8 Ways to Improve Construction Estimates

Before we delve into the nitty-gritty of this topic, it is crucial to understand what a construction estimate is. A construction estimate involves determining how much money will be required to complete a new project from or modify an existing design. Estimates are important because they give you a clear roadmap for implementing a successful project. 
Reasons to have a construction estimate 
There are several reasons you should have a construction estimate, depending on your specialization. For example, if you are a property developer, you will require a construction estimate to know whether a project is within your budget. 
If you are a contractor, you will receive construction estimates from subcontractors. You will then use these estimates to know who to hire. 
Other players in the industry, such as engineers and architects, will use construction estimates to determine whether a building meets specific requirements such as safety.  
In addition to ensuring accurate estimates, using modern AI solutions can help you create efficient construction plans and win bids by simulating project outcomes based on current data. ALICE Technologies is an example of an AI-powered platform for commercial and industrial projects. [Text Wrapping Break][Text Wrapping Break]Other reasons for having a construction estimate are: 
To identify errors 
AI-based platforms enable the contractor to produce estimates based on numerous variables that might affect a project’s success. When reviewed over time, contractors can identify gaps that improve the overall planning process. 
To reduce risk 
Another important reason why every contractor requires an estimate is to reduce risk. Estimates help developers optimize a project's financing because they have precise completion dates even after considering external threats.  
To saves money 
Cost estimates facilitate value engineering techniques geared at reducing costs and increasing profits.  
To make better bids 
Construction estimates give you an overall picture of how much a project will cost. Accurate and realistic estimates will result in better project bids and more frequent contracts.   
8 Ways to Improve Construction Estimates  
Below, we have offered several tips to enable you to make more accurate construction estimates. The more precise the calculation, the better for your project. 

  1. Have a comprehensive construction checklist

To have an accurate construction estimate, you must have a comprehensive construction checklist. The checklist should include everything required for successful implementation. Once the item is budgeted, you check it off the list. [Text Wrapping Break] 
If you already have subcontractors, it is important to request they provide a template for their project. This can be a simple breakdown that includes labor and material costs. For other subcontractors such as plumbers and electricians, the checklist should consist of electrical fixtures, controls, and transmission equipment. 

  1. Use historical data

Another strategy that you can use to improve your estimate is to compare historical projects of similar sizes and scope.  

  1. Factor price fluctuations

Failure to factor in price fluctuations can cost your company millions in losses. If it is an international project, it is important to factor in the exchange rate differences. Failure to do this can result in significant losses. When it comes to determining price fluctuations, you need to ask yourself certain questions: 

  • Will there be an increase in material costs? 
  • Are there government regulations that could affect the price of input? 
  • Are you importing machinery? 
  • Will the market cause a sudden demand for input which can increase the price? 
  1. Know your labor costs

Another aspect of construction that significantly affects estimates is the cost of labor and productivity. When we talk about labor, you must factor in indirect costs as well. 
Another important factor that you need to include in your calculation is the productivity of your labor force. The best way to assess the productivity of your labor force is to look at how long past jobs took to complete. Remember, productivity will be affected by weather, sickness, and inadequate training.  

  1. Determine your equipment needs

A construction estimate cannot be complete without knowing the value of the equipment required for the project. It is also important to identify whether renting the equipment or buying it makes more economic sense.  

  1. Re-confirm the formula

One of the biggest mistakes that we have seen with the contractor is that they submit bids with an erroneous spreadsheet formula. This is a common problem that has caused contractors multibillion-dollar projects. In other spreadsheet errors, the markup is from the wrong subtotal, while in others, an incorrect tax rate was used. 

  1. Asses sub-contractor quotes

The same way you go through your work is the same way you should go through sub-contractor quotes. Go through several subcontractor bids to know whether there is a large discrepancy in the cost of material and labor. 

  1. Use the unit cost method of calculation

Though there are several methods of calculating construction estimates, it is common to use the unit cost method. This is because the method is known to be faster and more accurate. For example, if the unit cost of putting up a wall is $2 per square foot, you can easily markup $1 per square foot. [
When using this method, each item must have a unit cost. You should also add your markup based on the price of each unit. In addition, do not forget to have an expert to help you out with the math. 
In conclusion, it is in your best interest to have an accurate estimate. The more precise the estimate, the better for your company because you will make more profits. In addition, you will also be able to lower costs, making your bids more competitive. 

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