One of the primary challenges faced by the construction industry is the management of building projects that usually come with unique requirements and features. However all projects have budgets, schedules and work scope, making it essential for contractors and firms to have the skill of building cost estimating as costs play a crucial role in important project decisions.
Cost estimates are based on technical data such as specifications, making it possible to classify them based upon the available information.
Type of building and project size will determine the estimate of an order of magnitude, but the limited information means that is the least accurate estimate. However this type of estimate can still help clients to decide if it is wise to go ahead with the project.
Cost estimation can be more accurately undertaken when the design process has reached the schematic design and design development stages.
Project managers need to have a thorough understanding of the design details in a project as each individual task within a project is derived from that design and take time and important resources including employees, all of which need to be taken into consideration in cost estimation.
Even small misunderstandings can cause huge problems and cost overruns, so there must be nothing a project manager does not understand to ensure they come up with a clear and careful plan.
Another best practice in regards to building cost estimating is being able to plan for any unexpected developments. Things can go wrong during projects and it is the responsibility of project managers to be ready for any surprises and have an alternate solution prepared.
It is also best practice to break huge projects into smaller tasks to avoid overwhelming people and making cost estimating even more difficult. When a large project is broken down into smaller tasks they are much easier to cost estimate, plan and accomplish.
Mistakes to avoid
There are a number of common mistakes in building cost estimating that are actually easy to avoid. Underestimating the cost of labour is one of the most prevalent errors as it is hard to accurately gauge the experience of every worker and whether there will be a need for subcontractors. Rates may also vary depending on the location of the project and possible overtime. Be as detailed as you can when calculating labour costs, take overtime into account and try to use similar projects to work out cost per square foot data to help improve accuracy.
Another common mistake is not visiting the project site. Site visits enable estimators to determine a site’s nuances such as access, material sources and proximity to labour.
Small to medium sized building companies can avail themselves of new technology to further increase the accuracy of their cost estimates. Construction estimating software is desktop or cloud tech intended to streamline and make improvements to the cost creation, labour and material estimating process and can range from basic spreadsheet templates to complex online software to aid collaboration and optimise efficiency.
Inaccurate building cost estimating is one of the common underlying reasons why costs tend to overrun in construction projects, but the good news is there are ways to make a more accurate estimation of project costs.