Minimize Expenses with Construction Cost Estimation

Cost estimation is the cornerstone of every construction project. To maximize the profitability of a project, a builder must have access to accurate financial estimation. Then, they need to take a critical look at materials and design choices and look for options to increase value while reducing costs.

Without accurate cost estimation, it is hardly possible to maintain a feasible budget for construction projects. Not just that, extensive estimate calculations enable a builder to procure the right kind of financing for a project. Also, it enables a builder to make quick yet well-informed decisions about changes in the project.

Now, the question is how to arrive at a reliable cost estimate that will steer an individual builder or a real estate conglomerate in the right direction. Let's find out!

How to Arrive at A Comprehensive Project Cost Estimate?

Cost estimation for construction projects is neither a one-time thing nor a one-off activity. Different estimate levels pop up at varying stages of the project. The first step to getting things right is keeping your estimator close and doing a thorough rain-check from time to time.

• Order of Magnitude - Even before considering a project, you need to calculate the order of magnitude of the project.
• Intermediate Estimate - Before you decide if a particular project is worth following through, you must get an intermediate estimate from your service provider.
• Preliminary Estimate - Once you decide to go ahead, look at the preliminary estimate before starting the construction process. It is the most realistic estimate with a more detailed scope than the other two. Several builders base their project budgets on these numbers.
• Substantive Estimate - This calculation considers project designs, timelines, goals, and deliverables. It also accounts for unit costs.
• Definitive Estimate - As the name suggests, it puts together the final project costs. At this stage, a real estate builder factors in all the variables to get the actual figures.

Understanding Various Costs Associated with Construction Projects

In many cases, actual costs may exceed estimated costs due to certain variables such as price changes, governmental regulations, etc. Therefore, various aspects of the project must be considered independently before arriving at a definitive estimate. The more common aspects of construction costs include -

• Estimating Establishing, Production, Assembly, and Construction Activities
• Estimating Supervision, Direct Management, and Other Direct Charges
• Labor Allowances
• The Use of Factors in Estimating
• Estimating Basic Material Costs
• Estimating Engineering Activities
• Establishing and Production Engineering
• Manufacturing Activities
• Construction Activities
• Testing
• Rent (if applicable)
• Operating staff payment
• Maintenance and repairs cost
• Periodic renovation cost
• Insurance and taxes
• Utility bills
• Any indirect costs

Causes of Inaccuracies in Construction Project Cost Estimations

While cost estimations are invaluable for budget allocation in construction projects, there are several pitfalls in the calculation methods. From glitches in raw data to unreliable service providers, there can be several reasons for inaccuracies in the calculations. Let us look at some of the most common ones -

1. Lengthy Projects

   Most construction megaprojects stretch over several years. The estimations made at the beginning of the project may vary from the outcomes if the cost calculations are not updated from time to time.

2. Involvement of Human Resources

   Wherever human resources are involved; it is difficult to predict costs accurately. Factors like work efficiency, methods, and coordination between teams vary from instance to instance.

3. Inexperience Cost Estimators

   This is the main reason for discrepancies in cost estimations. Estimators who are new may not consider all the factors involved. Sometimes, they may use outdated methodologies to arrive at the cost estimations.

Outsource Cost Estimation for Construction Projects to Flatworld Solutions

Accurate building cost estimation will consider every minor detail involved during a construction project and is your key to bidding and winning more projects. A reputed and professional building cost estimator should be able to cover everything from new construction to general repair, facility maintenance, green buildings, etc. while maintaining an exhaustive database of unit costs adjustable for any location.

Flatworld Solutions has 20 years of experience providing cost estimation services to real estate builders. We cater to 18,000 clients in 160 countries. You can rely on the quality and precision of our cost estimation services. We arrive at the most cost-effective building plan, ensuring long-term success for your company. The advantages of outsourcing to us include -

• Ability to track costs during all project phases
• Gather insight into currently profitable endeavors and check which proposals can bring in additional profits
• Perfect knowledge of all building estimates ensures that the bidding process for all future contracts becomes easier
• Regularly updated expense estimates allow you to efficiently gauge the cash flow, thereby enhancing the ability to make better pricing and business-related decisions
• Track overtime, wage scales, productivity, etc. related to manpower and other expense-heavy variables, and regulate expenses accurately for better profits

Contact us for professional engineering services today and reap the benefits of partnering with a truly global service provider!