ESTIMATING CONSTRUCTION COSTS - WHAT FACTORS SHOULD YOU CONSIDER?

Coming up with an estimate for a construction project china c z purlin machine often seems to include everything (even the kitchen sink). As well it should since a number of factors can impact that estimate. Plus, the estimate will have its own impact, including whether you get the job and whether you make money on it if you win the bid for the project.

Experience is the best foundation for a realistic bid and within that experience, you will find there are factors that you need to look at for every estimate. You might even have a checklist of sorts to help you wrap your head around each project as you develop your bid.

FOUR COMMON TYPES OF ESTIMATES
Not every estimate is the same. Different restrictions and understanding apply, and certain estimates are more like estimates of estimates, just to get things started.

Planning estimate aka ball park estimate
Just like it sounds, this is a pretty loose estimate providing a rough approximation of the costs. It should only be used for informational purposes, but it can be handy for qualifying customers and acting as a springboard to a more complete estimate.

Budget estimates

Somewhat like a planning estimate, a budget estimate roll formers for sale is based on some preliminary cost data that may be well-defined but not complete or verified. Generally, there are basic rules set for how this budget is developed and used.

Firm estimates
Here is where you get to the nitty-gritty. This is the estimate based on cost data accurate enough to use for entering into a binding agreement.

Not-to-exceed/Not-less-than estimate
This type of estimate provides tighter parameters and is based on a firm estimate. As negotiations are taken up, the firm estimate may need to be tweaked to meet new budgetary rules introduced by the needs of the project.

FACTORS IMPACTING ESTIMATES
Similar projects
Comparing a project that is highly similar to the proposed project is the best reference you will find upon which to build a reliable estimate. With all things being somewhat equal, having constructed a similar project will give you the best numbers for material and labor costs, particularly if the new project is in the same region of the country.

Labor and materials
Labor and material costs shift depending on supply and demand.

Construction material costs are impacted by availability, shipping costs, and taxes, among other things. Labor costs are affected by the type of skills needed, the number of available workers, and the local wage range. If local workers don’t have the requisite skills, you need to consider the cost of transporting and boarding workers from farther away.

The farther away the start date and the longer the timeline, the more variability will be seen in these particular costs.

Project size and type
Next up is the size of the project. Obviously, a small warehouse will likely cost less to build than an arena. The larger the project, the more materials, and labor will be needed, and the construction schedule will stretch out accordingly.

The type of project is another fairly obvious area. Looking at the comparison above, a warehouse is probably a lot less complicated to build than the arena as well. If everything were a big box, estimates would be easier, but people seem to want different types of buildings for different things.

Site location and conditions
The location of the site affects the estimate in a couple of different ways.

One consideration is whether the site is out in the boonies or square in the middle of town. If the site is distant from resources, transportation costs will go up, and it may be more difficult to contract the right labor. If your project is hemmed in by existing structures, different issues come to the fore: noise abatement, differing building codes, delivery issues, and more.

Something else to think about is the difficulty in reaching the site. A very remote site with few utilities and resources and potentially nowhere for workers to stay will impact labor costs and transportation of bother workers and materials.

Site conditions, as far as they can be predicted, can differ significantly from one place to another. The typical weather and environment in Seattle are not the same as West Texas. The soil type can be easier to work with or it can introduce some complications. If you are lucky, the site has been adequately and appropriately prepared, which will make the estimate easier.

Plans, specifications, and scheduling
The more detailed the plan, the better the specifications, the easier it will be to figure out probable costs. If the plan is vague, lacks specifications, or has not been adequately reviewed prior to construction beginning, you may be looking at a lot of changes and rework.

In a competitive market, you may feel you have to take on a project like this. Just realize that your estimate may require contingencies to cover the lack of detail. Of course, scheduling for an incomplete plan will be difficult as well. Determining which subs to use, the ability to call them back for rework or changes promptly, and trying to manage material delivery will make it hard to figure out how long the project will ultimately take, what weather conditions may be prevailing during that time and other dominoes that will easily topple over.

Regulatory requirements and insurance
Permitting and approvals can be expensive depending on the location. Different states have different building codes to meet, some more stringent than others. Some regions have additional considerations, such as construction in seismically active zones. As mentioned earlier, regulatory requirements for construction within a highly populated area may have additional terms to meet than if the project was outside of the city limits.

The insurance coverage you need will depend on the type of construction, the materials, tools, and equipment in use, and your company’s liability record, to name a few caveats. Insurance policies may need to be customized to the state or local level, as well. The details of the project will have some of these answers.

Whew! That is quite a list of factors that will affect your estimate. Again, experience will be the most help as will having done a similar project in the same location. Construction takes in so many trades and materials that you won’t be able to determine firm costs for everything, but that’s why it’s an estimate. Taking the major factors set out in the post into consideration will help guide you to creating estimates that lead to better revenues.