What are Some Challenges and Factors in Construction Cost Estimation?

If you work in the construction cost estimation industry, chances are that you will face a number of problems that hinder accurate estimates. Cost estimation for any type of building (residential, commercial, or industrial) can be difficult.

To create accurate estimates, it is important to stay ahead of challenges so you can deliver a forecast-calculated budget to your client.

Purpose of Construction Cost Estimation

The main goal of construction cost estimation is to create an accurate budget that streamlines the project. You need to perform cost estimates by keeping these goals in mind. Your financial plan should:

• Improve judgement and decision-making
• Enhance communication and collaboration 
• Prevents over or underspending of money
• Improves allocation of resources 
• Save time
• Increases project management 

Challenges in Construction Cost Estimation

Regarding the main concern, let’s look at some of the Challenges in Construction Cost Estimation.
1) Limited Data Availability

When an organisation puts out a request for a bid, it also shares information related to the construction project. When a contractor goes through the project plan, they use this information to create a budget.

But sometimes there is not enough information for accurate construction cost estimation. At best, you can get a ballpark figure. But that won’t help you to win the bid. 

What Can You Do?

In this case, utilising historical data is your best option. Go through past projects with similar project scope and check out their costs. You can analyse the current cost by updating the prices and tailoring it accordingly to your current project.

2) Unexpected Expenses

Unexpected expenditure may be the worst nightmare for contractors or subcontractors. Construction cost estimation comes with risks. Even after careful planning, there could be something that you didn’t account for. Hidden expenses disrupt the construction plan and create unnecessary stress. 

What Can You Do?

Contingency planning for construction projects protects from unforeseen expenses. About 10 of the total budget is usually allocated as a contingent.

3) Changing Prices

The prices of materials and labour costs change over time. Market prices are vulnerable to the economy. Unstable economies seed rapid fluctuations. Chasing a moving target is stressful and may seem impossible. Contractors should be able to foresee future changes. But if you are a beginner in construction cost estimation then this may seem impossible to you.

What Can You Do?

You can manage price changes by staying up to date with the market. If you have time it is always better to visit the marketplace yourself to get an idea about cost. You can also use a real-time pricing guide but that may be costly. 

4) Changes in Project Scope

During construction, there could be any changes in the scope of the project. The stakeholders could change their minds and shift to a new approach. This will disrupt the budget you have created. 

What Can You Do?

You can hold meetings with the client to discuss the project plan. Carefully explain their options so that they can make sound decisions. Other than that, contingency planning will also protect the budget from sudden changes in the project plan.

5) Tight Deadlines 

Every estimation contract comes with a deadline. You have to place your bid before that deadline or it won’t be considered. So in addition to creating a precise estimate, you also have to make sure that it is delivered on time. 

What Can You Do?

Only bid on the jobs that you are confident that you can deliver. If the bidding time closes and you are not done, it will only waste your time. You can use software to create fast estimates. Another option is to outsource construction cost estimation to cost estimating services.

Benefits of Outsourcing to a Construction Estimating Company

A Construction Estimating Company can deliver an accurate estimate with quick turnarounds. SMA Estimating LLC can provide you with an accurate estimate within 24-48 hours. You won’t have to worry about time limitations. Moreover, this will enable you to bid on multiple projects at once. 

Another advantage of outsourcing is that you can get access to advanced software. Estimators use cost-estimating software and pricing guides to increase the accuracy of their estimation. Some of these software includes:

• Planswift
• Bluebeam
• Stack
• On Screen Takeoff 
• Stack
• RS Means 
• Trimble
• FastPipe
• FastDuct
• Xactimate
• Con Est 
• Mc Cormick 

Conclusion 

Construction cost estimation can be tricky especially if you have just started your cost estimation journey. There are a lot of factors to account for such as material, labour, equipment, labour, permits and many more. The process of creating an estimate itself can take up a lot of time and resources. On top of that, you have to draft a compelling bid proposal. So there are several challenges faced by contractors or subcontractors. A very simple solution to these challenges is to outsource your projects to a reliable estimating service.