Preparing a project estimation is a daunting task, all project has variable considerations to arrive at the budget. To establish an effective method, we created a starter pack for creating a winning construction bid that includes all the factors reflecting the risk assessment of a project and pricing strategy. This continuum section reveals the setting of a ballpark budget.
We can say in confidence that no two projects will be estimated the same way. Several variations will affect the ultimate cost of the project. However, we can build a system to identify a budget for similar projects with typical requirements.
The most standard and preferred estimation approach towards a project are set up based on the square foot. Any method of estimating that is practical is not entirely precise. Therefore, when you quote a value for 500 Sq. Ft flooring project, the same value will not stand valid for a 10,000 Sq. Ft. Project estimations are not solely based on square footage, especially when estimated in a direct proportional system. A competitive project budget includes labor mobilization, products, and material costs, project management, housekeeping, and additional consultants’ cost. The price inflation in this method will be biased & cannot provide an accurate estimation.
This estimation fails because when the project size or value increases, the project cost-shares the expense to create an advantage in sales. This concept is popularly termed as “economy of sales”. Corresponding to this theory and principle cost involved in a project can be adjusted to fit within the budget. To simplify this process and reduce the turnaround time to create a proposal, we developed a method to arrive at an accurate ballpark figure.
Introducing Economy of Sales
We can assert that the square foot calculation method is flawed. Developing a calculator based on economy of sales would be an ideal technique and George Weissgerber, from Journal of light construction developed this method to integrate construction estimation to economy of sales trend to compute a Ballpark proposal.
If you begin to chart the Sq. Ft rate (‘Y-Axis’) to Area of the project (‘X – Axis’) the cost per Sq. Ft increases but in the actual economy of sales principle the Cost per Sq. Ft must decrease as the area increases. The estimation (black draft) and actual cost (orange curve).
In this method, the construction task of a project is sorted into multiple size corresponding to the cost of estimation per square foot. This simple chart showing project size vs cost when plotted against a graph yields a downward curve resulting in a fair pricing strategy for construction work. This curve is universally described as the “efficiency curve” and is a driving methodology behind the economy of sales adopted in many ventures.
Deep dive into ‘economy of sales’
Increasing the understanding of the 'economy of sales' would prove an advantage in drafting an accurate estimation and also give an edge to selecting a project that rolls a profitable outcome. The efficiency curve determines a point where a project executed show the highest competence. It means the course of project cost meets the time-taken and resources to carry out the construction work.
How to use the Calculator
Most designers loath calculations, and for that reason, we set up the calculator with the most familiar platform. If you dint already grind with Microsoft Excel for all estimations and BOQ this is a great start. The calculator estimates the cost closer to the actual project expense hence the ballpark figure.
- The estimate must include five size variants of the project. Identify the smallest size and thereon increment the size.
- Arrive at an estimate for the corresponding project size with accountable factors.
- Divide the estimated cost by the area of the project to obtain the cost per Sq. Ft value.
- These variables would be the base to calculate future projections.
- Enter the area of the project in the assigned cell and watch the estimator auto calculate the project expense.
Ballpark Estimator is fast and easy to turn out with a construction estimate that is accurate, organized, and professional. It is simple to navigate through this user-friendly downloadable calculator. This universal calculator works irrespective of the value of the currency in the world. It is a derivative technique to automatically total and arrive at an estimate with multiple projects in variable sizes. Be sure to read How to prepare an accurate construction project estimation for the understanding of the considerations.