Construction is a complex activity involving many types of costs. A single error can be costly, resulting in a loss of profit for the contractor and an expense for the owner. Therefore, construction estimating services are important to know how much money a specific project will need for construction. Therefore you need to decide what type of estimate you will need. Estimates can be rough or with details considering the depth. However, the purpose remains the same, to forecast the cost or budget by analyzing conditions.
On the other hand, stakeholders, engineers, and contractors always require different types of estimates. This is due to the fact that, whether one should invest time, effort, money, and business resources or provide professional services or not. Otherwise, the contractor will end up losing profit and the owner will face budget issues resulting in conflict.
Different Types of Estimates for Construction Estimating Services
Construction estimating services are professional and reliable services to estimate the cost. This is necessary for you as a contractor and stakeholders since you need to find the cost for your project. Moreover, accuracy, quick estimates are always necessary to bid on different projects to continue your business and earn more projects as a contractor. Construction projects have been estimated as a backbone which can be rough or in detail.
Different types of estimates can affect the accuracy of the estimate. Many estimates reveal results in the initial stages, while others are subject to final outcome. However, in the early stages, they are important to provide information about resources, time, and money. Moreover, you can streamline your construction activities with a roadmap.
Each construction estimate differs in scope and final outcome. Therefore, there are many processes and ways to develop the estimates. The scope, and final results requirements along with different processes are actually what make different kinds of construction estimates. They differ in information, data, and costs. In this blog, you will find 4 major types of construction estimates and information related to them.
Main Types of Construction Estimates
Below given are 4 main types of construction estimates which are mostly useful in the construction industry:
- Preliminary / Conceptual Construction Estimate
Preliminary estimate is also known as a conceptual construction estimate. This is because this estimate is performed in the early stage of construction where you will have little completed work and more plans. Stakeholders and owners require such estimates to know about financing requirements and financial feasibility. Moreover, this construction estimate can reveal the source of financing.
Based on historical data, industry norms, and comparable projects, it gives a preliminary cost prediction. The conceptual estimate is helpful for assessing the project’s viability and securing early finance.
On the other hand, if you want to devise a preliminary estimate, your experience, skills, and tools will help. Mostly the general contractors are able to figure out the cost while looking into their past projects of the same size and kind. However, you must note that these figures need revision before the actual construction begins.
When the project concept is clearly defined, a preliminary estimate that is more thorough than the conceptual estimate is created. It entails examining the project’s essential components and, using the data at hand, offers a more precise cost prediction. Making important judgments and determining the project’s budget are both aided by the preliminary estimate.
Example: A contractor estimates the amendment or remodeling of bathrooms in a residential project. The contractor estimates the cost using the past project he was able to complete of similar nature and in some close neighborhood. This becomes the preliminary estimate.
2.Detailed Estimate (Square Foot Estimate)
Next comes the comprehensive estimate which is at a stage where stakeholders have information and can get into details and depth. This is why it is termed as a detailed or square foot or comprehensive estimate. Actually, square foot estimates come into play at this stage which can reveal benchmark cost estimates.
Detailed estimates or square foot estimates are developed in a matter of hours with details from preliminary design and estimates. You should include materials prices, labor charges, equipment, and other expenses in this estimate. Moreover, it does not reflect the actual cost of the project but rather what comes after calculating the cost of per-square-foot construction.
The most thorough kind of estimate is the detailed estimate. It entails a detailed examination of all project elements, including material and labor costs, equipment costs, overhead expenses, and other direct and indirect expenses. For procurement, budgeting, and project planning, it offers an accurate cost prediction.
Example: A detailed estimate for several square foot rooms for any project should include a detailed explanation of all rates for price calculations (item list including materials, labor charges, other expenses), project scope or in-depth details, and building drawings.
3. Quantity (System & Assemblies) Estimate
The next is quantity or system and assemblies estimate. In this stage, you will need information on systems and assemblies. The systems and assemblies enable you to make quantity estimates for them by acquiring the details and breaking them down. It can include HVAC, MEP systems as well as room construction costs. Moreover, it is more in-depth than the square foot estimate.
Example: A Mechanical, Electrical, and Plumbing Estimator developed a quantity estimate for a small project. It consists of hourly rate or labor multiplied by total square feet along with materials price and other expenses.
4. Bid Estimate
Bid estimate consists of the construction cost for the project from the customer or client. Moreover, here you need to consider that every contractor wants to win the job or project with a bidding low. Professional construction estimating services are capable of providing such bids. Construction estimating services have professional teams, accurate and reliable tools, the right experience, and the use of industry practices to ensure the estimated work, as well as the bid estimate, wins the job.
Usually, contractors perform such a type of estimate. You might be wondering how to become a construction estimator in addition to a contractor. Well, this is part of the job as a general contractor to develop estimates. You should use client plans, documents, and search market prices, contact subcontractors, determine labor costs and other expenses, and equipment prices for developing bid estimates.
It entails a thorough breakdown of expenses associated with the project’s specifications, requirements, and range of work. The bid estimate is used by contractors to set their bid price in an effort to win the project.
Example: A client hires a contractor for some kitchen and garden work. The contractor can perform or acquire professional construction estimating services to develop the bid estimate. It consists of an hourly rate for labor, cost of materials, equipment, and transportation/administration charges, contingency costs, and other costs. Moreover, through construction estimating services, contractors will try to develop estimates with low costs to win the job.
5. Change Order Estimate:
Change order estimates are created when the initial project scope is modified or altered after construction has begun. These projections aid in comprehending any new expenses or cost savings brought about by the improvements.
6. Final Estimate:
At the conclusion of a project, a final estimate is created to compare actual costs incurred with estimated costs. It gives useful information for future projects, aids in evaluating the project’s financial performance, and identifies opportunities for cost overruns or savings.
There are different types of construction estimates. They differ on the basis of the purpose such as scope, available information for estimations, and final output of the estimate. Construction estimates help stakeholders to know about the project price, and decide about finances and contractors can win bids to perform the work on the basis of accurate estimates. Professional construction estimating services help the contractors, engineers, and stakeholders to have the construction cost estimate without spending much effort, investing time and money. You should perform the estimations to fulfill the purpose with accuracy as objective.
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