Construction cost estimates

Construction Cost Estimating: A Beginner’s Guide for Contractors

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Everything you need to know to create accurate cost estimates that help you win more work.

When most people think of quantity surveyors, they typically think of the work carried out once a project gets underway, the budget management, project assessments, and other essential duties vital to ensuring a successful, cost-effective job.

That’s certainly part of the job, but did you know that a qualified surveyor can also help your business long before anyone sets foot on site?

Having run a successful construction consultancy for close to ten years, I’ve seen first-hand how much of a difference quantity surveyors can make in terms of helping contractors to deliver maximum value for money.

In this comprehensive beginner’s guide, I’ll share with you precisely how they do that by providing professional cost estimating services that appeal to clients and investors alike.

Before we get into that, however, let’s ensure that we’re all on the same page when we’re talking about cost estimates.

What is a Construction Cost Estimate? 

In its most basic sense, a construction cost estimate is exactly what it sounds like: 

A calculated and carefully considered estimate of all the costs associated with a construction project. 

Estimates are tailored to the individual project, and typically cover costs including:

  • Labour
  • Equipment
  • Materials.

They may also include any other special requirements necessary for the successful completion of a project. 

Why Are Cost Estimates Used in Construction? 

Cost estimates have a number of uses in construction including:

  • To assess the feasibility of a project
  • To determine an accurate budget for the project
  • To plan how that budget will be spent.

Ultimately, this benefits everyone.

Clients understand how much the task at hand is going to cost them while contractors are able to make effective plans that will help them to profit from their efforts.

As I’ll discuss later on, a professional cost estimator can also create necessary documents such as a Bill of Quantities which can be used to maintain a fair and accurate tendering process.

What Makes a Good Cost Estimate in Construction?

To be most effective, a good estimate should find a perfect balance between three major factors: 

1. Accuracy 

Accuracy is the most critical component of any good construction cost estimate. If you’re going to set a budget that is appropriate for the project and affordable for the client, then your budget has to be absolutely accurate.

Not only does an accurate estimate help to get the project off the ground much faster, but it also helps to eliminate any nasty, expensive surprises that may come the client’s way once work commences.

2. Speed 

Whilst achieving the highest possible levels of accuracy may seem like a painstaking process, that doesn’t mean that professional cost estimators can afford to take it slow. 

With bid deadlines to meet and schedules to commit to, time is most definitely of the essence with any project. As such, it is vital that your quantity surveyor balances that high-level accuracy with a fast turnaround when putting together an estimate.

3. Competitiveness 

For contractors, submitting a tender at just the right price can be a fine balancing act in itself. 

Pitch too high, and you put yourself out of the running as your competitors submit a lower offer. 

Aim too low, however, and you either price yourself out of making a reasonable profit, or face compromising on the quality of materials and integrity of your work.

Let’s be honest, neither is ideal.

To get it right, a specialist will combine their expert knowledge, a network of contacts, and a wealth of innovative solutions created during their years in the industry.  

By doing so, they can create an estimate that remains competitive while still guaranteeing a profit for the contractor, and maximum value for the end client.

Why Do Contractors Hire Construction Consultants to Work on Cost Estimating?

The main reason why any construction contractor undertakes estimating work at all is to guarantee success in winning that next big project. 

Yet why outsource that work instead of going it alone? 

The answers to this question are as many and varied as there are contractors, but typically, it all comes down to two main reasons. 

1. Save time, hassle, and headaches 

Contractors excel at their own specialist trade, and would much rather be out on-site doing what they do best instead of being handcuffed to a desk and dealing with the complicated and time-consuming process of creating an estimate

2. Present the Same Professional Image as Larger Competitors 

Many small businesses and sole traders simply lack the resources to compete with the major building contractors, and that can be reflected in the tendering process. 

But it doesn’t have to be. 

Working with a quantity surveyor who specializes in cost estimates empowers contractors to compete with larger businesses in terms of the estimated costs and the overall presentation.

Can Private Clients Benefit from Cost Estimating? 

Yes, definitely.

As an individual, a cost estimate will play a key role in determining how financially viable your project is, and will form the very blueprint upon which your overall budget will be based. 

That’s not all. 

A Cost Estimator can also work with you to create a Bill of Quantities, which lays out the number of materials and other essentials you’ll need to bring your big project to life. 

By supplying this to potential contractors, you ensure a fair and accurate tendering process as contractors interested in taking on the job will base their prices on your original document. This ensures that you only receive like-for-like quotes based on your exact requirements. 

How Easy is It to Get a Professional Cost Estimate from a Quantity Surveyor? 

It’s pretty easy. In my own consultancy, we simply asked clients to send us their drawings, logo, and company details via email. After a quick-yet-comprehensive conversation with the client, we then got to work on providing a detailed estimate within an agreed time frame.

The process may be short, but once that estimate results in a winning tender, it contributes to the long-term growth of our client’s business.

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