Common Construction Estimating and Pricing Mistakes

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When you are in the construction industry, estimating project costs is an inevitable task. Surprisingly, estimating is actually one of the most difficult tasks when it comes to a construction project. If your price is and cost estimates is too low your project will lose money. If your prices are too high your competitors will have lower prices and will win the project. 

The profitability of a project at the time of completion can vary from expectations at the beginning of the project. This is why a construction company must get their price estimates right before the project starts. One factor that is really important in determining the profitability of a project is estimating. Profits are typically won or lost based on the accuracy of your estimates and how they match with your final project costs. Some companies shut down because of unprofitable projects. Believe it or not, chances are that one bad estimate of a project won’t easily put you out of the market, but try two to three bad estimates and your company will probably fail.

Let’s take a look at some common construction estimating mistakes and how you will be able to prevent them. 
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1. No Site Visit 
There are no two identical job sites and there are sometimes unknown site conditions that can cause unexpected and even costly issues when the construction work begins. This is why before pricing a construction project you should conduct a site visit. A site visit enables you take measurements, inspect the topography, look at road access and traffic to the site, determine how much space you need for staging, equipment, and the delivery and storage of materials. It will also help you know what environmental protections should be in place for construction so you can allow for these and other costs.

You also have to ensure that any subcontractors whose work may be impacted by the site condition visit as well. This is important so they can assess the site for themselves and factor in all the additional costs that the existing site conditions might present when you’re already doing the estimates.

2. Inaccuracy of Takeoffs (measurement of quantities)
Takeoffs help lay the groundwork for estimates. When you have incorrect or incomplete measurement of the quantities your price estimates will be wrong. To help you determine the exact quantities needed for all your materials and supplies, you need to have accurate takeoffs. Takeoffs are also important to determine your labour and equipment needs. Missing items during takeoff, or having the wrong quantity, will result in a cost estimate that is wrong, either too high or too low. 

To get accurate measurements for your estimates, you can now use takeoff software. 

3. Labour Costs
Labour costs are sometimes the hardest item to nail down accurately when it comes to making your estimate. When it comes to labour costs., there are several variables that come into play. This can include the number of available workers for the project, their experience level, their productivity, and the rate of pay. You should focus on the determination of the number of man-hours it takes to perform a task to use a guide in the estimation of labour costs. Also, don’t forget to keep records of past job costs, especially labour costs and production rates, to help you get more accurate estimates on future projects. 

4. Costs of Materials and Supplies 
Another big cost for construction projects an accurate estimate of your construction materials and supplies. Keep in mind that prices for materials can change from the time you start an estimate up to the time that construction commences. The demand for materials changes and this impacts the prices, thus making it harder to get estimates right. Currency variations also impact the cost of imported materials.

One thing that can help you with the costs of materials and supplies is by establishing relationships with building product manufacturers and suppliers. They will not only help you lock in on accurate prices but they can also refer you to alternative materials that might better fit your project. 

5. Failure to Assess Risks & Create Contingencies

Risks are always a possibility in every construction project. You should incorporate a risk assessment when you’re doing the estimating process. Failure to assess risks and build in contingencies to your estimate will be detrimental if things do go wrong. Always remember that you likely won’t be able to recover your losses should an unforeseen issue suddenly pop up once construction has commenced. 

6. Uneducated Guesses
This is something you must never do -- don’t gamble on a project by making uninformed or uneducated guesses in your estimate. To ensure your estimates are accurate, you should track job costs on every project. Research the most current data available and base your job costs for labour, materials, and equipment on this data. Also, include overhead costs and cost for inspections. 

7. Not Checking Your Work
Although small estimating errors or omissions might not make much of an impact, big ones such as omitting scope items, inaccurate measurement, or using wrong units of measure, can put your business in huge trouble. Always take the time to carefully review your work. Ensure that your measurements are accurate and that your math for all costs is correct. Keep in mind that rushing through your work will only result in costly mistakes in the future. 

8. Not Reviewing Contractor/Subcontractor Estimates
If you need to hire contractors and subcontractors, be sure that you review their bid estimates and proposals. They should understand exactly what aspects or parts of the project you want them to work on and complete on time. This is important to avoid duplication of work in their estimates that are covered by other contractors and subcontractors. 

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Lastly, you should always be involved in every stage of the project estimate. You may hire an estimator if you think it will work better for your company. However, it is advisable that you always stay updated and involved. Review everything that your estimator reports to you and don’t hesitate to provide advice or make changes to their proposals. If you are not yet confident with your judgement, you can seek the help and advice of reliable construction companies that could be your possible contractors or subcontractors for a project.

Author Bio: Best Access Doors is a trusted supplier that provides for your access door needs or for any construction project. When it comes to helping construction companies come up with great estimates for their business, we do our best to give you affordable quality products. For more inquiries or more help, visit our website.

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​Paul Netscher has written several easy to read books for owners, contractors, construction managers, construction supervisors and foremen. They cover all aspects of construction management and are filled with tips and insights.
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