Construction Estimating in 2025: Get 100% Accuracy with Tried and Tested Methods!

Of all the crucial steps and phases, construction estimating, as a pre-construction activity, holds its special significance in development. It plays a vital role in accurate budgeting and proper funding so that the actual construction takes place smoothly without any interruptions. 

In this article, we will talk about this pre-construction activity and learn how to streamline the same! Let’s begin the discussion with some crucial background information. 

What is Construction Estimating & a Construction Estimate?

The process of calculating the potential costs of a construction project, before actual costs occur, is called construction estimating. And, as far as a construction estimate is concerned, it is the total amount of estimated money required for the completion of a particular construction.  

There are two types of construction costs associated with a construction project, namely, potential and actual. The potential costs are just an estimation of the actual costs, and they are calculated ahead of the construction process by a contractor based on experiences from handling similar projects in the past.  

Furthermore, actual costs are expenses that actually occur once a build is complete. Such expenses include all cost overruns and unexpected spikes in financial needs. 

The goal of a skilled contractor is to estimate the potential cost of building a project as close to the actual cost as possible. 

Also Read: 10 Biggest Construction Companies in the US to Know Before Hiring a Contractor!

What is the Construction Cost?

Every currency of money that a construction project requires for its completion translates into a construction cost later. Many items contribute to the expenditure, such as worker wages, equipment wear & tear, worker salaries, labour, subcontractor fees, etc. 

However, all these expenses or costs are subsumed under direct and indirect cost categories.

What are the Key Components of a Construction Estimate? 

A construction estimate or construction estimation includes three crucial sections, namely, direct costs, indirect costs, and unexpected costs. However, there is also a fourth component: profit margin. Often, contractors cover profit margins by charging for their services separately. 

• Direct Costs: These include expenses that are directly related to the construction process, such as money spent on the procurement of necessary construction materials, hiring and setting up equipment, labour, etc. 

• Indirect Costs: These are expenses that are indirectly related and thus cover money spent on safety measures, legal permits and compliance, utilities, administration, etc. 

• Unexpected Costs: For all unplanned events that might end up increasing the actual cost of a construction project, a contingency or emergency fund is maintained well in advance. 

• Profit Margin: Part of a construction estimate that a contractor takes away as their service cost is called profit margin. 

What is the Best Construction Estimate Format?

The following are the five major features of the best construction estimate format. Have a look at the key highlights below and try to incorporate them in your estimates as well. 

1. Detailed Breakdown: A construction estimate must provide an in-depth view of all the estimated costs. 

2. Accurate Measurement: Direct and indirect costs have to be calculated with precision and accuracy. 

3. Clear Structure & Organisation: Every part of the estimate, when organised and structured clearly, streamlines the communication process for better understanding among all the stakeholders in the construction process.   

4. Logical Simplicity: Each cost item in the estimate has to be logical and easy to understand. There must be no element of ambiguity to create doubts and confusion. 

5. Flexibility: The best construction estimate includes funds for unforeseen events from the outset. This helps keep the budget flexible. 

Pro Tip: Making mistakes while calculating an estimation is natural. But to make sure that these inaccuracies or inconsistencies don’t move to the final document, ensure that you proofread the final estimate at least three times at different intervals. If possible, set aside time in the morning for this practice. 

What are Major Construction Estimate Options?

There is more than one type of construction estimation to choose from. Contractors use estimates not only for bidding on projects, but also for other purposes. The American Society of Professional Estimators (ASPE) talks about five types or levels of estimates used at various stages of the construction process.

1. Order of Magnitude: Potential construction costs are calculated based on experiences from handling similar projects in the past. 

2. Schematic Design: Rough estimates are calculated based on the initial schematic design before the documents containing detailed design are ready.  

3. Design Development: Costs are anticipated before actual construction, taking a tentative design and expected quantities into consideration. 

4. Construction Documents: With the help of a finalised project construction design, an estimate is formulated, which tends to be closest to actual costs. 

5. Bid Estimate: At the time of bidding for a project, contractors come up with a competitive potential cost based on their experience and subjective analysis. This is called the bid estimate.   

All these estimates show different levels in the construction estimating process. The most accurate form of an estimate is the 4th one, which is known by the name of construction documents. 

Also Read: What is RFI in Construction? A Naive-Friendly Guide

How to Estimate Construction Costs Accurately?

To estimate the construction costs of a project correctly, ensure the following 4 things. These are crucial aspects of the process that you mustn’t skip. Have a look at them below. 

1. Breakdown: Brainstorm and create a work breakdown sheet. Include every single type of task, deliverable, or undertaking that you need to do for the successful completion of the project. 

2. Scope: Once the rough breakdown sheet is done, outline the scope of work and add all the details to the document. Keep defining it until nothing seems to be left out. 

3. Resources: After defining the scope, use the details to calculate material takeoff. Gauge how much it might cost to arrange essential resources, taking into account other estimations.  

4. Contingency: Don’t forget to factor in emergencies. Allocate enough funds for unexpected events or happenings ahead of time. It keeps the estimate flexible and viable.  

Pro Tip: To define and break down the scope of a construction project into an actionable plan, make use of construction documents. However, before that, never forget to cross-check with the project owner and designer that such documents are final. 

What is a Construction Calculator & Construction Estimator?

The terms “construction calculator” and “construction estimator” both have a two-fold meaning. 

• Firstly, it refers to a professional in the construction industry who helps make construction estimates during pre-construction. 

• Secondly, to reduce effort and boost productivity during construction estimating, various software and online tools are also available on the market for the use of project estimators. So, these terms also refer to such tools designed to streamline organisation and calculation.  

Do you know? 

A construction estimator helps determine the potential cost to complete a construction project by relying heavily on their deep experience in the field, analyzing past data, and factoring in the current level of inflation. In addition, they also leverage various workable techniques and harness the latest technology. 

What are the Most Popular Construction Estimating Software Options?

There are a variety of software types available for the use of construction estimation makers. These tools reduce inefficiencies and help maximize output. Consider the 5 most popular options below. 

1. Procore: For large and big construction projects, this estimator offers robust functionality and exceptional suitability. Not just a huge number of integrations, Procore, as an estimation software, also facilitates easy digital takeoffs and streamlined budget management. 

2. STACK: For small and medium-scale projects, STACK offers a better experience as compared to the alternatives. Being a cloud-based solution, it assists the construction estimating process with digital takeoffs, project templates, and auto-count tools. 

3. Buildertrend: Operating on the SaaS delivery model, this estimator offers cutting-edge project management capabilities to estimate, schedule, and bid better.

4. Autodesk Construction Cloud: With a suite of cutting-edge tools, this construction calculator streamlines various phases of the construction process.  

5. PlanSwift: This estimate maker comes with a user-friendly interface to particularly revolutionise the digital takeoff efforts. It allows users to determine accurate quantities. 

There are other software alternatives as well that people in the estimating profession can use, such as QuickBooks Enterprise, Clear Estimates, Estimator360, CostX, CostOS, etc. 

Also Read: What is a Contractor? Roles, Responsibilities & Everything to Know!

What are the Common Problems During Construction Cost Estimating?

Estimating potential expenditure before the actual start of a building project is a complex task. It requires multitasking and razor-sharp focus, validating the profession of construction estimators, as experts are needed to take care of this pre-construction requirement in a dedicated manner. 

Consider the 8 most common problems that professionals face while making building estimates. 

1. Inaccurate Takeoffs 
2. Underestimations
3. Ignoring Risk & Unexpected Costs  
4. Miscommunication
5. Poor Planning
6. Incompetent Site Visits 
7. Outdated Data
8. Scope Creep

Additionally, the insufficient collaboration also results in financial losses and unmanageable situations, leading to delays in the completion of a development project. 

Also Read: General Conditions of Contract: Complete Guide with Meaning, Types & Examples

Conclusion 

Accurate construction estimating is pivotal to arranging and allocating sufficient funds for the actual building. These days, various state-of-the-art online tools are available to assist estimators. Thus, if you find estimating overwhelming, don’t forget to check out the software listed in this article. 

Choose anyone, take a free trial, alternate with other options, and draw comparisons. Trying and testing will help you find a piece of software that understands and serves your estimating needs in the best way. 

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