7 Essential Elements in Construction Cost Estimation

Read this blog post to find out about the 7 elements that cost estimators use while developing a cost estimate for a construction project.

Did you know that an accurate construction cost estimate is crucial to the success of a construction project? Yes. It is true. It is no doubt that construction cost estimation is the cornerstone of every construction project. The construction of any project begins with an accurate estimation of costs. Getting an accurate cost estimation from a professional construction estimator is critical to developing and maintaining a realistic budget of project costs.

With an accurate construction cost estimate in hand, you will know how long a project will take and how much it would cost you. However, getting an accurate construction cost estimate can be tricky. The consequences of an underestimate or an overestimate can affect your construction project to a great extent. Getting a construction cost estimation carried out can take up some time and cost, but it is worth the effort as your business will be able to make big savings in terms of cost and money.

A skilled cost estimator can provide you with accurate information about possible costs. When your stakeholders are presented with an accurate cost estimate, they will be able to make the right decisions with authority. Do you know what elements are taken into consideration during a cost estimation? When you outsource construction cost estimation, a skilled team of experts will take into account the following 7 elements, so as to give your team a comprehensive project cost estimate.

  1. Quantity takeoff – The cost estimator will first accurately identify and develop the required materials for the project. This step is crucial, as without an accurate takeoff, there will be inaccuracies in the project.
  2. Labor hours – Next, the cost estimator will use his experience to estimate the labor hours required to complete the project. The varying levels of labor productivity based upon the complexity of each stage of the project will be taken into considerations.
  3. Labor rates – A cost estimator will estimate labor rates with a basic wage and estimate for each given work. This estimation will take into account various taxes like FICA and FUI, along with other taxes required by the company. The cost estimator will also take into consideration the possibility of overtime work and the increase in cost that will be associated with those extra hours.
  4. Price of materials – Correctly estimating the cost of materials can be more complicated then it initially appears. This is because the cost of a given material fluctuates greatly depending on the market demand and supply, the required quantity, the cost of transportation to the building site and exchange rates, in case the materials have to be shipped to another country.
  5. The cost of equipment – Cost estimation will also take into account many factors in regards to the equipment. This will include the capacity of the equipment and the cost differential that occurs if the equipment has to be rented.
  6. Subcontractor quotes – At times, portions of a project will be completed by subcontractors. The cost estimator should consider costs around the labor, materials and equipment required by the contractor.
  7. Indirect costs – A cost estimation of indirect costs is important in the overall estimation of the project. Temporary on-site utilities, land acquisition, mobilization, design fees and office support are a few important items that must be considered in order to arrive at an accurate cost estimate.

Why is construction cost estimation important?

As you would know, it is virtually impossible that the initial estimate will be the same as the final price tag of the project. However, a comprehensive estimate will enable your developers to make important choices. With a cost estimate in hand, developers can determine the profitability and feasibility of a prospective project. The procurement of financing will also depend on the cost estimation. During the development of the project, your developers will be able to make important decisions about alterations in the project design/materials that can affect the project negatively or positively.

Most importantly, an accurate cost estimation can keep all the involved parties focused on delivering the project on time and within the budget. A construction cost estimation will hold your team accountable for increased costs or overrun.

Outsource construction cost estimation

At Outsource2india, we approach each step of the construction process with integrity, skill and honesty. Our aim is to provide our valuable customers with accurate information, so that they can make the best possible decisions for their project. Our skilled experts will take into consideration materials and design choices in the cost estimate in order to present our customers with options that will increase value, while minimizing cost. Find out how you can get started with outsourcing construction cost estimation services.

Did you like reading this post? What are some of the challenges that you have faced while trying to work on a cost estimation? Let us know your thoughts, questions or feedback by leaving a comment in the box below. We, at Outsource2india love to hear from you!

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