Estimating the cost for a construction project is always a challenge. Giving too small of an estimate could leave you without enough resources to satisfactorily complete a project, while giving too large of an estimate will drive up your prices and scare away potential clients. Determining the cost of a project is a skill that develops with time, but we can still provide a few tips that will make it a little easier.
Use a Master Checklist, but Don’t Rely on Unit Cost Estimating Guides
Before you begin any project, create a master checklist of everything you will need. It’s easy to forget things such as permits, extra safety equipment, and other things you will need for every project, so include the costs of those on your list. Update your checklist as needed.
While you should rely on your master checklist when making estimates, you should be using unit cost estimating guides as a guideline only. It’s easy to take what these guides say as universal truths without taking into account the individual needs of a particular project. No two projects are the same, so only use cost estimating guides as a starting point.
Take Specialty Labor into Account
Since no one person can be an expert on everything, you will need to hire at least a few subcontractors for your project. These people need to be paid, and their wages need to be factored into the overall cost of the project. Determine how many of these specialists you will need – or even if you need any at all – and determine an hourly rate that can be factored into the total estimate.
Determine Risk Factors
Every project comes with a little bit of risk. Equipment can become damaged, workers can be injured, and accidents can happen to the client’s property. Determine how much of a risk is involved in your project before you provide an estimate. If there is too much of a risk, you may need to charge more or simply turn down the project altogether.
Speak with Your Suppliers
The cost of any project – or whether or not you can complete a project at all – will depend on how much your materials will cost. Speak to your suppliers about the costs of any materials you think you will need when preparing a bid. It’s best to overestimate in the early stages since it’s always better to have too much of a material than not enough. You can adjust the cost of materials when you get closer to completing your estimate.
For more advice on managing your construction business and making accurate estimates, contact American Contractors Organization, Inc. We specialize in helping contractors of all kinds with marketing, brand building, remaining in compliance, and everything else they may need to be successful in construction. For more information about our services, contact American Contractors Organization, Inc. today.