Coming up with an accurate estimate is essential to selecting profitable projects and submitting solid bids. Too often, construction companies fail to generate expected profits on a job because they underestimated the costs. And it’s not surprising; estimating isn’t easy. There are some typical construction cost estimate mistakes that account for many inaccurate calculations.
In fact, according to a survey by QuickBooks and TSheets, 1 in 3 construction companies make less profit than they expect to earn based on their initial estimate. If you’re one of them, take a few minutes to review these common construction cost estimate mistakes to help home in on where you’re going wrong.
Estimating Mistakes on Construction Projects
- Skipping the site visit – Site visits and pre-bid meetings are key opportunities to better understand the scope of the work, ground conditions and other environmental factors, staging space, and more about the job. Survey the site thoroughly and attend any meetings.
- Incorrect takeoffs – Without an accurate accounting of materials quantities, you can’t possibly arrive at an accurate estimate. There’s some helpful takeoff software available today that can really help you accurately gauge your materials needs.
- Inaccurate labor costs – Labor costs are often the hardest to get right, making them one of the most common construction cost estimate mistakes. Keep detailed records of labor costs from every project, and you’ll soon have good data to assist with this aspect. Also, remember that more experienced workers with higher pay should also be more efficient.
- Inadequate risk assessment and planning – Every estimate should take into account the foreseeable risks on the job, how you’ll mitigate them, and the contingency plans. And the bigger the risk, the more you should spend on mitigating it.
- Making uneducated guesses – Estimates by nature involve some guesswork, but it should always be educated guessing. Again, keep detailed records to build up strong historical data to help inform your estimates. And take the time to investigate answers to the questions that come up when you’re doing your calculations.
- Failing to double check the estimate – Everyone makes mistakes. Review every estimate to ensure that measurements, quantities, costs, and other numbers were entered correctly and that all the math was done right.
- Not reviewing subcontractor estimates – If your estimate is affected by subcontractor estimates, make sure you look them over too. See that they understand the scope of their work, that they did their due diligence in creating an estimate, and that they got their numbers and math right.
