating process.