Importance of Building Cost Estimation in a Construction Project

The Importance of Building Cost Estimation in a Construction Project 

Regardless of the project anyone is about to undertake, the sole objective is always the same; to accomplish the vision of the project owner and fulfill the strategic goals of that project. This applies to any type of project; be it a construction project, IT Project, Research Project etc. Although, the focus here is Construction projects. 

Thoughts and visions are important things but however, before these things become a reality, it is imperative to carefully explore its feasibility through a cost benefit process. The most practicable way to explore the feasibility of any project is through a cost estimating process. 

As there is a common saying by Laozi a Chinese philosopher “A journey of a thousand miles starts with a single step”. Likewise, every small construction project like renovating a small space or an add on facility or your large-scale construction project, it is very important that they all commence with a cost estimate which is critical in creating and maintaining a feasible budget for that project. This also, provides the project owner/ client with a comprehensive description of the total expenditure required to complete their project. This may be inferred as that one step that commences the journey of a thousand miles (the construction project to be embarked upon).

Cost Estimate? 

This is an evaluation of the probable total expenditure to be incurred for a future project as accurately as possible. An estimates’ degree of accuracy and detail increases as the project progresses, specifications and work items become clearer, more information is made available and coherent decisions have been made. The true cost of any project becomes evident when actual costs are incurred, and the project has been completed.

Estimation for construction projects are very unique and differ from project to project. No two projects cost, or its estimates are the same.

Why do you need a Cost Estimates for your construction Project? 

• - Budget for the Works and Proper Planning – A good cost estimate will predict the material, labour and preliminary costs inclusive of any other resources needed to complete each item of work for a project. With this in hand, proper planning may be carried out by both the contractor and the client i.e. the client knows what amount of fund is due and required for each stage of the work, the contractor as well can plan ahead either in the provision of labour for certain aspects of the work and or bulk purchase of materials or in bits. The importance of a good cost estimate for proper planning Is endless.

• - Cost Control – At the commencement of a construction project usually a cost estimate should have been developed for that project. During the course of the project, good cost estimates should ease the control of expenditure of funds. Items of works are usually benchmarked against the cost estimate set by the estimator for that work item and afterwards, the actual cost is compared with the budgeted cost for that item of work. This comparison allows to discover where cost savings have been made, or productivity levels need to be increased or where losses have been made. Generally, a good cost estimate eases the cost control process during the life of a construction project.

• - Decision Making- Asides the major quality of a good cost estimate which assists a client or a project owner judge whether the project is feasible or worth embarking on during its concept stage, during the course of a project as well, a good cost estimate helps to make clearer decisions on the approaches towards work, alternative approaches (materials & labour)which may be used to save time and cost. On the hand of Financial decisions which could impact the going future of a project, a good cost estimate plays a major role too. 

There was a residential construction project where the contractor abandoned the works after completing 65% of the works. The Building estimator was then invited by the project owner (the client) to appraise the work done. It was however evident that the bill submitted for the works was underpriced hence not allowing the contractor to finish the job. I mean how does one quote in the material and labour scheduled costing too the client for a trip of 30tons of granite at N165,000:00 (the going rate for a 30tons trip of granite is between N210,000 – N225,000 depending on the vendor supplying).  This may have been strategy on the contractors part but If the contractor had a good cost estimate as per the works and an estimator on the job, this issue may have been averted. Although, claims from the contractor was fluctuation claims which the client was not willing to entertain. 

What makes up a good cost estimate for your construction project

The process of cost estimating requires a bit of research, experience, judgement and decision making. With all these in play, your cost breakdown is not only a list of costs but it a detailed basis of estimate which composes of; 

• - Inclusions – Material required, their units and costs, labour required and cost associated, Preliminary items required to make the work possible like scaffolds, cutting/ grinding machine etc. 
• - Exclusions – these are usually provisional items which their scope of work are unable to be estimated at the time of estimating hence, a sum maybe developed for it but stated. Later on, in the project when its scope is clearer, a good cost estimate is then developed which is then termed an inclusion.
• - Any other aspects – this may detail out any other processes of preliminaries required to be done before the actual project is commenced of works needed to assist the project on its course. This may be approvals or consent from relevant authorities, storage for materials, workshop drawings, light and water for the works. 

Also, it is important to note that it is almost impossible that an estimator’s initial estimate will be same as the projects final cost.

New Trends in Estimating 

Excitingly, as new trends develop, and technology emerges, estimating has shifted from the hands of just the estimators to now almost every stakeholder in the construction process. 

The Building Estimator which is a web application has now made it easier for anyone involved in the construction process to estimate for construction works required to be done. With The Building Estimator, users can now estimate by themselves within seconds the material quantities, labour and preliminary requirements for different items of works like concrete, formwork (carpentry works), blockwork, screeding, plastering, ceiling works, tiling works, clearing works, excavation works etc. with the Automated Building Estimator

Also, There is a Custom Budget calculator which allows you have a concept estimate for your different construction works like a residential building, commercial building, a fencing project and amazingly, if you want a more detailed and good cost estimate outside these, then you can upload or email your drawings to our team and we reply within 2-4 hours. 

On the platform you can also check and verify Construction Material Prices and Labour Rates which are updated weekly. 

There is also opportunity to access Construction Tradesmen like carpenters, bricklayers, welders, Tile installers etc.  and Construction Vendors and Suppliers.

There is also a Construction Inventory and Cost Tracker which allows you get real-time updates of the ongoing expenditure of your construction project by automatically doing out an Expenditure Analysis - Amount Budgeted vs Actual amount spent on material and labour.

Also, at The Building Estimator, because of our vast knowledge of construction practices over the years, we adopt a cost benefit approach with our cost estimating processes by taking a critical look at material and design choices following the designers preferences and clients’ needs of a project in order to present options that increase value to the client while reducing cost.

Generally, The Building Estimator is a quick and easy to use construction solution that gives you estimated quantities of your material and labour requirements. Also aids your construction processes.

A good cost estimate is the difference between a successful project and a failed one as often time, its vital parts are usually overlooked. 

In simple terms, Building Estimating is to accurately know the worth through money interpretation of your construction project (be it a small renovation project or your 30 storey construction project). Having a construction project today and need to know its money interpretation, contact The Building Estimator today – [email protected] or visit our web application on www.thebuildingestimator.com