Construction Estimates: 4 Expert Tips to Make Them More Accurate
Accurate construction estimates. There’s nothing more important to starting a project off on the right foot.
Too high of an estimate could cause you to be out bit, while one that is too low could lead to significant financial losses. Here are 4 expert tips to improve the accuracy of your estimates.
1. Start with a Template
Every estimate should start with a template. Include every potential line item that could be included in any project that your scope of work covers. General contractors will likely have much larger templates because of their broad scope of work. Subcontractors, on the other hand, will have fewer line items included in their templates.
Having a template eliminates the need to start each estimate from scratch. The template can be easily customized by adding or removing line items as needed, so it can be used for all of your estimates.
2. Plan in Detail
Detailed planning takes more time up-front, so many people skip it. Don’t make this mistake. Would you trust a supplier that pulled a wild guess for the cost of supplies out of a hat? Of course not. You would expect them to do their research, check the real numbers, and give you an accurate estimate. The same is true for the clients you provide bids for. They’ll be much more inclined to trust a contractor whose estimate includes a detailed plan than one whose bid looks like it was thrown together without much thought.
Be thorough in your planning. Do your best to estimate accurate costs for materials, equipment, labor, and other costs associated with the project. Detailing the costs will help ensure the accuracy of your construction estimates.
3. Learn from Past Projects
Your past projects and estimates can be a great learning tool. Review your past successes often to see what went well and your mistakes to identify what went wrong. You can use the numbers from your previous estimates and what the job actually costs to help improve the accuracy of future bids.
In a recent survey, nearly 30% of contractors reported profiting less on a job than expected because of inaccurate estimates [QuickBooks]. Reviewing and learning from your past projects can make your estimates more accurate and ensure profitability.
A simple error in an estimate can be enough to throw off the entire thing, like if you missed a zero and estimated your labor costs at $500 instead of $5,000. It’s important to double-check your math, any formulas, and your line items for mistakes after the estimate is complete. A little extra time spent confirming the accuracy of your bids will be well worth it.
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Construction estimates are an important part of running a successful construction business. And CoFi is here to make operating your business easier. Our revolutionary construction finance software is here to bridge the gap between lender and contractor through streamlined communication and automated processes in a simplified and organized system. See how CoFi can help your business. Schedule your personalized demo today!