How to Create a Construction Cost Estimate?
According to an article from the website of Carnegie Mellon University, estimating costs is a vital process in construction project management. The article added, similar to what we've stated earlier, cost estimates serve as a guide in formulating a budget for the development stages of a construction project. With those in mind, you must conduct a cost estimate during the planning process of your construction projects. We will help you by sharing our guide in creating a project cost estimate for construction operations.
1. Determine the Project's Stages
Among the steps in a generic project, the plan is to determine its various phases. The same principle also applies to your construction project. By determining the stages of your project, you'll have a much better grasp of its scope, which will then help you in budgeting. Examples of construction stages are roofing, plumbing, painting, and many more.
2. Assess the Labor Requirements
A construction project is a labor-intensive operation. That said, it requires a lot of manpower. With the stages you've identified for your project, identify the type of personnel needed for each operational phase. You may utilize a checklist form to record them.
3. Identify Necessary Resources
An integral step of the planning process of your construction project is identifying its necessary resources. Plus, listing the resources on your cost estimate sheet form is essential when you start calculating the possible expenses of the project. So, work with your contractor, engineers, and co-project managers in identifying the needed resources for the construction operations.
4. Calculate Possible Expenses
In this process, you'll now be doing an actual cost estimating. Break down the possible expenses of each operational stage, as well as the resources and labor costs. Survey the market and your suppliers for the prices of the services and materials. For this matter, you need to work with an accountant, financial advisor, or financial manager. Afterward, calculate the overall total cost estimate of the upcoming project. The results of the cost estimate will be utilized for your budget sheet.
5. Indicate Project Details
Aside from the cost estimate itself, you must also state the details of the construction project on the estimate document. That includes the project name, construction site address, name of the head project manager and engineer, and the contractor. They are necessary for documentation and record-keeping purposes. Also, you may indicate your construction company name and official logo on the estimate document.
What is a Construction Cost Estimate?
A construction cost estimate is a document detailing the potential expenses of a construction project. It serves as a basis in establishing a budget plan for each stage of a construction project. At times, a cost estimate helps construction project managers in determining their current assets to commence operations.
How to Estimate Building Costs?
Deduct the average cost or approximately 20% of the land from the comparison home price and further divide the new home price by its square footage. It is effective to compare the calculation with new or similar construction projects to get an average cost-per-square-foot figure.
How are the Different Types of Estimates in Construction?
- Preliminary construction cost estimate.
- Approximate quantity method cost estimate.
- Cube rate cost estimate.
- Plinth area construction cost estimate.
- Revised construction cost estimate.
- Detailed construction cost estimate.
- Annual repair cost estimate.
- Supplementary construction cost estimate.
Who Prepares a Construction Cost Estimate?
A construction project includes different jobs that require specific estimation. That is why various professional estimators may be responsible for this job, like building estimators, electrical estimators, chief estimators. Other than them, quantity surveyors and cost engineers also do the estimation job.
Why is the Cost Estimate of Construction Project Important?
- To prepare an effective budget plan.
- To ensure the construction project budget reflects the decisions.
- To manage the financial plan.