As an estimating manager in the construction industry, I have seen firsthand the impact that mistakes in cost estimation can have on a project. Accurate cost estimation is a crucial part of the construction process, as it helps ensure that projects stay within budget and are completed within the allocated resources.
In this blog post, we’ll discuss five common mistakes that estimators should avoid when determining the costs of a construction project. By avoiding these pitfalls, you can improve the accuracy of your estimates and better manage the budget for your projects.
Mistake #1: Skipping the review of plans and specifications
Before you even begin the cost estimation process, it’s crucial to thoroughly review the plans and specifications for a project. This includes not only the architectural and structural drawings, but also any special requirements or considerations that may impact the cost of the project.
For example, if the project involves the use of specialised materials or equipment, you’ll need to factor in the additional costs associated with acquiring and installing these items. Similarly, if the project requires the completion of certain tasks within a specific timeframe, you’ll need to consider the impact that time constraints may have on labour costs.
Failing to review the plans and specifications in detail can result in inaccurate cost estimates and potential budget overruns. Make sure you have a clear understanding of the scope of work and any unique requirements before you begin the estimation process.
Mistake #2: Underestimating labour costs
One common mistake in construction cost estimation is underestimating labour costs. Labour is often one of the largest expenses on a construction project, so it’s important to accurately estimate the amount of labour needed and the associated costs. This includes not only the number of workers required, but also their hourly wages and any benefits or overtime pay.
To accurately estimate labour costs, it’s essential to have a thorough understanding of the tasks that will be required for the project and how long they are likely to take. This may involve breaking down the work into smaller tasks and estimating the time required for each one.
Additionally, it’s important to consider the skill level of the workers that will be needed for the project. More specialized tasks may require workers with higher levels of expertise, and therefore higher hourly rates.
Mistake #3: Neglecting to include all necessary materials and equipment
It’s easy to overlook small items or specialty equipment that may be required for a construction project in the excitement of estimating costs. However, these costs can add up quickly and neglecting to include them in your estimates can result in budget overruns.
To avoid this mistake, make sure to create a complete list of all materials and equipment needed for the project. This should include everything from lumber and drywall to hand tools and power tools.
It’s also a good idea to get quotes from multiple suppliers to ensure that you are getting the best price on materials. Don’t forget to factor in delivery and handling costs, as these can also add to the overall cost of the project.
Mistake #4: Not allowing for contingencies
Even with careful planning, unexpected issues can arise during a construction project. To protect against budget overruns and ensure that your project stays on track, it’s important to include a contingency budget to cover any unforeseen costs that may come up.
Contingency funds can be used to address a wide range of potential issues, such as unexpected delays, unforeseen site conditions, or changes in scope. It’s generally recommended to set aside a contingency fund of around 5-10% of the total project budget to give you some flexibility to address any unexpected issues that may arise.
Mistake #5: Failing to regularly update the construction cost estimate
Costs can change due to a variety of factors as a project progresses. To ensure that your construction cost estimate remains accurate and reflects the current status of the project, it’s important to review and update it regularly.
For example, if there are changes to the scope of work or if the price of materials increases, you’ll need to adjust your construction cost estimates accordingly. By regularly updating your estimates, you can stay on top of changes and make sure that your project stays within budget.
In conclusion, construction cost estimation is a crucial part of the construction process. By avoiding common mistakes such as skipping the review of plans and specifications, underestimating labour costs, neglecting to include necessary materials and equipment, failing to allow for contingencies, and not regularly updating the construction cost estimate, you can improve the accuracy of your estimates and better manage the budget for your projects.