Cost Estimating – Construction

Some cost estimates for bidding on construction projects are made that do not contain errors of one kind or another. Too many errors on the plus side can be a major reason for a bid not being competitive. Too may errors on the minus side can cause the contractor to lose money if awarded the contract.

Below are some of the common sources of errors in construction cost estimating:

Errors in arithmetic: Estimates made on construction projects are arithmetical calculations of quantities and cost of materials and labor costs to install materials or perform various operations. In order to avoid errors in arithmetic, the estimator should use an electronic calculator with a recording tape, have the calculations checked by another person, and attach the tape to the estimate sheet for backup.

Taking Wrong Measurements from Plans and Specifications: Errors in measurements and dimensions taken from plans, drawings, and specifications result in corresponding mistakes in the cost of construction items based on those measurements.

Using the Wrong Wage Rates for Labor: Hourly labor wages for construction workers vary countrywide. You should consistently verify current wage rates and fringe benefits for the building trades involved through local union offices, other contractors, supply yards, and other reliable sources. Overtime rates are generally one and one-half to two times regular rates depending on labor agreements and union rules.

Insufficient or Excessive Allowances for Labor: A frequent cause of error in estimating is allowing too much or too little for labor to do the job.

Materials and Supplies Improperly Priced: Always be sure that building materials and supplies are correctly described as to kind, quality, size, and dimensions. Also confirm that they are priced competitively.

Using Incorrect Units of Measure: Using a wrong unit of measure can result in substantial cost increases or decreases. For example, be careful not to record lineal feet for lineal yards, square feet for square yards or cubic feet for cubic yards, and so forth.

Including Poorly Maintained Machinery or Equipment: Machinery or equipment to be used in construction, and included in the estimate or bid, must always be checked for efficient serviceability. Preparing an estimate on a construction project and contemplating the use of poorly maintained machinery or equipment is unwise. Breakdown, repairs, and idle time can be costly, delay completion of the project and invite penalties.

Failure to Visit the Project Site: This souce of error might well be number one on the list because of its importance in the early stages of cost estimating. Visiting the proposed site of the project enables the cost estimator to inspect topography, check the soil by boring if necessary, determine if protection of adjacent properties will be needed, and check distances to railroad sidings, supply centers, and the proximity to sources of labor. If existing structures have to be demolished or removed from the premises, the estimator is able to properly determine the probable cost.

Overlooking or Miscalculating Haulage Costs: The cost of hauling materials, supplies, machinery, and equipment to a project can be a very expensive item in an estimate. Access to the job site may be difficult because of poor roads or no roads, heavy traffic to and from supply sources, or the requirement to obtain permits, and so forth.

Failure to Review Building Codes, Permits, and Inspections: Cost estimates and bids on construction projects are subject to local, state and federal building codes, permits, and inspections.