Estimation is one of the most important aspects of any construction project.
Estimation is one of the most important aspects of any construction project. Typically, profitability is dependent on the accuracy of the project’s estimates, as profits are calculated after comparing the closeness of the estimated costs with the final costs. Due to this, mistakes made during the estimation process may only come to light at the end of the project.
While one bad estimate may not shut down your company, a recurrence of unprofitable projects could run you into the ground. So, you cannot afford to limit resources (both financial and human) in the estimation process There are many variables involved in the construction estimation, and a mistake or two could negatively affect your bidding ability. If you do not have a good construction estimator, your estimates could be too high and lose bids or be too low, and you'll win bids to work at a loss. In this article, we’ve collated a list of 9 costly construction estimator jobs mistakes and how you can avoid them.
1. Not Visiting The Site
Regardless of how similar a prospective job seems to be to a previous job, they are never the same. If you're unaware of the job site situations/conditions, unexpected issues—warranting unplanned costs may arise during construction.
Most times, as part of the bidding process, your company would be allowed to conduct a visit to the job site and have a pre-bid meeting. During the visit, you'd want to collect some soil bore samples, check the topography and take certain measurements. Take note of the roads leading to the site and the traffic. Also, check how much space there is on the site to accommodate equipment and delivery of materials. Finally, confirm all that would be necessary for safety procedures.
To avoid incurring out-of-pocket costs as a result of improper estimation, the cost estimators should assess the sites and factor any site-related costs into their estimates and bids.
2. Incomplete and Incorrect Takeoffs
If your takeoffs are inaccurate, they can destroy the foundation for your estimates. Takeoffs are supposed to assist you in sorting out your equipment and labor needs. They also help you predict the amount required for your materials and supplies. When your takeoffs are incomplete (missing items), you may over-estimate and lose the bid or under-estimate and win a bid that would cost you much more down the line. You can consider trying out new Takeoff software to help improve the accuracy of your takeoffs while avoiding human error.
3. Underestimating/Overestimating Labor Costs
Many variables influence labor cost estimation, and that makes it one of the most challenging items to estimate accurately. It factors in the construction workers available, how experienced they are, their pay rate, and how productive they are. As one of the most expensive project costs, the margin of error is tiny. A little mistake can flush your profit down the drain.
To avoid this costly mistake, you should focus on the man-hours it would take to complete tasks and include the prevailing wages for each worker (this may differ slightly depending on the variables mentioned before). You should strive to record these estimates to provide insight for future construction projects.
4. Costs of Supplies and Materials
The cost of construction supplies and materials is high up there on the list of expensive items that are equally difficult to estimate. Inflation and other commercial factors also affect the price fluctuations of these items.
Since you cannot bank on price stability, you can try to get ideas from those who manufacture and supply these materials. You can build relationships with them, and in turn, they can help you estimate prices accurately and even steer you in the direction of better alternatives suited for your construction.
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5. Improper Risk Assessment
Every project has its risks, and it is the job of a construction estimator to assess the risks and make plans to combat them if they arise. A proper risk assessment will help you decide if the project is too risky. If it isn't, you can factor in the cost of a contingency plan into your estimate. This way, you can mitigate the issues before they arrive and avoid unexpected problems when the construction starts.
6. Making Uninformed Guesses
While the physics behind the construction is stable, the world is constantly changing around you. As a professional construction estimator, you cannot afford to gamble bids by making uneducated guesses for your estimates. Make sure that your estimates are based on current cost information for labor, equipment, supplies, and materials. Take note of soft and overhead costs that can be easily forgotten, like permission and inspection costs. You need to factor in all the workers, subcontractors, and equipment available to complete the construction. Everything needs to be accurate and reviewed thoroughly because impromptu costs can consume your profits.
7. Not Reviewing Your Work
Mistakes can be inevitable, and Construction Estimators are not the exception to the rule. There are times when minor omissions can happen without overly impacting the final estimate. However, some costly mistakes can turn the project into a colossal loss waiting to happen. Problems like calculation issues, wrong measurements, and incorrect units can be fatal to your bottom line. To avoid this, you should take your time to go over your estimate carefully. There is no need to rush through the estimation process because it would only lead to costly mistakes.
8. Not Reviewing The Estimates of Your Subcontractors
There are times when you would need subcontractors for a particular construction project. As a construction estimator, you should be able to review all estimates coming from your subcontractors. Explain in clear terms all the aspects of the project, and if needed, they should also be part of the visit to the job site. Avoid duplicating items they have cited to prevent overestimation and a possible loss of the bid. Blindly trusting their estimates may be very risky and negatively affect your bottom line.
9. Trying to Win Every Project
It can be really tempting to pursue projects to keep your employees active and gain experience. However, this should not be at the expense of making a profit. You don't need to lower your estimates to win a bid just because you are strapped for work. The truth is you cannot win every project, and that's okay. Before you decide to take on a new project, be up-to-date on the current costs, factor them into your estimates, and calculate a realistic profit margin, so you do not run at a loss.
Conclusion
The construction estimator has a critical role to play in ensuring the estimates are accurate. While mistakes are common, they can be prevented even before the ball starts rolling. Avoiding these costly mistakes would go a long way to securing the profitability of the construction company.
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