Four Common Construction Cost Estimating Mistakes
Estimating is considered one of the most difficult jobs by experts in the construction industry. It is also one of the most important, primarily because profits are typically lost or won based on the estimate’s accuracy and how closely it matches up to the project’s final cost.
Recent surveys from TSheets and QuickBooks have shown that nearly one-third of companies in the construction sector make far less profit than expected when tenders are based on their estimates. While one bad estimate is not likely to put you out of business, stringing together a handful of unprofitable projects could lead to you having to close the doors for good.
Getting accurate cost estimates is not an easy task. While hiring in-house professionals could prove expensive, outsourcing the task to reliable BPO companies is an excellent cost-saving alternative. Highly qualified estimators at ADDMORE Services account for an array of variables to deliver accurate estimates for every project. They handle everything, from nailing down material and labor costs accurately to understanding workers’ productivity and streamlining precise takeoff measurements or factoring in items like overheads and risk contingencies.
At ADDMORE Services, we know that even the slightest mistakes can throw construction estimates off, resulting in inaccurate bids. Using the wrong measuring units, inaccurate measurements, omitting scope items, and other similar errors could mean you will lose the project because the bid is too high or win it because it is very low, resulting in decreased profitability, and sometimes, even loss. Let’s look at a few common estimating mistakes and ways to prevent them.
Mistake #1- Inaccurate Takeoffs
Takeoffs lay the groundwork of most estimates. If they are inaccurate or incomplete, it can be detrimental to the estimates. Accurate takeoffs help determine the exact supplies and material quantities needed for successful and timely project completion. They are also beneficial when determining equipment and labor needs.
Missing important details during takeoffs can cause over-or under-estimates. Either way, the project would not be profitable in this case. Many prefer using software to ensure accuracy, but it could prove equally disastrous without the proper training needed to use the software.
Mistake #2- Inaccurate Labor Costs
Labor costs are probably the toughest to nail down accurately when it comes to construction estimates. This is because various variables come into play when estimating labor costs, including experience levels, the number of workers, productivity, pay rate, etc. An experienced worker may demand higher pay as they are more productive and can get more done in comparatively less time than those with less experience. It is important to determine the man-hours it would take to finish a task when estimating labor costs.
Mistake #3- Supplies and Materials Cost
Material prices can fluctuate drastically from the time to curate the estimate to the time construction begins. Tariff uncertainty and varying demands for the materials significantly impact the prices, making it difficult to get the estimates right. Establish relationships with the suppliers and manufacturers to get accurate prices every time. They can steer you towards alternative materials better suited for the project and provide signals if the prices are likely to increase shortly.
Pro Tip: Do not forget to factor in overhead and soft costs, such as those for inspections and permissions that can often be neglected or forgotten.
Mistake #4- Not Outsourcing the Job to Professionals
Everyone makes mistakes, and estimators are no exception! Let industry professionals at ADDMORE Services handle all your estimating jobs. We work with a highly qualified team that double-checks everything to ensure accuracy. They assess potential risks and create contingencies beforehand to ensure nothing affects your bottom line.
Schedule a consultation with us to learn why businesses in the Republic of Ireland, the USA, New Zealand, the Middle East, Australia, the UK, and many other countries worldwide trust us for a wide range of outsourcing and offshoring solutions.
We offer high-quality construction cost estimation services, BIM services, architectural drafting services, 2D or 3D CAD drafting services, Revit design services, real estate rendering, Primavera modeling services, construction project management, quantity surveying services, takeoff estimating services, and more at cost-effective rates.