Everything you need to know about construction cost estimating
Every construction project requires a considerable amount of investments. These investments are made keeping in view the scale of monetary needs for the construction project. The expenses and costs that is going to arise determine the need for money. However, some estimations are required always to start the process. It is simply not possible to determine just the scope of the project and start constructing without the cost estimation of the required materials or the labor etc. This field of construction cost estimating is technical and is important as well. For those who do not know about construction cost estimating and find it difficult to have a budget estimation by themselves, we are going to list everything you need to know about the construction cost estimating in this article. So hang on and keep reading.
What is meant by construction cost estimating?
As is evident form the title, it is the estimation of project costs. Under cost estimating, planning, monitoring and controlling of the project is done as part of the project cost management. Estimates are done keeping in view the project needs. It is also stated that the project budget requires authorization that the cost estimates provide. Therefore, the construction cost estimating is the estimation of monetary needs for a project.
Types of costs involved:
As we are listing the details of construction estimating, it is important to include the types of costs for the project. There are multiple types of costs involved in the project. Some of them are quite easy to determine and are straightforward but some of them require detailed knowledge of the construction site and process. The types are listed below:
- Direct costs
- Indirect costs
- Labor and material costs
- Services cost
- Software and hardware costs
- Facilities and equipment costs
- Contingency costs
The title of the costs are conveying the meaning for them. Direct costs are those that are construction costs and are directly determined as well as estimated. Whereas the other costs involve the material costs. Services of multiple stakeholders involved are also included in the cost estimation. The software of the company that you are using during the construction, whereas the equipment that you have either rented or bought, all these costs are included in the cost estimation for a project.
Balance between overpricing and underpricing:
A very important point while doing cost estimation is to keep a balance between underpricing and overpricing. When determining the project costs, owners tend to either make it overpriced while going after quality products or make it underprice for budget safety. Both of these concepts hamper the effective project growth. Overpricing tend to make delays in the completion of the project. This risks the entire serenity of the project. Whereas, underpricing translates into budget blows which affects the quality of the project and can also delay the project. Delay can cause more damage in terms of budget and pricing. Hence, it is of utmost importance to keep a balance between underpricing and overpricing. You can avail the construction cost estimating services of a professional firm to avoid this.
Methods for Project cost estimation:
Nature of construction projects vary from site to site and scope. Every construction project varies in nature and hence require the cost estimation for that. It is clear that not every project can be estimated through one method of estimating. The owners and contractors must be aware of these different methods of cost estimation that vary according to the nature of the project.
In this type of estimation, the cost estimations and projections are based on the historical costs. Having said that, the cost estimation is done keeping in view the estimation for the previous projects. This I also called analogous estimating which means that it is done for similar projects having similar scopes. This leaves no room for the variations in the project.
It is regarded as the accurate type of estimating and is done through bifurcation of the project objectives. This bifurcation is done to divide the project into smaller parts and make it easy to understand the needs of the project. Cost estimation of these smaller units is done which makes it accurate. Lists of tasks is generated and the estimation is done accordingly.
In this type of estimating, parameters are defined and the project is divided accordingly. The estimation is then for those units. This type of estimating is accurate for projects with high degree of repetition of methods and scope. Which makes it easy to set parameters to provide the cost per unit. It works best of the skill-based projects.
As it is evident from the name, this type of estimation requires three particular fields to give a cost estimation. Nature of those points are determined based on the project needs and a risk of delays as well as of damage. Those three points are as follows; Optimistic costs, Pessimistic costs and most likely costs. Optimistic refers to the costs and needs that arise as the project proceeds and are important for the completion. Pessimistic refers to the costs in case of any delays or damage that occurs during the construction process. Most-likely costs include the increased labor costs or certain material costs or similar costs of this nature.
This type of estimation provides accurate estimates along with the better risk management.
Project management software:
Many software are used for cost estimation. These software help in construction cost estimating as well as construction takeoff services that are provided by the companies. The tools are used for time estimation as well as budget tracking for accurate estimates.
- Microsoft excel
- Google sheets
- Web development project estimator
- Smart sheets are used for resources planning.
These are the tools used for cost estimation as well as the resource management.
This is the basic and important information that you must have when looking for cost estimation for your construction project. Many of the owners prefer to estimate their projects on their own or consult the contractor but it is 9important to have professionals doing that work for you.