Estimating is one of the most difficult tasks in construction…it's also one of the most important. Profits are usually won or lost based on how accurate your estimates are and how close they are to your final project cost.
So, how accurate are your guesses? Surveys by QuickBooks and TSheets show that nearly one-third of construction companies make less than expected profits based on their estimates. It's not too surprising that 40% of respondents aren't that confident in their guesses.
Chances are a bad estimate will cause you to lose money on a project that won't put you out of business. But put together a few nonprofit projects and you'll find yourself closing doors for good. A quarter of all respondents indicated that it would only take two or three bad estimates to ruin their business.
Accurate estimation is no easy task, and a good estimator is worth his weight in gold. There are many variables that need to be considered for accurate estimating on every project - from estimating accurate labor and material costs to understanding worker productivity to measuring accurate take-off and risk contingencies and overruns. . Until achieved. Factoring in items such as head. These should be close to perfect.
A mistake or two can completely throw off your estimate and result in a bad bid – one that you'll either lose because it's too high or win because it's too low. It will do you no good. Here's a look at the most common construction estimating mistakes and how to avoid them.
1. Not Conducting a Site Visit
Most bidding opportunities offer potential bidders the opportunity to attend a pre-bid meeting and visit the job site. Often, this is a condition of bid submission – and with good reason. No two job sites are the same and unknown site conditions can lead to unexpected, and costly, problems during construction.
When visiting the site, you'll want to take measurements, inspect the topography, and take some soil bore samples if this hasn't already been done. You also want to look at road access and traffic to the site, determine how much space is available for staging, shipping and storage of equipment and materials, and what environmental protections will be required during construction.
Make sure that any subcontractors whose work may be affected by site conditions also visit. This allows them to evaluate the site for themselves and consider any additional costs that current site conditions may present in their estimates and bids.
2. Inaccurate Takeoffs
Your take off is based on your assumptions. If they're incomplete or inaccurate, it can really mess up your estimates. Accurate takeoff helps you determine the exact amount you need for all your materials and supplies. They also need to determine your labor and equipment needs. If you miss
If items or measurements are not met during takeoff, you will either overestimate the project and not win the bid, or you will underestimate and risk winning a project that is not profitable. . Takeoff software is a great option to ensure you get accurate measurements for your estimates. It's also a huge time saver when taking off manually. These tools are only as good as the user, so it's important that estimators receive proper training and are comfortable using the software.
3. Labor Costs
Labor costs are probably the trickiest thing when it comes to your estimate. In the QuickBooks and TSheets survey we mentioned earlier, construction business owners say, "Labor costs are the most difficult to estimate and are ranked as the most expensive project cost." There are many variables when it comes to estimating labor costs, including the number of workers available for the project, their experience levels, pay rates, and productivity.
A good, experienced worker may be paid more but is more productive and can do more in less time than a less experienced worker who is paid less. When estimating labor costs, focus on determining how many hours it takes to perform a task to use as a guide.
Don't forget to determine whether the project requires a prevailing wage, which may or may not be different from what you normally pay each worker. Always keep a record of job costs, especially labor costs, as you can use this historical data to make more accurate estimates of future projects.
4. Materials & Supplies Costs
Construction materials and equipment are another major cost for construction projects and are high because of the difficulty in estimating them accurately. Material prices can fluctuate dramatically from the time you start estimating until construction begins. Demand for materials is high and uncertainties regarding tariffs and their impact on prices are making accurate estimates more difficult.
Building relationships with your building product manufacturers and suppliers has its benefits – not only can they help you lock in accurate pricing while gathering estimates, but they can also direct you to alternative materials. can take Which may be better for your project.
Locking in your material costs is very important but don't forget to make sure you deliver quantities to your suppliers. This allows them to ensure they can fulfill your order and deliver on time. Costly delays caused by workers not having the materials they need are embarrassing and will hurt your bottom line.
5. Failing to Assess Risks & Creating Contingencies
Every construction project comes with risks. Completing a risk assessment should be part of your estimating process. For one, it helps in your bid/no-bid decision. A good estimator can identify a project that is too risky and be successful in submitting a bid. It also helps determine how much to budget for emergencies.
Failure to anticipate risks and create contingencies that you expect will prove harmful when things go wrong. The greater the risk, the more time you should spend determining ways to mitigate it and how it might affect your costs. You may not be able to recover damages in case of any unforeseen problems after the construction has started.
6. Making Uneducated Guesses
Don't gamble your bids by making uninformed or uneducated guesses in your estimates. Tracking the cost of work on each project is a great way to ensure that your estimates, and ultimately your bids, are as accurate as possible.
Job costs for labor, materials, and supplies should be based on currently available data. Be sure to include overhead costs and soft costs, such as permitting and inspections, that can often be overlooked or overlooked. You also want to make sure you have the manpower and equipment for the project. Unexpectedly subcontracting extra work or renting extra equipment can quickly eat into your profits – or wipe them out entirely.
7. Not Reviewing Your Work
Everyone makes mistakes; Assessors are no exception. Small estimation errors or omissions may not have much effect, but large errors such as omitting scope items, incorrect measurements, or using incorrect units of measurement can cause problems with a large "T". Take the time to review your work carefully or have another member of your estimating team review it. For all your expenses, double check that your measurements are correct, and that your math is correct.
Give yourself plenty of time to make your guesses and bids. Rushing through your work just to meet the bid deadline will only result in mistakes that will cost you in the end, so get it right the first time. Profitability on a project is almost always determined by your estimates. If you underestimate your bid, there are usually not enough cost-cutting measures to cover the shortfall.
8. Not Reviewing Subcontractor Estimates
If you are a general contractor, you will likely have to subcontract some work to trade contractors. Be sure to thoroughly review their bid estimates and suggestions. Make sure they understand exactly what aspects of the project you want to bid on and complete. This will avoid duplication of work in their estimates that is being covered by you or another subcontractor.
About Core Construction Services Inc.: The right estimate starts with the right take-off. Core Services prides itself on completing fast and accurate estimates for design firms, contractors and developers.
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