8 Common Mistakes in Construction Estimating

A challenging task in the building industry is estimating. It is also one of the most important. Usually, whether you’ll turn a profit or a loss depends on the accuracy of your estimates and how well they match your project’s final costs.

So how accurate are your estimates? A survey by QuickBooks and TSheets found that only around one-third of construction companies really make as much money as expected. It shouldn’t be a major surprise that 40% of respondents aren’t particularly confident in their forecasts.

One bad estimate on a failing project is unlikely to put you out of business. A spate of failed campaigns might lead to the ultimate closure of your company. According to 25% of the respondents, only two or three inaccurate estimates would be enough to ruin their business.

Since generating accurate estimates is no easy task, a trained estimator is valuable. For each project, a number of elements must be taken into account in order to generate reasonable estimates. From calculating accurate labour and material costs to understanding worker productivity to acquiring correct takeoff dimensions to accounting for things like risk contingencies and overhead, everything must be almost faultless.

One or two mistakes may completely distort your predictions, resulting in a terrible bid that you would either lose because it was too high or win because it was so low that you wouldn’t make a profit on. Here are a few of the most frequent estimating mistakes made in the building sector, along with advice on how to prevent them.

Not Making a Site Visit

The majority of bid openings provide prospective bidders the option to visit the project and attend a pre-bid meeting. These are regularly, and understandably, necessary in order to submit a bid. No two construction sites are similar, and unforeseen site conditions might cause pricey issues as soon as work gets underway.

When you visit the site, you should take measurements, look at the topography, and, if you haven’t already, get some soil boring samples. The site’s accessibility and traffic, the space available for staging, the delivery and storage of equipment and supplies, and any required environmental precautions during construction should all be taken into account.

Any subcontractors whose work may be affected by the site’s condition should be invited to visit. This gives them the ability to assess the site independently and include any additional costs that probable site conditions could entail into their estimates and bids.

Inconsistent Takeoffs

Your takeoffs provide the groundwork for your estimates. If your estimates are unreliable or incomplete, your calculations may suffer greatly. Using precise takeoffs, you can determine the exact quantities needed for all of your goods and supplies. They must also figure out how much equipment and labour you need. You run the risk of either overestimating the project and losing the bid or underestimating it and receiving a project that won’t be profitable if critical details are overlooked or measurements are wrong.

Consider utilising takeoff software to ensure that you have correct measurements for your calculations. Additionally, compared to manual takeoffs, it saves a tremendous amount of time. Given that these technologies are only as useful as the user, it is imperative that estimators get the required training and feel at ease using the programme.

Labor Costs

Labor costs are undoubtedly the hardest item to predict accurately when it comes to your estimate. In a survey by QuickBooks and TSheets, owners of construction companies said that “labour expenditures are the trickiest to anticipate and are regarded as the most expensive project cost.” A number of variables, including the number of employees available for the project, their level of experience, pay rate, and productivity, are taken into account when determining labour costs.

While a skilled worker with experience may make more money, they are more productive and able to do more tasks in a shorter amount of time than a worker with less experience who makes more money. Focus on determining the number of man-hours needed to do a work while calculating labour costs.

Don’t forget to determine if the project requires prevailing wages, which may or may not be different from the rates you typically pay each employee. Always keep track of project costs, especially labour costs, since you may use this data to develop more accurate estimates for next projects.

Materials and supply costs

The cost of supplies and construction materials, which is notoriously difficult to anticipate, is another big expenditure for construction projects. The cost of materials might significantly alter between the time you develop an estimate and the start of construction. Given the rising demand for resources and the ambiguity around tariffs and their impact on prices, it is difficult to make precise predictions.

Having connections with the makers and suppliers of your building products has advantages. They might point you in the direction of other materials that would be a better fit for your project and help you lock in specific prices as you construct your estimates.

Although it’s crucial to lock in material prices, don’t forget to let your suppliers know how much of each resource you’ll need. They can therefore ensure that they can finish your transaction and come on time. Employees without the appropriate materials might cause costly and inconvenient delays that can hurt your company’s bottom line.

Not recognizing hazards and preparing for them

Every construction project has its risks. A risk analysis needs to be a part of your estimating procedure. It helps you decide whether to bid or not, which is one advantage. An experienced estimator may determine that a project is too risky and opt not to submit a bid. Making a budget for contingencies and other expenses is also beneficial.

Failure to assess risks and include back-up measures into your estimate may be expensive when things go wrong. The larger the risk, the longer it will take you to determine how to lower hazards and how it can impact your spending. Once construction has begun, it’s likely that you won’t be able to recover your losses if anything goes wrong.

Making unfounded assumptions

Don’t gamble with your bids by making estimates based on incorrect or uninformed assumptions. Tracking project costs for each project is a great way to ensure that your estimates and, ultimately, your bids are as accurate as possible.

To estimate work expenses for labour, materials, and equipment, the most current data available should be utilised. Pay close attention to soft costs that are sometimes forgotten or ignored, such as overhead costs and fees for licences and inspections. You should also make sure you have the required staff and equipment for the job. If you have to unintentionally recruit additional personnel or rent more equipment, your income might be quickly drained or lost completely.

Not checking your work

Everybody makes mistakes sometimes. With estimators, the same is true. Larger errors, such as leaving out scope items, taking inaccurate measurements, or using the incorrect units of measurement, may result in issues. Small errors in estimating or omissions may not have much of an impact, but they may generate issues. Spend some time carefully evaluating your work, or get the help of another member of your estimating team. Check to make sure your dimensions and all of your cost estimations are correct.

Give yourself ample time to gather your estimates and submit a proposal. Hurrying your work can only result in mistakes that will ultimately cost you money, so instead of rushing to meet a bid deadline, take your time and do it well the first time. Nearly usually, the profitability of a project is determined by your estimations. If your offer is too low, no amount of cost-cutting measures will often be able to make up for the shortfall.

Not verifying the accuracy of subcontractor estimates

It’s conceivable that a general contractor will have to assign some of the work to specialist contractors. Do a thorough analysis of their bid estimates and proposals. Ensure they are familiar with every aspect of the projects you want them to bid on and complete. This will stop them from listing work that you or another subcontractor are currently doing in their quotations.

Also Read: Benefits of Using Hyper Tough Tools in Construction