If you exceed your construction estimate, the first thing to do is figure out why that is. Were your materials a higher cost than expected? Did the job require extra labor hours? Assess the situation and come up with an explanation. Then come up with possible solutions to the problem.
After that, discuss the extra cost with your client. It’s always best to maintain open and honest communication with them and build trust. Explain the situation and why it happened. Come up with solutions with your client moving forward. Maybe you’ll have to cut costs somewhere else. But it’s always best to work together to find a solution that suits both of you.
In the future, you might want to consider being more aware Building Estimating Services of unexpected costs. You can even build contingencies in your estimate to account for unforeseen costs throughout the project. Actively review the budget throughout your projects to target problems before they arise.
When it comes time to kick off a new construction job, an accurate estimate is the first step toward project success. The best approach to the construction estimating process begins with a thorough understanding of the project, along with a team of estimators who are deeply familiar with the nuances of quality construction estimating. For contractors and business owners, this stage of the project can have a pronounced impact on your bottom line. According to a survey conducted by QuickBooks and TSheets, one in four construction companies would go out of business if they made just two or three inaccurate estimates.
As a resource, here are a few tools that will guide your team toward a successful construction estimating process, creating opportunities for new business and exceptional client relationships.
While construction estimates are hardly always accurate to the cent, successful projects start with accurate and detailed estimation efforts. If not, there can be ethical and even legal risks. For instance, in March, the SEC launched a federal probe into two leading construction contractors to uncover why their estimates were inaccurate.
The initial construction estimating process for large-scale projects usually begins with a specific team, known as estimators. They estimate the project by gathering proposals, plans, specifications, and related documents.
Overall, a construction estimate is the total price of the project, which includes all expenses, like materials and labor. It’s also important to note that there’s a common misconception around the definition of a bid vs. an estimate. A bid is a finalized offer in order for the construction project to proceed. In a bid, a contractor often specifies a construction price and project timeline. Usually, an accurate estimate is set before you place a bid.
Similar to the estimate vs. bid distinction, there are several terms to understand and keep in mind throughout the estimation process. In construction, these nuances are important to not only explain your approach to the client, but to speak internally with vendors, partners, and others in the industry. Simply put, speaking the “same language” can help minimize confusion and mistakes.
First, there’s a quantity takeoff. This is when the cost estimator accurately identifies and develops the required materials for the project. This step is crucial, as without an accurate takeoff, there will be inaccuracies in the project. Next, the estimator will use their experience to estimate the labor hours required to complete the project. A key factor in determining the labor hours is correctly identifying the relevant labor rates, which are the basic wages for all team members. The cost estimator will also consider overtime work and extra hours.