Project managers, contractors, and property owner ought to have an accurate forecast of the project cost. Nonetheless, every construction contract features unique variables. From the availability of labor to the building design, projects differ significantly.
Miscalculating the cost of building can have negative consequences. Here, you’ll find an overview of construction cost estimating. Find out the purpose, elements, and factors affecting the construction cost.
What’s the Purpose of Forecasting the Construction Budget?
Construction cost estimating involves forecasting the monetary cost of building a structure. Are you worried about the financial implications of cost overruns? Afraid the project might not be completed?
If you want to render the full benefits of construction management, you need to estimate how much it will cost before you move forward. Your client might ask for multiple estimates if you are managing a big contract. They can even hire an independent estimator.
The main idea is to determine the scope and feasibility of the project. As you prepare the estimates, make sure that they are viable in relation to the client’s requirements. A good budget plan prevents underpayments and overpayments.
Qualities of a Good Estimate
A good construction budget should be:
Credible
Accurate
It has confidence levels
Readable
Precise
Documented in writing
Reliable
Valid with up-to-date information
Uniform
Risk-detailed
Cost-verified
The best construction budget estimate is made by a team. That is the project manager, designers, builders, contractors, subcontractors, and suppliers.
What Components Make Up a Construction Cost Estimate?
Estimators use the following to create a construction budget. Some of them may overlap depending on the type of project involved.
Capital costs – land acquisition, architect salary
Prices of the building materials
Labor hours
The cost of machinery and equipment
Subcontractor quotes
Administrative costs, e.g. design fees, permits, and transport
Contingency costs
Operations and maintenance
Factors Influencing the Construction Budget
A lot of factors can affect the elements highlighted in the above section. That’s why you must recognize that every construction work is unique. You may need to create a punch list from time to time. This has a direct implication on the budget. Here is a rundown of the underlying factors.
Size and complexity of the project
The condition of the site: Is it waterlogged? What’s the nature of the rocks?
The location of the site: Do workers travel for long distances? In urban areas, wages might be higher.
The regulatory requirements: Some are expensive to fulfill.
Feasibility studies: These are likely to increase the budget.
Unpredictable changes: things like construction weather delays and cost inflation
Embrace a Robust Tool for Estimating the Construction Budget
Construction budget estimation can help you foresee the costs of executing a building process. This helps you to achieve the objectives within the desired construction timeline. Make sure you understand the nuances and basic estimation techniques.
Traditionally, construction budgets are developed with formulas and spreadsheets. Recently, there is cost-estimating software designed specifically for construction. It integrates seamlessly with other management applications like construction scheduling software.
One of the best automation tools is Synuma. It allows you and your team to work better. The interface offers robust management features for creating cost estimates. Then you can combine those estimates with other project plans in one sheet.
You need a tool that compares the actual cost and the estimated budget. With Synuma, you can even share your sheets with external and internal stakeholders. This allows collaboration in real-time, keeping everybody on the same page.
