Construction estimating involves assessing all the costs of a construction project. Construction costs include direct and indirect costs, overhead, and the general contractor’s profit margin. Construction estimating provides the general contractor with a construction estimate to bid for construction projects.
A construction estimate forecasts how much it will cost to build the structure in a project plan. Construction estimating is, therefore, one of the most important steps to take during the early stages of a construction management process.
Construction estimating begins when estimating a bid for a potential contract. Historical data, known costs, and construction documents provide a foundation for building an accurate estimate.
Construction estimates are important because their accuracy impacts the contractor’s profit margin. Accuracy is critical to ensure the profitability of any construction business. A construction estimate is also valuable as a competitive tool when trying to win bids for new jobs.
A construction estimating template is critical for any type of construction project. You can create a construction template from scratch, but it is not a best practice. The process of creating a new construction template is time-consuming and tedious.
It is best practice to use a construction estimating template software to avoid creating a new one for different jobs or jobs with different estimating requirements. Using a pre-made construction estimate template can save you time and headaches. Besides, you can get a pre-made template for free.
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Why use a construction estimating template?
Estimating is one of the most critical yet difficult jobs in construction. A good construction estimating template can improve the image of your construction business.
A good construction estimating template guarantees accuracy and gives clients confidence in your business. A poorly constructed estimating template can cause financial issues and payment disputes due to inaccurate estimates.
Construction estimates must be as accurate as possible. Contractors should take several steps to ensure they provide the most accurate costs using a construction estimating template.
First, start with a site visit and build relationships with laborers. Next, establish a relationship with suppliers. Once the relationships are in place, use appropriate software to calculate takeoff.
Now assess your risks and develop contingencies. Finally, review your work and finish by reviewing all subcontractor work.
Choosing the right template for a project and providing the most accurate information on the chosen template is as time-consuming as it is overwhelming. You must first understand how to use the appropriate construction estimating template.
How to use the construction estimating template
Step 1 Identify the project: Add the name of your company and project at the top of the template, including the project number. Next, name the client, location, architect, date, and project manager. Step 1 provides a reference for historical data.
Step 2 List all activities for the job: Our construction estimating template lists the general activities split into 33 sections. For each section, fill in the costs of labor, materials, and subcontractor fees, and calculate the variance.
Add the overhead, contingency, insurance, and profit below section 33.
Step 3 Add additional costs: Each section has a row for any additional costs (other). You should include a subtotal of these costs and add the total cost at the bottom of the estimating template.
How to read the results
Reading a construction estimate requires a high level of expertise. You can read it during the early stages of construction to help you draw accurate projections of the project’s scope, time, and budget.
There are various ways of reading your estimate, but you should ensure you stick to the costing method, preferably the unit cost method, as it lists all the associated costs of a job.
After assessing the direct and indirect costs, it is advisable to evaluate labor costs as that is where estimates veer off-track. Use a work breakdown structure to estimate your project's work activities.
It is then best to consult with suppliers to figure out your budget and help you reign the costs of your resources.
Construction estimation software can help you plan, schedule, and monitor your estimates.
Estimating construction costs is a critical but time-consuming and overwhelming process. However, estimating construction costs can be easier using the construction estimating template. While you can develop your estimating template, this can waste your time without guaranteeing accuracy.
Accuracy is key when estimating construction costs, and using a pre-made construction estimating template can ensure you give your clients the most accurate forecasts.
When developing your estimate, ensure you understand your client’s needs and the project scope. A well-drafted construction estimating template will build trust with your clients and ensure you win new jobs for your construction business.
What is included in a construction estimating template?
Your construction estimate should include as much information as possible to build trust with your clients. Your construction estimate should not miss any of the important aspects of construction costs. A construction estimating template should include the following items:
* Labor costs
* Costs of materials
* Subcontractor fees
* Estimated costs before taxes and fees
* Taxes and fees
Using a well-prepared construction template sets you up for success. With a template, you can ensure that your estimate includes every detail the client could need. It helps to avoid overlooking any important fields.
Indicate the amounts for known and estimated costs in the estimate.
What percentage should the labor cost on a construction project be?
Labor costs account for approximately 25% to 40% of any construction project’s budget. Labor costs may include recruiting and training, payroll taxes, paid time off, worker’s compensation, and insurance.
National average costs for labor vary depending on the type of labor and nature of the project. For example, the hourly labor cost for foundation and exteriors is approximately $19.65, $20.98 for utility, $21.48 for non-residential construction labor, $18.68 for residential construction labor, and $19.94 for specialty labor.
How do you come up with estimates?
Commercial construction businesses rely heavily on good cost estimates. There are several factors to consider when creating a commercial construction estimating template.
These factors include environmental review, labor costs, equipment rental costs, market conditions, cost of materials, costs of items per square foot, project scope and size, and the accuracy of the estimated costs.
You must also consider the project definition and the industry you will work for. Check the level of quality of tools and procedures. Finally, consider the quality of the estimating template throughout the process.
To come up with accurate estimates, start by reviewing the project's scope. Next, estimate a timeline for completing the job: subcontractor fees and material costs. Add the information to a blank construction estimating template.
What are the five main types of estimates?
Construction estimating is one of the most critical steps when bidding for a construction job. However, you must first understand the five main types of estimates you may need.
Construction Proposal Contract Template
A construction proposal contract template provides a basic outline of the project and its estimated costs. This estimate does not include a detailed breakdown of the project. It may be a basic contract between the general contractor and the client.
Construction work quote template
A construction work quote template provides more detail, including labor and material costs for a project. It is a legally binding document between a contractor and the client. One of its main advantages is the ability to make automatic calculations for taxes and discounts.
Construction Soft vs. Hard Costs Template
This estimating template defines the soft costs and hard costs of a project. Soft costs include insurance, permits, administrative work, and legal services. A construction soft vs. hard cost template helps avoid surprises in the final invoice.
Construction Bid Tabulation Template
A construction bid tabulation template helps the contractor to organize and compare the bid items from subcontractors. It is useful in spotting errors that you could miss when reviewing multiple bids.
Construction Estimating and Budgeting Template
The construction estimating and budgeting template tracks costs estimates against the actual costs of each item. It helps with monitoring budget utilization.
What are the common estimating mistakes to avoid?
As a contractor, you must know the work to understand the required qualities from the specifications. Understanding the cost per square foot of different types of buildings in the area is beneficial. Understand the details because minor errors can cost you money.
Deep knowledge of the materials makes you a better problem solver because you can adapt to changes quickly and suggest alternatives when required.
Another common estimating mistake is not knowing your overhead costs. Understand overhead costs specific to the job, including bonds and permitting, rent, administrative, and staffing costs.
It is also best to avoid carrying costs unless you are certain the job supports them. You may find yourself paying upfront for labor, materials, and subcontractor fees but be sure that the owner will pay you for these expenses.
Contractors also easily overlook business development costs. Consider administrative and business development costs when building your estimate for a job. Ensure that you place a bid to cover the expenses.
Lowering your profit too much to outbid the competition throws a lot of contractors out of business. It is good to be flexible with your desired profit but bidding too low will affect your profitability. Ensure the job is worthwhile before you place that bid.
Finally, consider the financial value of time. When calculating labor costs, consider the time the workers drive and wait for deliveries. Remember that time is money, and you do not want to lose money because of time spent working on other trades.