When it comes to construction projects, being able to produce accurate construction estimates quickly is a major advantage. To do that, you need fast, accurate techniques on how to estimate construction costs. The trick is to develop a reliable method for estimating the cost of your construction projects.
How to Estimate Construction Costs - Best Methods
In this article, we’ll discuss how to provide fast, accurate estimates for construction projects. This is a simple process that allows you to get accurate estimates in the shortest time possible. If you are a construction worker or managing a construction project, estimating construction costs is important.
While there are plenty of project management software you can leverage to try and estimate the costs of a construction project, some of them are quite complex and there’s often a steep learning curve. Nonetheless, at the core of every estimating program is the database of costs and pricing. You can develop your own database that doesn’t have to be complicated.
Developing A Cost Database for Your Construction Estimates
Estimate the Schedule Based Unit
Using the total revenue, you can calculate the unit price for a given period of time for your business.
If you had a total revenue of $2,000,000, the price you produced was $38,461 per week
Weekly price = $2,000,000 / 52 per year = $38,461
Let’s assume that your construction company worked on a single project at a time before moving on to the next. When you’re ready to start a new project, you determine that it will take about 7 weeks based on your experience. As such, you can make a quick estimate for the project to be around $ 269,227 (+/-).
$38,461/week X 7 weeks = $269,227
If you have multiple crews working on several projects at any given time, you can factor that into your calculations.
Estimate an Assembly Based Unit Price
The stick estimating method accounts for every piece (labor in hours or materials in pieces). But you don’t have to develop a labor take off or material list until you’ve sold the job. Doing so wastes time.
A unit price method accounts for the individual units that make up the project.
For example, if you’re placing concrete for a foundation, an assembly unit price would include all the materials, labor or markup for each cubic yard concrete poured or linear foot of foundation.
Add Factors to Your Unit Prices
There are plenty of factors that drive up costs on one project that may not be present on other jobs. Developing a system for fast, accurate estimating requires you to come up with a standard list of production factors that will apply to your pricing.
Compare Unit Prices to Relevant Data
Every job you track, perform and sell is a data point in your construction company’s database. As you develop your database by tracking labor budgets, subcontractor costs, actual job costs and compare the figures to the techniques above, your pricing database will become more accurate.
As a management it is important to control labor costs in construction. With these tips, you now know how to estimate construction costs. Be sure to adjust prices when needed and make updates. When you know how your construction projects have been priced, you’re better able to perform the work in a way that reflects the data used in the estimate. Whether you are changing order in construction, it is important to know how to control labor management and other construction costs.