How to prepare an accurate construction project estimation

Apr 02, 2021

Cost estimation of construction runs through a tendering process. It is a competitive phase that materializes after the design stage. It is a customary practice that construction projects go through a bidding process to select a contractor. To win a construction bid and realize a project, it is curial to build an accurate project estimate.

The greatest challenge before the construction process is project estimation. Here is a starter pack to win a construction bid and docking a price strategy. A competitive proposal entails accurate prices, precise specification and quantities and capture associated risk factors. Delivering a high estimate will lead to losing the bid and a low estimate to a sticky situation to have never won the project.

At the onset of the estimation process

Begin the process with a clear set of drawings. Design development drawings that include floor plans, elevation and schedule of finishes and specifications. An attempt to arrive at an estimate without actual plans is an unrealistic ambition. However, a ballpark estimate can be determined with the conceptual plan but expect to find immense variations and extensive on-site challenges.

How to approach a construction project estimation? 

Work break down Structure

Read the floor plans and drawings to understand the project details. Review the tender documents that define the scope of construction work. Identify and classify grey areas to gather additional information. Prepare work break down of construction activity which will determine work hours for each assigned job. Establish hourly wages for labor, specialty work and craftsman. Include sub-contractors and consultant’s timeline and charges. Find out how many employees to deploy on the project. With that, build out a support team and additional members for the project to determine a crew rate.

Chasing materials and products

Choosing and sourcing materials for construction need a procurement strategy. Defined answers and solution to the following questions will develop into a planning scheme for material procurement.

  1. Does a particular material or product have a higher demand in the market?
  2. Are there any delivery challenges?
  3. What is the standard lead time for the material/product?
  4. Does any product or material need to be customized?

These questions involve constant follow-ups and networking with vendors and suppliers, analyzing and staying upfront with the market trends. Arkihive is here to change this old school method. Arkihive will offer a digitized work tool to discover materials and identify suppliers to support your projects.

Define risk factors

Cynical views could define your risk factors. Sidestep negligence and consider all possible scenarios that can go wrong during construction. Contemplate potential setbacks that include material delays, labor shortages and resources at the site. Factor these components into the price strategy of the project. They are also directly proportional to the timeline of the project. Be alert to overcome challenged to get the project on track. Contingency planning evolves and gets better with every project planning and execution.

Estimate individual task and add those to determine project cost!

Determining project costs

Defining the risk factors and identifying the dependency of all stakeholders will support in determining the project costs. Direct all attention towards portions of the project that contribute highest to the overall cost of the project. Expand your knowledge and spend more attention on these job areas. Ensure precise and specific definition of the scope of work – tasks involved along with labor responsibilities and material requirement.

A seamless process can avoid careless damages and keep the project under budget. At this stage, plan and understand cost-cutting pointers, never on material or compromising the quality but optimizing procurement strategy and material alternatives.  Further include overhead costs and other indirect expense and service charges.  Below is an overview, not limited only to - list of services to cover with project cost.

  1. Administrating and managing charges
  2. Project operational costs
  3. Material storage / land acquisition / rental charges
  4. Architectural design services, engineering, and technical services
  5. Staffing charges onsite and offsite
  6. Project managers
  7. On-site resources and utilities (electricity/water)
  8. Transportation costs

Equipment rental costs

Understand and recognize the list of equipment needed for the project while estimating. Separately equipment costs and rentals charges. Realize investment rate for equipment and differential rates with renting rate. Spend time with sub-contractors and consultants to match gear specifications. It is a critical job to verify equipment interfacing if it involves multiple participants to complete a job. The objective is to understand the size, capacity, make and other redundancy factors. Appropriate equipment will reduce the error rate with perfect finish and completion of the work.

Arkihive offers a platform to bridge Architectural and Construction Professionals.
Arkihive for Material insights and Vendor support

Sourcing the appropriate material for the project concerning the design principles, economic consideration and contextual convenience is critical. Finding the precise material with installation guidance and technical support leads to successful project execution.

The best way to achieve this is to think about material selection at the early stage of the project. Material suppliers and retailers can offer a cost-saving strategy that reduces the time and effort exerted on construction/execution onsite.

Pricing strategy objective is to consider and prepare costing based on involvement of all stakeholders. Focus on lowest bid value be reduced and consideration on accurate estimation will lead to successful completion of the project. In the next post, we apply this system to create a checklist and a ballpark estimator. Stay tuned!

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Arkihive, an intelligent digital product discovery platform enabling sales and collaboration among Architectural and Construction Professionals. We love doing the research to present you with information on the application and best use of construction materials.

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Anusha Ashok

I believe only art can change the world! Although, I constantly critique the design approach & in dispute with my belief. But usually found having tea & listening to Coldplay.