Construction estimating is an important task that should not be overlooked or done in a careless manner.
Failing to prepare a reliable construction estimate could make the difference between a successful project and a complete fiasco aided by a calamity of errors.
Preparing an estimate does not come without a cost. A good estimate requires time to develop which directly effects the Owner’s, Contractor’s, Architect’s and Engineer’s cost of doing business.
Many times those costs are not recovered, however; they could make the difference in keeping the Builder or Owner solvent or ending up with a failed project or worse yet bankruptcy.
Construction estimates can be developed in house or there is always the option to engage an Outsource or Freelance estimating company.
Recently Contractors and Owners have found that Outsource Estimating is becoming a practical way to cut overhead. They do not have the burden of carrying costs like workmen’s compensation, general liability insurance, unemployment related costs, vacations or sick days, etc.
Builders and owners both are concerned about the financial impact or cost overruns and failing to complete a project.
Cost estimates will help outline the project’s scope and feasibility. Both contractors and owners use them when deciding whether to bid or build a project.
Developing a well-planned estimate, including soliciting multiple bid proposals for materials and subcontractor work, will help ensure the estimates accuracy.
It also aids in gauging bid proposals received from material vendors or subcontractors. It is best to have an idea of what an item will cost when proposals are received to guard against over paying or in determining if the proposal cost is too low.
Choosing the lowest bid is not always the best practice. Many times contracts are awarded to the lowest bidder, only to find that the contractor cannot perform the work or sustain the additional costs not allowed for in the bid. Should a contractor fail, it can open up an onslaught of problems, which could lead to a domino effect putting the project in peril; lawsuits, liens, lost time and progress to name just a few.
Having another company come in to take over the previous contractors, due to their failure, can lead to premium costs charged knowing the owner is distressed and can take advantage of the situation. Suddenly cheap became expensive; notwithstanding your anticipated project cost just went out the window.
While estimating project costs are imperative to a project’s success, even a finely honed estimate cannot provide absolute precision. An accomplished estimator will account for as many factors, however there are occasions where unexpected costs can happen once the project begins; weather, shortage of labor or materials, production rates are a few examples.
Bottom-line investing in a well-developed construction estimate whether using an in house estimator, an Outsource or Freelance Estimating companies will pay many dividends.