When it comes to developing detailed tenders for new construction projects, it goes without saying that there is usually little room for error in the process. It’s a fact that lost tenders and costly construction errors are very often the result of estimation errors — yet with some simple foresight and the correct tools, most of these mistakes can be averted. Before we delve into some common construction estimation errors and how they can be avoided, let’s first delve into the specifics of estimating for construction — what it is and why it’s so important.
What is estimating in construction?Put simply, estimating in construction is the process of forecasting all expenses to be incurred in a construction project. It is an essential step in the tendering and construction process — no matter the type or size of the project. During the estimating process, quantities and costs of all materials are anticipated in order to produce an accurate measurement of project costs. Along with the cost of actual materials, such factors as labour costs, travel costs, tax, and all other expenses are included in the final estimate. Construction estimating is a difficult task — as well as missed tenders, inaccurate estimates can result in lost profits, and sometimes projects going completely under. While there are common construction mistakes, and the occasional small error won’t necessarily impact your business, it’s important that the same mistakes aren’t repeated on an ongoing basis.
6 common estimation errors – and how to avoid them
1. An inaccurate takeoff process“Takeoff” is an essential part of estimating in construction. Its purpose is to provide a thorough and detailed list — including quantities — of all materials and supplies required to complete a project. The final construction estimate will also provide the total cost of these materials. It is crucial that the takeoff process is as accurate as possible, as it can help you determine the exact quantities needed and future labour and equipment needs. If items are forgotten, or inaccurate measures are made during this process, you may find that the project costs are overestimated — ultimately resulting in a lost tender. Construction estimating and tendering software, such as Nexvia’s centralised and user-friendly platform, can help ensure precise measurements, and save you time during this process.
2. An inability to assess risk and plan contingenciesIt’s a fact that all construction projects come with potential risks, and it’s absolutely vital to include an assessment of risk into your construction estimate. An accurate risk assessment will not only save potentially costly expenses, and perhaps the lives of workers, but it will also ultimately help you determine if a tender should be submitted for a project, or if it is deemed too much of a risk. Failing to include a risk assessment — and contingencies — into your estimate can lead to substantial problems down the line, including increased project costs. Sometimes, loss due to unplanned risk is so high that it is near impossible to regain or recover from it. Using effective construction estimating software can help you minimise risk, and hence avoid unnecessary loss.
3. Inaccurate estimation of supply, material and labour costsCosts for construction materials and supplies can be difficult to accurately estimate, largely due to common price fluctuations in this area. Establishing strong relationships with manufacturers and suppliers can help solve this issue, as they can help you obtain accurate estimates when prices change, as well as provide you with alternative, and better, supplies and materials when necessary. Labour costs are also often difficult to correctly estimate, due to the level of complexity involved in this area. Several variables, including the volume of workers to be hired, their different levels of experience, and productivity and wage rates need to be factored in. Focusing attention on the number of working hours it will take to get jobs done, along with current project wage rates, will help with an accurate estimation. Estimating and tendering software can also dramatically help with accurately estimating labour and material costs.
4. Not conducting a site visitVisiting a prospective job site gives you, as a prospective bidder, the opportunity to collect valuable information which will ultimately help you with a successful bid or tender. Unforeseen site conditions can result in unexpected, and expensive, issues once the project has commenced. Taking appropriate measurements, inspecting the topography, and checking access and space issues — among other things — will help you estimate correctly for the project. It can also be a good idea for any relevant subcontractors to also visit the site, in order for them to accurately estimate any additional project costs.
5. Not understanding the client’s expectationsHaving a good idea of a potential client’s expectations in terms of quality, time and cost will ultimately not help you win the tender at hand, but also ensure that the project stays within budget and time restraints once underway. When it comes to quality, it’s important to know what the client finds acceptable, in order for you to correctly estimate supplies, and justify your costs. When it comes to timing, ensure that you have an understanding of the client’s expectations, including when each phase of the project is expected to be completed. And when it comes to cost, ensure that you question your reasoning for each estimated item, along with carefully reviewing the work breakdown, and checking your cost database. A precise take-off process will also help ensure costs are accurate and fair.
6. Making uninformed decisions and not analysing your workWhen it comes to estimating for construction there can be little worse than making uninformed decisions! Speculating on bids by creating uneducated estimation guesses can only lead to lost tenders, or costly issues for the project once it’s underway. Ensure that you track costs for each project, always basing your material, labour and equipment expenses on the most current available costs. Also ensure that your work is analysed carefully and that your measurements are double-checked to ensure that actual costs are obtained. Costs should be carefully reviewed — rushing through an estimate to meet a deadline is a surefire recipe for mistakes. Attaining accurate estimates will always help ensure a profitable project, for any business. And in order to achieve accurate estimates, your business needs efficient, logical processes in place.
Streamline your estimating process with NexviaLooking to take the complexity out of estimating and tendering for your business? With Nexvia’s construction rstimating & tendering software, you can do just that. Our cloud-based platform comes with a range of tools, all designed to help you create simple yet detailed estimates, including:
- A “drag and drop” builder for quick estimations
- Easy access to historical fixtures and services information
- Pre-generated contractor responses for easy communication
- Display of cost recovery margins and markup controls
- Ability to compare multiple quotes from contractors
- Estimate approval controls