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Estimating the cost of a construction project is key to contractor profitability and winning jobs. There are several ways to estimate a construction project, and which is best will depend on the type and specifics of the project.
Here are four of the most common ways to estimate a project:
This is the most time-consuming way to estimate a project, but it’s also the most accurate. It involves noting every piece of material needed and the labor to install each one. An estimator must break down the plans into individual assemblies and detail all the materials and labor required to install those assemblies. For example, a concrete contractor will breakdown a foundation into forms, rebar, rebar ties, concrete, and the labor to install and finish.
An assembly is a group of materials that form a part of the project, like a wall or foundation. An estimator measures the amount of each assembly, by quantity, square foot, or linear foot, and multiplies the quantity by the cost for the group of materials. Labor is included in the assembly calculation. Estimating by assembly is not as accurate as a detailed takeoff, but it’s quicker and is how most projects are bid. In the example of a concrete contractor bidding a foundation, costs would be estimated by first doing a takeoff of the amount of foundation in square feet. Then the estimator would multiply that square footage by the cost for one square foot of foundation, including labor.
Contractors can also look at previous work they’ve done that is similar to the project they are bidding and use the costs to inform their estimate for the current project. To use this method, contractors must keep accurate cost data that they can use when bidding a new project.
There are many industry-standard cost databases that have been developed by organizations for specific trades. These databases include average costs for assemblies, whole buildings, and materials. New contractors often use these databases to estimate their first projects, or they can be used to get a rough order of magnitude for a project.
Creating an accurate estimate is key to becoming a successful contractor. If you are new to estimating or want to brush up on your skills, we invite you to join our class “Estimating with Confidence.” It will give you the tools you need to create accurate estimates and win more work. Contact us for more information and dates.
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