It is important to point out that cost estimates for the construction business are mandatory. Thus, if the company does not develop a sound estimating strategy, the company may offer to complete a project at a cost that is below the actual cost and end up incurring losses or offer to complete the same project at a higher price than the client is willing to pay and therefore loses the client. It is not easy to build an estimation process, but it is worth doing that because it will lead to more accurate bids and, as a result, higher profits, and customer satisfaction. The general tips that are discussed in this guide pertain to the fundamental aspects of developing a precise estimating model for your construction organization.
Gather Historical Data
The first one is to collect records of the past experiences and activities that were accomplished by the company. These are the project estimates, the cost estimations of the project when it is completed, the type of Construction Estimating Services project, the geographical location, the period of the project, the employment of labour and materials, the site conditions, and all others that contributed to the total cost of the project. Develop a portfolio of this information starting from the period that is as early as possible. The key here is to start dissecting all the assumptions made in your estimating and costing exercise in the past to start identifying some practical patterns.
Standardize the Estimating Process
Each estimator within your company should proceed with the same general procedures when developing an estimate. This begins with a precise identification of the complete extent of a project which may be determined by drawings, specifications, and clients’ requirements. After that, the detailed takeoff is made for projecting the labour cost, cost of materials, cost of equipment, cost of subcontractors, and project overhead. Field cost descriptions, coding systems, estimate forms, and review processes help you create uniform bid estimates.
Implement Estimating Software
There are different types of software which is used for estimating which can help in systemizing as well as improving the process. Features include the ability to create estimating databases without much effort, the capability to quickly generate accurate takeoff estimates, comparison of estimates, interaction with accountancy systems, and the capacity to determine the reliability of estimated bid amount as against actual values. This means that the estimator has to work less to produce estimates while at the same time improving the accuracy of the estimates. Just make sure that the software meets your business requirements in terms of the kinds of estimating reports produced, the time required to get familiar with its features and functionalities, and its compatibility with other systems.
Define Allowances
Technical credibility of estimation largely depends on how unknowns and uncertainties of the project have been handled. Construction Estimators are prepared to assume especially during the early bidding when they are faced with incomplete drawings from the architects. Specify the amount of monies to be allowed for such factors as design-related contingencies, cost escalation contingency up to the expected construction period, unforeseen site conditions, and the client’s change orders. The amounts should be derived from an evaluation of the cost history of similar projects as they embarked on these projects.
Continuously Improve Knowledge
Construction estimating involves understanding construction processes, products, tools, codes, and standards, key cost influences in the construction of structures, and sources and rates of construction subcontractors. This means that estimators have to expand their knowledge as much as possible. Cost trends should be checked frequently through trade organization events, continuing education, papers, seminars, and other professional contacts, such as peers. Get subscriptions to services that can offer accurate construction cost data for the local area. If you are constantly improving your understanding of the factors that influence your judgment, then the impact will translate to a better estimation.
Leverage Technology
Whereas there seems to be a trend towards more accuracy in estimation, new technologies are aiding the process by making some of the steps easier. Site visits, for example, can be completed on mobile applications which provide the estimators with an interface where they can enter measurements, photos, and notes that can be easily imported into the estimation application. Sensors are installed on the equipment to monitor construction productivity and provide the data to adjust labour costs. Scaffolding and cranes supported aerial mapping of site conditions by drones. Machine learning algorithms also assist in benchmarking the estimates with past data. Use these technologies relevant to business to enhance estimating efficiency for your firm.
Perform Estimate Peer Reviews
This is because an independent external view of bid estimates before they are tendered tends to bring out some things that the original estimator overlooked. This best practice confirms that you have not excluded important scope-related items, identified flawed assumptions, made sure you have provided adequate allowance, and double-checked on mathematical computations. The opinion brought by reviews helps provide more accurate data. More often, send skilled estimators or managers to do the peer review.
Another one of the key considerations is the Bid vs. Actual Performance
A key aspect of the lock-in estimation strategy is comparing the bid estimates with the final cost of the accomplished projects. This shows how closely you estimated various aspects such as labour productivity, the number of change orders, the unpredictability of material prices, subcontractor services, equipment requirements, etc. Identify areas of significant deviations and the causes. Identify chronic estimation mistakes. Bid better with bid-actual data to improve the estimate with incremental refinement over time to your assumption and the method you used.
Conclusion
In this way, by using an estimation methodology that covers the above-listed steps, Construction Estimating Service companies can get great competitive edges from higher accuracy of bids. This allows applying smart bidding strategies on the projects that one is capable of delivering at profit, within stated time and costs. To provide accurate cost estimates, significant improvements must be made to historical data, defined and consistent procedures, modern equipment, well-trained human resources, and continuous enhancement. However, once this type of estimation strategy is developed, it will provide a great platform for continued business growth and success.
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