Let’s face it – making an accurate construction estimate is one of the most challenging parts of the job. Practically every phase of the contract, from planning to completion, relies heavily on the budget that you set at the start of a project. After all, your budget is your lifeline. However, providing an accurate estimate is a balancing act. Set the estimate too high, and you’ll likely lose the bid to a competitor. Estimate too low and it’s possible that you may fail to deliver a successful project to the client. Both of these results can have devastating consequences That’s why we wanted to line up some helpful tips to help you provide an accurate estimate that’s fair for both parties.
Tip #1 – Don’t underestimate your labour costs
There’s no doubt that any team’s most valuable asset is its people. But at the end of the day, labour costs are one of the most difficult components to estimate. It’s a complicated part of the job, simply because there are a ton of variables involved. You’ll need to know how many people you’ll need, their rate of pay, experience level, and their output. Factor in the fact that you’ll likely need to bring on specialists or subcontractors, and suddenly you’ll realize that labour should be one of your primary focuses when providing an estimate.
For most jobs, labour costs are the largest cost associated with the project. Take your time when planning a bid – it’s better to overestimate than underestimate. This is one part of your construction estimate that you want to get as accurate as possible.
Tip #2 – Know your customer’s expectations
Before you submit a bid to the client, it’s critical that you have an understanding of their expectations for this project. This means that you’ll have to rely on your strong communication skills and ask all the right questions. By doing so you will be able to get a better understanding of their priorities. This way, you can direct your resources in the right areas. If not, you risk potential delays or added expenses due to misunderstandings or unrealistic expectations.
Tip #3 – Consult with your suppliers and subcontractors before you make an estimate
Building strong relationships with your suppliers and subcontractors is crucial for a long-term and prosperous partnership with them. In an environment where construction businesses are always competing for projects, having additional information will never be a liability. That’s why we recommend that you consult with your suppliers and subcontractors before submitting a bid. They’ll be able to provide you with valuable intel, such as material pricing or changes in the market. If you’re on good terms, the chances are that your suppliers will be happy to provide you with their feedback. Their feedback can help you mitigate potential risks and create a more accurate construction estimate.
Tip #4 – Know your specialty
It’s important that you understand your own expertise, and more importantly, where you’re not an expert. Too often are people making uneducated guesses in fields where they lack the experience and knowledge. We all want to seem like an expert, but making uninformed claims can have a negative impact your estimates. That’s why we recommend that you build yourself a diverse network of trusted professionals who you can lean on to help you make more informed decisions. A lot of subcontractors specialize in particular niches, so it’d be worth reaching out to these individuals for their expert opinion.
Tip #5 – Don’t bid on every job
Whether you’re just starting out or have years of experience, we’ve all taken on unnecessary risks. There’s a lot that goes into preparing a bid for a project – knowing potential costs, understanding the project timeline, and looking at potential competing offers. This amount of preparation can take a lot of time, so it’s important that you pick your battles. If you were to bid on every single project, you’d be taking away valuable time from actually delivering on a project. We recommend that you select potential jobs based on the likelihood that you can deliver a successful project, business-to-client fit, and within your scope. A construction estimate can be extremely time-consuming, so be wary!
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So there you have it, our top five tips to help you make more accurate estimates, helping you save time and money. If you’re looking to digitize your construction business we recommend taking a look at the services we offer at Contract Complete. Our software is used by hundreds of businesses to help them plan their budgets, organize bids, and even automatically generate the hundreds of documents you will need. Further, ContractComplete allows you to store the document digitally, thus reducing the need to store a physical copy. Above all, our process reduces inefficiencies and ensures that all parties have a clear understanding at all stages of a project.
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Having a consistent and reliable procedure in place allows for simplicity should the need for a change notice arise. We recommend outlining this process from the beginning with project owners. Most importantly, being upfront ensures that everyone is on the same page when changes happen. Being proactive requires deviation from industry norms, which at ContractComplete, we are eager and prepared to provide.