Cost estimation is very important. This idea cannot be stressed enough, because getting your estimates in construction projects right could spell the difference between a successful project and a failed attempt. Many companies and project owners have fallen short of their improvement plans and have spent too much time and money for nothing because they did not use the correct techniques to optimize construction project costs.
Project details may change over time, and so your cost estimation software or team must be able to adapt to these changes. Otherwise, you might end up spending more or losing more in the process.
Be wary of some warning signs that could spell trouble in your construction bidding. Here are six things that signify a wrong cost estimation system:
1. The system uses a huge amount of guesswork. Sure, estimating expenses may entail a bit of guessing. However, if you feel that your estimation system has too much guessing going on, then you need to rethink your strategy.
2. Only one person can do the estimation. Some companies rely on a single individual to do all estimates. While this may seem like a simple and easy-to-manage approach, future cost estimation cannot proceed in a timely manner when the appointed person is not available.
3. Numbers in the expense report cannot be justified. Why bother using a particular cost estimation scheme if it cannot define each and every item on the expense list? Estimates must always be backed by proper reasons and justifications.
4. Estimation reports cannot be replicated. Cost estimates that are haphazardly done will result in figures that cannot be re-generated. Minor modifications in construction estimates should not turn the entire system upside down.
5. You don’t receive word from prospective clients. Some people find it difficult to trust companies that cannot deliver what they need, especially when it comes to financial matters. If your prospects do not reply to your quotes, then that means you’re doing something wrong.
6. Your company is losing money instead of saving. Cost estimation schemes should result in gains for the company, and not become a liability. If you discover that the results of the estimates always lead to financial loss, it might be best to recalibrate the cost estimation system.
These are just symptoms of a larger problem. If you spot any of them, it would be a good idea to take another look at your cost estimation system.