Construction cost estimators fulfill a crucial role in the construction process. A construction cost estimator works closely with professionals in other areas of the construction process, including clients, architects, and vendors to craft a detailed proposal outlining the costs of a specific construction project. Although the importance of a building cost estimator cannot be understated and is generally recognized throughout the construction industry, many people outside of the construction industry lack a realistic understanding of the role that a cost estimator plays in the construction process. In this article, we’ll break down what a construction cost estimator does and outline the position that they play in the construction process.
Construction estimators play a central role in nearly every construction process regardless of the size. At the most basic level, a construction cost estimator provides an estimate to the client that details the cost of a project. While this sounds simple on the surface, in the real world estimators must balance a variety of different factors and considerations to create an accurate estimate. This is done with the understanding that conditions and circumstances can change rapidly, leading to delays and cost increases that can affect the overall price of a construction project. As such, construction cost estimators must use their expertise, skills, and knowledge to account as much as possible for the uncertainties that might arise during a construction project.
Construction estimators must balance both known and unknown factors to arrive as close as possible to the actual end cost of a project. To do this, estimators must consider the size and scope of the project, tally all of the materials used and their market costs, assess the labor required for a job and account for the labor costs, and determine the length of time that a project will need. Each of these factors is critical to arriving at a close estimate of the final cost of a project, and the accuracy of the estimate can have a significant impact on the successful completion of a construction project and ultimately the financial success of the construction firm working on the project.
A construction estimator must approach each step of the construction estimating process with care and thoughtful consideration. Each of the factors that a building cost estimator considers when crafting an estimate requires specialized knowledge of the construction industry, the wishes of the client, the overall design, and external considerations such as changing material costs, labor supply and availability, logistics, and even things like the weather.
Construction cost estimators must weigh a variety of information to arrive at their estimate. Some of this information can be quantified and very closely approximated. For example, a cost estimator must create a list of all of the materials required to complete a project. Known as a Material Take-Off, or simply takeoff, this list of materials and their associated costs has a significant impact on the final cost of a project. When building a takeoff, construction estimators look at the blueprints and schematics of the project and carefully create a comprehensive list of all of the materials that will be required for a project. This includes things like concrete for the foundation, wood for framing, roofing materials, wiring and plumbing supplies, and even things like hinges, screws, and nails. Once a cost estimator has created a list of all the materials that are required for a project, they must then assess the cost of those materials. Cost estimators must ensure that the prices assigned to materials are as close as possible to the anticipated costs of those materials in the future when a project would be completed. Additionally, construction cost estimators must consider things like the weight of the materials to factor in the logistics of moving the materials to the job site and working with the materials to complete the project.
Creating a takeoff is a time-consuming process that is essential to arriving at an accurate final cost for a project. Inaccuracies during a material takeoff can result in cost overages that impact the financial success of the construction firm completing the project. As such, construction estimators spend a great deal of time accounting for every single material required and their actual cost when creating a takeoff. For the most part, the materials on a takeoff can be quantified, and risk of overages can be minimized with care. However, there are other aspects of an estimator’s job that require assessing a variety of potential risks and factors which aren’t as black and white as a takeoff.
A central role of cost estimators is to anticipate delays, risk, or excessive costs and incorporate that assessment into the estimate. This can be extremely difficult, as it requires weighing potential or even unknown factors when creating an estimate. For example, one crucial aspect of the estimate is a timeline for completion. When creating a timeline, estimators must work closely with the contractor and client to determine a completion date. In doing so, estimators must take into account things like the logistics of getting materials to the job site, any potential delays in the production of materials, and the impact that the weather will have on the timeline of completion. These factors are largely unknown since they are considerations of things that may happen in the future. No one can accurately predict what the weather will be like in 6 months or even a year. As such, estimators must make an educated assessment of the impact these factors might have on the project and ultimately use that assessment to create a proposed timeline for the project.
Construction estimators have a job that requires weighing a variety of known and unknown factors. Assessing areas of risk and the impact on the cost of the project and the timeline of completion, and accounting for potential shifts in the future in areas like labor costs, material supply and costs, and the impact that regulatory changes might have on the construction process. In each area, an estimator must have a deep understanding of the nuances of forces both within and without the construction industry, as well as the ability to work closely with multiple teams of people including the client, architect, contractor, subcontractors, and vendors.
As is probably evident by now, construction estimating is a position that requires a high amount of skill and knowledge to be accomplished well. There are a variety of career paths that one can take to becoming an estimator, but in general, estimators work their way up through the construction industry. An estimator with a broad background in construction is capable of understanding and accurately assessing the various factors and risks that can impact the cost of a project and the completion date. At the same time, estimators must have solid skills in mathematics and engineering, as each step requires detailed and complex mathematical equations to be accurately assessed. As such, backgrounds in engineering, mathematics, or manufacturing are common for estimators.
Alongside the deep understanding of the construction industry and the technical expertise required to make an accurate assessment, construction estimators must also be skilled communicators. Construction cost estimators must work closely with a variety of individuals and teams throughout the estimation process. Estimators work with the architect or design team and client to make sure that a project can be completed within budget while still meeting the desires of the client. Estimators must work closely with contractors and, often, union representatives to determine the number of workers necessary to complete a project. Estimators must also be able to communicate clearly and effectively with vendors to achieve an accurate price assessment for materials and realistic delivery dates. Lastly, estimators must be skilled at distilling data and rendering that data presentable for presentations. During final cost presentations, estimators must be able to craft professional reports that detail their total project analysis.
The combination of technical expertise, in-depth knowledge of the construction industry, and excellent communication and presentation skills make estimating a crucial role in the construction industry and a difficult position to fill. Estimators must fill a variety of tasks throughout the estimation process and stay engaged with the various parties involved in a project from the planning stages until the project is completed. At the same time, estimators must be able to work quickly and meet deadlines. Crafting a comprehensive estimate by hand takes time and manpower, all of which is lost if the estimate is rejected in favor of another estimate. This makes estimating crucial to the financial success of contractors.
Estimators fill a vital role in the construction industry, but understanding the importance of this role requires gaining a greater understanding of the challenges present in the modern construction industry. The construction industry is characterized by volatility and unpredictability, both of which play a central role in what an estimator does. The construction industry experiences rapid fluctuations in supply and demand, labor availability, material availability, and regulatory changes. Ancillary industries that are directly tied to the construction industry such as the material and labor markets are themselves volatile and turbulent. All of these factors impact the number one driving force in the construction industry: cost.
The construction industry as a whole is largely driven by cost. While the quality of a finished project and the time that a project takes are also significant considerations, ultimately the cost of a project is the watermark by which success and failure are determined. For construction firms, the cost detailed in an analysis plays a central role in whether they secure a project. Thus, construction firms are incentivized to price estimates as aggressively and competitively as possible while remaining profitable. Estimators play a central role in this process, as it is the job of an estimator to accurately assess the cost of a project, the necessity of a profit margin, and the consideration of bids from various competitors. For the client, the cost of a project is a paramount concern. Clients often obtain funding sources before a project has begun which places a hard limit on the amount of money that can be spent to complete a project. Clients typically have budgeting restrictions that limit the scope of a project and the length of time that a project needs to be completed within. Meeting these expectations is the job of the contractor, and ensuring that the project can be completed within the budget is the job of both the estimator and the contractor.
The crucial role that estimators play in the construction industry is, unfortunately, most often visible when a construction project goes over budget. This usually happens for a variety of reasons, some of which are outside of the estimator's control. For example, a project in the State of California to build a veterans home was estimated to cost $118 million. The final cost of the project ended up higher than $230 million. State auditors found that one of the factors that resulted in the exorbitant overages was the change in scope of the project over time. This example highlights a couple of things. First, the wildly inaccurate estimate was largely due to erroneous information given when the initial estimate was produced. Second, this also shows that an estimators work isn’t done when an estimate is submitted and a bid is secured. Instead, estimators must work alongside the client, architects, and contractors throughout the process to revise estimates as other circumstances come up.
Further research shows that inaccurate cost estimates can, and often do, plague even the most massive projects. The creation of the Channel Tunnel, the world’s largest undersea tunnel connecting the United Kingdom and France, resulted in a final cost of roughly $21 billion over the initial projections. Although that number is staggering, one doesn’t need to look at multinational construction projects to find projects that go over budget. Unfortunately, many projects go over budget, which simultaneously reduces the trust clients and the public have in contractors and increases the importance of the work that estimators do. Because of the public perception that construction projects routinely go wildly over budget, estimators must work even harder to craft accurate cost estimates.