What happens when you need a construction estimate on a tight deadline? It’s intimidating communicating with potential clients. Therefore, all bids and estimates must be accurate. This situation frequently occurs in the commercial construction industry, and, as a result, mistakes can happen. The incorporation of commercial cost estimating is the best way for spelling out the project’s costs, but also ensures a reduction in budget overruns.
One of the best ways to avoid cost estimating nightmares in commercial construction is by ensuring you include everything. Before that can happen, you must develop an in-depth understanding of what a cost estimate is first.
What is Cost Estimating?
During cost estimating, you're developing a forecast of how much funding a project needs for completion. You must use accurate cost estimating techniques to determine the feasibility of a project. When your company completes the cost estimating process correctly, that improves project budget management.
Using digital takeoffs right from the blueprint is another way of reducing the amount of time it takes for takeoffs, which can cause slow-downs during the cost estimation process.
You can ensure you include everything by utilizing some or all of these standard techniques:
· Analogous Estimating: Research similar or previous projects and use actual costs. The more similar the project means a more accurate estimate.
· Bottom-up Estimating: Here's where you're creating estimates for individual activities and tasks and calculating higher-level estimates based on separate estimates. By clearly defining select activities and tasks, your estimate is more accurate.
· Expert Judgement: When estimating new projects, use your experience and knowledge from previous projects. Find a subject-matter expert to advise throughout the process because they have an in-depth understanding of the requirements for the project.
· Resource Cost Estimating: During this scenario, you're generating a list of every resource necessary for the project and then adding up their costs to find a total.
Is everything in your cost estimate accurate? If not, that’s a recipe for disaster and other nightmares regarding budget, overordering, or underordering. That’s why double-checking your numbers is a critical step during cost estimating.
Inaccuracies can occur if you enter information incorrectly or using traditional spreadsheets. According to a paper written by Raymond K. Panko, What We Don't Know About Spreadsheet Errors Today, "45% of errors that participants made were logic errors, 23% were mechanical errors, and 31% were omission errors.”
Beyond omission errors, you should also be double-checking for mathematical errors. That means the labor rates, material prices, and applicable taxes should be consistent throughout the entire cost estimate.
How Data Integration Helps
When implementing data integration into the cost estimation process, you’re integrating relevant data-sets seamlessly with other business tools, like Procore, for example. That means it’s possible to unlock more capabilities within your estimation software.
Making the wrong assumptions when cost estimating is a nightmare. For example, some commercial contractors include allowances that are too low, which, in turn, leads to budget overruns. Therefore, you must research how every contractor on the project price allowances and then develop realistic allowances based on the quality of work you want to be delivered.
How Can Reporting Help?
During the estimation process, you must have accurate data in front of you at all times. That’s where reporting comes into play. Using reporting tools allows you to create data-driven reports throughout the entire estimation process. Therefore, you’ll drive better decisions through critical findings that wouldn't stand out with regular reports.
If you’re not using an internal review process for cost estimating, then you could be facing a significant amount of errors. Therefore, all cost estimates must undergo a review process, and CRM can help in those efforts.
Why is a CRM Beneficial?
Customer relationship management (CRM) software is a powerful tool for any business. When implementing CRM software, you’re able to easily manage your company’s current and potential customers using a single cloud-based management tool. In doing so, you’re no longer dealing with multiple data sets and can stay better organized.
How Can a CRM Help with Review Processes?
When implementing CRM, that’s an optimal way of eliminating job-site surprises. Using a CRM also helps reduce your chances of forgetting inclusions, like the costs for concealed damage and so on. By incorporating CRM into your internal process review, you have an organized way of evaluating all your cost-estimating.
Avoiding cost estimation nightmares in commercial construction doesn’t have to be a stressful situation. ProEst is a proactive approach to helping reduce commercial construction costs efficiently so that your business can flourish with an increase in profit.
ProEst is a cloud-based pre-construction estimating platform that helps you create accurate estimates and digital takeoffs directly from blueprints quickly, allowing you to determine the most favorable rates for your company within the estimation process. There’s no guesswork involved. ProEst makes quality assurance in commercial construction projects estimation effortless. You won’t have to engage your entire team to be sure your numbers are accurate.
If you would like to learn more about how your commercial construction company can increase its profits and reduce miscalculations during the estimation process, reach out today and schedule a 1-on-1 walkthrough with one of our specialists!