We experienced great satisfaction this week witnessing the completion of a university project that we presented in 2020. It was completed under budget during a period of extreme market volatility. Completing construction projects under budget is not an easy task, but is the result of constant maintenance of cost data.
Having What It Takes to Produce an Accurate Initial Project Budget
Accurate estimating is one of the most important aspects of job management and is the key to any successful project.
The purpose of cost estimating is to estimate the quantity, cost, and value of resources required to complete a task within the scope of the project. An accurate first budget for a project will be responsible for whether a project moves forward or is rejected.
Why are accurate estimates so important?
A recent study of higher education projects by the Project Management Institute found that actual costs were, on average, 28% higher than estimated costs. This may be due to a lack of visibility into work cost figures on previous projects, the client's eagerness to win the bid, or internal pressure to get the project approved. It is common for businesses to minimize the time and resources required to complete a project.
Given that cost estimates provide the basis for job schedule and budget planning, the accuracy of the estimate can determine whether the project is able to meet its objectives.
Some of the benefits associated with accurate cost estimating include:
More accurate planning: When you are able to accurately estimate what tasks and resources are needed to complete a task, you can effectively schedule work breakdowns, allocate funds , and stakeholders will be informed about the progress of the work.
Better profit margins: Many factors (such as unforeseen events, weak capacity, and inflation) can cause job costs to increase over the life of the job, allowing work to be completed within budget and Profit targets are reached. Allowing for risk and market fluctuations to arrive at an accurate estimate of expected and unexpected costs. The end result is that it avoids surprises.
Better resource management: With greater insight into the tasks and timelines required to complete the work, you can ensure you have the resources to complete each step, reducing resource gaps. Identify, require adequate manpower to mobilize people, and supply materials as required.
Strong client relationships: When clients understand the 'why' behind a project's cost, they are more likely to trust the estimator's expertise and identify changes in cost estimates as the project progresses. , resulting in a more comfortable project management experience.
Improved reputation and repeat business: When projects are delivered on time and on budget, you're likely to build happy customers and satisfied stakeholders.
Accurate estimates start with accurate data
The key to making accurate estimates is leveraging data from previous work and learning from past projects. An estimating firm should periodically update its cost data to provide accurate future estimates.
It is the responsibility of the estimating firm to be diligent in tracking all project past costs, as well as material increases and current market trends, and apply these changing costs to each new project.
Core Services prides itself on maintaining accurate construction cost data by utilizing several resources and regularly applying updated information to our database. This results in the highest level of accuracy possible for every new project.
Let us show you how we use our expertise to make your next project a success.
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