Construction Estimating

In the construction industry, the importance of construction estimating is pivotal. For, the successful projects completion would be primarily based upon the calculations made for construction estimation. If estimation is not done properly a completed project may have much more escalated costs than budgeted earlier based on wrong estimates. This would be due to budgeted estimates having been considered on the lower side.

Construction cost estimating is both a science and an art.

It is a science because a systematic method has to be adopted to draw up accurate construction estimates. An experienced bidding estimation team will first draw up a detailed estimation plan after it factors in all the technical and commercial requirements of the construction project. It will then request the bidding technical team members to furnish the detailed material and labor requirements for the construction project in terms of the detailed bill of material and man-hours of labor.

The technical team will provide the detailed bill of material and man-hours to the estimation team. It will also furnish all other requirements for the project including any statutory requirements to the estimation team. Any special requirements of the client will then be considered by the estimation team. To find the different construction material costs, the estimation team will base the unit material costs on the last purchase prices of the different materials and also factor in the realistic percentage escalation since then.

It will then calculate the labor cost based on the number of man-hours and the nature of the work performed by each skilled workman. Costs of utilities will be considered on their estimated overall consumption and different unit costs assigned to them based on the types of the utilities. It will then factor in the construction machinery and accessory structures cost based on the hourly rental cost.

It will also factor in the cost towards the statutory, legal, seismic, and environmental approvals for the construction project. It will then consider the forecasted salaries of the project executives in the estimation. It will also keep some margin for contingency expenses in the estimates.

It will use historical data to base the contingency expenses. It will also apportion certain fixed costs and overheads in the estimates. It will also apportion the cost of the capital in the estimates. In this category, it will also consider the cost of financing of the capital. Lastly it will include a margin for project cost escalation in the estimation.

Construction estimating is also an art. The art lies in keeping the estimates accurate yet low enough to bag an order.

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