construction estimating

You have to track many expenses in order to estimate construction costs.  Some of the old, die-hard contractors will stick to the old method of estimating costs and will shy away from using computer technology when it comes down to estimating the cost of a project.  If these contractors would just try their hands at the new computer technology that is available, they will save themselves a lot of time.

 Projecting Construction Costs is the First Step to a Successful Project

Estimating the projects costs will include the land acquisition in addition to assembly, holding and improvement.  Other important steps are planning and feasibility studies of the structure.  The major costs for a construction project can include expenses related to the initial establishments of the facility all the way to the final filing fees and assessments.  The early stages that are to be financially considered are architectural and engineering design.  You must also take into consideration the actual construction which includes the materials, equipment and labor.  Other factors to consider are field supervision of construction, construction financing, taxes and insurance during construction, the owner’s general office overhead and equipment and furnishings not included in the construction inspection and testing.  Operation as well as maintenance costs of the construction project can eat up a lot of money.  Therefore, they need to be carefully accounted for and should be included in the process of the estimation of construction costs.  Additional factors to consider are operating staff, land rent, periodic renovation, labor and material necessary for maintenance and repairs, taxes and insurance, financing costs, utilities and other needed expenses.

The cost of the construction will differ with the size of the project which will include factors for location and the efficiency of management.  You must consider labor and ancillary expenses when considering the total construction cost.  It is true that the largest component in figuring the cost is the actual construction costs, but there are other incidental components that must be added to the overall expense.

No budget will ever survive the final cut.  In any large project something is always bound to go wrong.  Therefore, you will have to have a contingency budget waiting in the wings so that it can handle any unexpected expenses that may crop up during the construction process.  The contingency amount may be figured into each cost item or it may be included in a separate budgetary line item.

The size of the contingency budget should be based upon the contractor’s past experience as well as the difficulty of the project.  For example, one construction firm may break down its estimates into five basic areas:  design development changes, general administration changes, schedule adjustments, differing site conditions and third party requirements that are imposed during construction which may include new permits.

If you have a remainder of funds left over from the contingency budget, they should be used for further improvements on the project or they should be returned to the owner when the project is finished.  Estimation of construction costs is a highly professional and skilled process that needs to be carried out by the very best in the industry to ensure that the construction project continues to run smoothly.
 
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One construction concern is the bid process and that’s based on the construction estimate. The estimate determines not only the cost of the project, but in many cases the contractor who will be selected for the project.

Long before a commercial or industrial construction project is bid on by contractors there have been many estimates prepared which determine feasibility, scope and financing of the project.

For small residential projects it is the contractor who holds the entire responsibility for determining the project costs and creating the construction estimate. This leads to the contractor having more responsibility with fewer safe guards that the estimate is correct, and thus it is even more important that estimates on small projects be prepared with care.

There are several well known methods for estimating the cost of construction. These include parametric estimating, assembly or system estimating and unit cost estimating. ultimately all estimates must depend on unit cost estimating as the basis for the costs determined.
 
During the early budget process for a project there are occasions where a square foot cost will be discussed. The concept of square foot costs has very limited value and should never be relied upon when creating an estimate that will be used for an actual project.. even during the earliest budget discussions square foot costs should be evaluated only in the broadest of contexts.

The craft of estimating is applied at numerous times during the development of a construction project. This means that the demand for qualified estimators is not limited to only the construction firms, but also architects, engineers, government agencies, financial institutions, etc.

The different methods of estimating, parametric, system or unit cost are applied most effectively at different stages of development of the construction project. The accurate application of any one of these estimating methods will result in accurate results and an understanding of all is important for an estimator.

Parametric estimating is so important that the united State navy took out several patents relating to parametric estimating in the early 1990’s. The use of parametric estimating can provide reasonably accurate estimates at even the early design stages of a construction project. however, parametric estimating can be used throughout the project development to validate costs.

The most stressful estimate which is prepared is by far the “bid day” estimate. These estimates are both unique in their nature and function. They also represent the culmination of every aspect of the estimating art. We will cover each of the estimating methodologies, and the culmination of this will be applying all these to the “bid day” estimate.
 
The estimate provides not only the cost but also defines the construction methods and crews which will be used in the construction process. it is an understanding of the processes and their application which differentiate a winning estimate from just a place holder estimate.

Once the estimate has been prepared and accepted it is then the responsibility of the construction firm to implement that estimate and create the facility. The execution of the estimate and the construction documents in a professional manner is the next step that determines if the construction firm will be a success.

Because the estimate and the construction process are so intertwined let’s look at the requirements of that construction process. once we understand these requirements we will then return to a detailed discussion of the estimating craft.

Delivering the Project Once the bid has been awarded and the construction firm
has a contract for a construction project the next step is to implement the processes that will make the project a reality.

The construction industry, like many others, is in a state of flux and is changing almost daily. It has already changed significantly over the last 30 years, but there are more changes coming.

Many of these changes reflect changes in technology.  Other changes reflect changes in types of products available. Still other changes are emblematic of the changes to our legal systems and owner expectations.

The advent of automation impacts not only the way the construction project is managed but also the expectations of the owners. Actions which might have been acceptable as recently as a few years ago, now can mark a firm as unprofessional and be the basis for the loss of job opportunities.

Even for smallest of projects, an owner expects to receive more than a simple proposal on the back of an envelope.

Recently construction bidding software has experienced a tremendous level of growth, since many smart business owners realize the potential of such programming. Every bidding software company builds their programs differently. For instance, some programs will allow you to view a line by line of each job, while others may not. One version may offer you the option of tweaking your line items while also being able to personalize each bid, while still others blanket quote each item. In some, you may also be able to determine if you want any items printed on your bids.

You should take your time while choosing a construction bidding software for your business needs. You should begin by making a list of the features you will need in a construction bidding software program, before you make a purchase. Just the right construction bidding software is an essential business tool and very important. When used properly such software, aids you in operating your office more efficiently and with its customizable features, you can offer outstanding bids.

With a good construction bidding software program, you are able to customize your paperwork professionally to fit your style, needs, accessibility and maintenance. It is hard to beat that kind of service, especially when you bid on the same job to several other companies. When you are the business owner, running the full spectrum of operations, putting in bids, calculating figures or in search of downtime, a good construction bidding software program is an invaluable asset.

You can keep all your client companies single, by printing your own forms and documents, while saving a lot of money on such items as proposal worksheets and estimate forms. Anytime you are window shopping for construction bidding software be sure to find one that is user friendly and customizable to your requirements. If you cannot use your programs due to difficulty, you have wasted your time and expense.

What you want is a construction bidding software program that features easy installation, access, use, maintenance and great tech support. A construction bidding software should always be easy to use, while not getting in the way of daily business activities. The easier it is to use, the more you will make use of it, while producing more bids and consequently, more business profit and more downtime to enjoy the good things in life.

Most small and medium construction contractors find that they are in a state of constant flux when it comes to estimating residential construction costs. They work very hard at trying to collect and collate data, but end up with very little extra profit in their pocket when all is said and done. They are also operating in a dog-eat-dog competitive industry that finds itself in the midst of a slump, given the recent bust-up of the sub-prime mortgage lenders.

In order to convert his estimates into sales invoices, a construction contractor has to be on his toes while estimating a residential construction project. Here is some information as to how a contractor must tailor his estimate.

PART A: Residential construction costs

1. Location and environmental costs The contractor should survey the piece of land upon which the building is to be erected before he actually signs on for the job. Some building constraints may come up due to a variety of factors such as location and environmental factors. At other times, a building may have to be demolished in order to make way for the new construction. All of these factors add to the construction cost. Therefore, a contractor must have thoroughly done his research so that any additional costs can be built into his original estimate. .

2. Construction costs A contractor is usually given a house design and asked to give an estimate based on the cost of materials and labor costs. While he is giving a residential construction estimate, a contractor must break up his quotation into the following:

a. Foundation: The cost of concrete being used to lay the foundation of the house as well as in walls, footings, columns, slabs and the expenditure on the machinery that is used.

b. Heating/Cooling: Central air conditioning costs, furnace costs, number of furnaces, ductwork and air conditioning units required all make up the heating and cooling cost of a home.

c. Framing: The cost of wood used in the project – construction of walls, floor joists, roofs, and ceilings use up a great deal of wood. Aside from wood, these structures also use a lot of metal.

d. Flooring: Any item that is used to cover the floors of a home – tiles, vinyl, carpet and even such things as carpet pads.

e. Exteriors: Anything necessary to do the exterior of a home, that is, stones, bricks, stucco or any combination of the three.

 f. Interiors: Anything needed to complete the inside of the home to a finished state for example, bedroom cabinets, kitchen cabinets, wall paints, or anything else desired by the client.

g. Windows: The estimation of all wood, glass and small hardware attachments.

h. Electrical work: The cost for wiring, lighting fixtures, outlet points and connection from the main power source.

i. Plumbing: Includes the cost for preliminary work such as connection from water lines and connection to sewage lines as well as the cost of plumbing fixtures for the kitchen, bathrooms and utility room.

j. Appliances: The home is expected to be finished with certain appliances such as a dishwasher, gas range, and a garbage disposal facility. These costs should be included in the estimate. In case other appliances are needed, they can be added on later.

There is no exact science to estimating residential construction costs. A contractor relies on a variety of factors so there are bound to be ups as well as downs. Therefore a few things should be built into his estimate of the project – a contingency reserve, an escalation clause and a market condition allowance. A contractor must use care if he plans on outsourcing any of the construction services. He should get a written commitment as well as penalty clauses with his suppliers.

PART B: Other costs a contractor must stay on top of The small or medium construction contractor should plug in the usual construction costs when figuring out his estimate. He should also ask the client if he will be expected to perform any or all of the following:

1. Getting the site ready for the project to be constructed

2. Should he handle permit costs, liaison work with authorities and will he have to pay requisite fees

3. Demolishing any existing structure or building

4. Landscaping

5. After construction has already begun ask the owners if there will be any modifications. As soon as the contractor has factored in all costs, he must estimate the residential construction costs, add his margin of profit and hope that the client will be happy to accept his estimate. Since there are many jobs that a contractor must do behind the scenes before and during the construction, it would be wise if he could get everything organized and planned to go like clockwork. As a help, he should buy residential construction estimating software like LiteningFast Construction Estimating that will help him execute his plans smoothly.

His estimation of the residential construction costs will be accurate and fluctuations will be kept to a minimum. This software will help the contractor gain the upper hand on his business.

Your construction estimating software must be easy to learn and use.

Most construction estimating software systems are extremely complex and difficult to use without extensive training.

The companies that produce many of the construction estimating programs will usually offer classes that go for a week or more to show you how to use the system. And, to add insult to injury, they charge you for the classes. 

After that, they charge you hundreds of dollars a year for phone support because you don’t get all the information you need in the class. And to top it off, if you don’t use it every day you forget half of what you already know. Once again, requiring phone support.

What you need in a construction estimating program, if you don’t estimate 8 hours a day 5 or 6 days a week, is a program that’s easy to learn and to use. The construction estimating program should include video tutorials that show you step-by-step how to use the program. It should also be intuitive enough that after you’ve gone through the videos and used it everything flows without dozens of hidden, hard to remember, features that you seldom use.

Your construction estimating software must allow you to estimate using sections.

Sections, which are also called tasks, classes and a number of other terms, are extremely important for four reasons:

1. They break the estimate and the takeoff process into small chunks that, typically, are done in the sequence that you do the work.  Sections are groups like foundations, framing, roofing, etc. This means it’s easier to visualize the part, like foundations, that working on rather than having a large conglomeration of items on the construction estimate sheet. Perhaps having a foundation item after, or before, a roofing item.

2. When your construction estimating software database is organized by sections it makes it easier find the specific items you’re looking for when you’re doing a take off. For example, if you’re working on foundations you’ll only have foundation items open. This makes your take off a lot easier because you’re not looking through thousands of items. You only have the foundation items to look through.

3. It’s easy to spot errors, missing items or extra items, in your construction estimate. Again, if you have a foundation item following a roofing item it’s difficult to spot missing items or you have a duplicate roofing item in the multi-page estimate.

4. Creating budgets in your accounting system from your construction estimating software by section makes it much easier to track your job costs because you can can capture your costs and easier to find where you’re doing well and where you’re not doing well. This means that you can adjust your estimating so you’re not making the same mistakes over and over again

Your construction estimating program must allow you to create assemblies.

Creating assemblies in your construction estimating software gives you the ability to put several items together into a group. This means that as you’re doing a takeoff, you’re capturing multiple items with one entry.

For example, a wall assembly might be: Studs: Top and Bottom Plate, Insulation, Drywall on one side, Wall Sheeting on the other side. The items are entered in the assembly based on a specific unit of measure. In the case of a wall it would probably be in linear feet. So, for each linear foot of wall, you’d a stud (or a portion of a stud), top and bottom plate, 8 square feet of insulation, 8 square feet of drywall, and so on.

So, as you take off a section of wall, you capture all the materials used in that wall with one entry rather than five entries.

In addition, the material list described in number 8 will show each of the individual materials (So many studs, so much top and bottom plate, insulation, drywall and sheeting) so you can get the correct pricing from your suppliers. This means that you’re going to have more accurate material prices, and that means you will make a profit on the job!

Select the items you use regularly in your construction estimating program.

This is important because you don’t want to waste your time wading through thousands of items that you have no use for. Many “Price Book”, or “cost book” estimating programs have tens of thousands of items available in the database. An amazing quantity of information! The challenge is that there may be too much information. Lots of cost items that you have no use for.

Unfortunately, most contractors don’t use more than a few hundred, maybe a thousand or so items. So, as you’re doing your takeoff using your construction estimating program, you have to wade through more items that aren’t useful to you to find items you need. This slows down your takeoff process and leads to frustration and errors.

You need a construction estimating program that allows you to have just the items you use at your fingertips so you can estimate faster and easier when you’re trying to get the construction estimate completed so you can present it to your prospect.

Your construction estimating software must have a modifiable database you can make permanent changes.

The database for your construction estimating software must allow permanent additions and changes to the data for three reasons:

1. Your labor rates may not be the same as the “standard” labor rates even when they’re adjusted for your city or area of the country. You need to be able to specify your exact labor rates to get an accurate construction estimate. Your construction estimating program must allow you to make the changes easily.

2. You need to be able to add new items to your construction estimating software database. You may have items that are specific to the way you create your construction estimates or may have items that may not be in a normal database. And, those items must be in the database so you can create accurate future construction estimates.

3. Material prices in your specific area might be different than national prices, even if they’re adjusted for your city or region. Your construction estimating program must allow you to maintain pricing that you actually pay for materials so you can produce accurate construction estimates.

Your construction estimating software must prepare budgets in an accounting system for job cost

Construction Estimating and Job Cost are like the “Chicken and Egg” proposition, which came first. You shouldn’t have one without the other. If you’re a contractor that doesn’t track your costs you are headed for the poor house. If you don’t know what it really costs to do the work how can you estimate? You can’t, you’re guesstimating.

That’s why it’s extremely important that your construction estimating software will create budgets that you can track your costs and employee time to. This will give you the information you need to adjust your construction estimating so you’re not making the same mistakes over and over and over again.

The construction estimating software should also include instructions on how to use the job cost functions in the accounting system so you get the most out of it. This means you don’t have to spend hours and days trying to figure out how to get the information you need out of the accounting system.