{"id":7201,"date":"2021-01-05T00:00:00","date_gmt":"2021-01-05T00:00:00","guid":{"rendered":"https:\/\/bxglobal.wpengine.com\/us\/construction-cost-estimation\/"},"modified":"2022-07-17T22:33:07","modified_gmt":"2022-07-18T02:33:07","slug":"construction-cost-estimation","status":"publish","type":"post","link":"https:\/\/www.buildxact.com\/us\/blog\/construction-cost-estimation\/","title":{"rendered":"The importance of construction cost estimation"},"content":{"rendered":"<p>Estimating construction costs accurately relies on many elements. It\u2019s a necessary process and is what underscores the pricing of construction projects. The accuracy or inaccuracy of an estimate can make or break a business\u2019 profitability. However, the elements involved&nbsp;can&nbsp;complicate the process and result in a lot of risk, whether from material price fluctuations to uncertain labor costs.<br \/>\nMaterial price fluctuations directly affect the total project cost. While calculating estimated costs, you want to make sure the cost data is as accurate as possible. Buildxact&#8217;s dealer integration updates offer cost data in real-time to ensure you are always estimating as accurately as possible.<br \/>\nBy using actual costs, as opposed to average cost, you improve the efficiency and accuracy of your cost estimate process and stay ahead of the competition. No one can afford construction estimates to end up costing the business money. Every cent matters. Making sure your actual construction costs match your cost estimates ensures you are watching every penny.<br \/>\nCreating an accurate construction estimate takes practice, skill and reliable data because each job has different variables. It remains one of the most challenging yet most important skills in construction. A recent study by\u202f<a href=\"https:\/\/quickbooks.intuit.com\/industry\/construction\/#industry-survey\" target=\"_blank\" rel=\"noopener noreferrer\">Quickbooks<\/a>\u202fdetermined that just two or three inaccurate estimates can be detrimental to a business.<\/p>\n<h3><b>Construction Cost Estimation Challenges&nbsp;<\/b><\/h3>\n<p>Some risks in the construction estimation process can adversely affect your bottom line, like overestimating and underestimating materials costs and administrative costs.<\/p>\n<ul>\n<li>Overestimating: results in the owner or customer paying more, or you risk having an inflated price prevent you from winning the job in the first place;<\/li>\n<li>Underestimating: puts you on the line to either eat costs or lose the confidence of your customer.<\/li>\n<\/ul>\n<h3><b>Tips to Create an Accurate Estimate&nbsp;<\/b><\/h3>\n<p>Construction cost estimates are among the most critical components of your&nbsp;business\u2019&nbsp;profitability and\u202f<a href=\"https:\/\/www.constructiondive.com\/news\/business-toolbox-how-to-produce-a-winning-estimate\/524710\/\" target=\"_blank\" rel=\"noopener noreferrer\">winning new business<\/a>. It\u2019s essential to be as accurate as possible. It involves calculating various elements, including material and labor costs, subcontractors, equipment and markup. Here are a few tips to create an&nbsp;accurate construction cost:<\/p>\n<ul>\n<li><strong>Material Cost:<\/strong>&nbsp;You probably have a pretty good idea of your material cost. However, the changing supply and demand within the market throw off an estimate by the time actual construction commences. Working closely with your suppliers is critical as they have a pulse on the types of materials that might work best for your project;<\/li>\n<li><strong>Labor Cost:<\/strong>&nbsp;Perhaps the most difficult expense to estimate is labor, with more than a third of respondents to a&nbsp;Quickbooks&nbsp;survey admitting to best-guessing rather than using hard data to calculate labor costs. It is the most expensive of all your project costs. You will be responsible for wages, payroll taxes, benefits (if applicable), etc. There are a variety of\u202f<a href=\"https:\/\/www.markupandprofit.com\/articles\/estimating-labor-burden-and-cost-of-goods-sold\/\" target=\"_blank\" rel=\"noopener noreferrer\">calculations<\/a>\u202fto help assist the labor cost that best suits your needs;<\/li>\n<li>&nbsp;<strong>Assess Risk and Build in Contingencies<\/strong>: Mitigating risks and building in contingencies is vital to note. Things don\u2019t always go as planned, and you must plan for them to make sure you recoup your costs;<\/li>\n<li><strong>Accurate Takeoffs<\/strong>: A complete and correct takeoff lays the groundwork for the best estimating process by determining solid material quantities for the project.&nbsp;Using software to complete a takeoff increases accuracy by reducing the human error present when completed manually;<\/li>\n<li><strong>Site Visits and Pre-Bid Meetings:<\/strong>&nbsp;From small to large projects, it\u2019s essential to meet with the owner or customer because all job sites are different, even if the project is similar in scope to others you\u2019ve performed. From road access to the amount of space to maneuver, it\u2019s crucial to get the lay of the land.<\/li>\n<\/ul>\n<p>No estimate, however, is risk-free.<br \/>\nToday many builders, remodelers, and contractors use software&nbsp;solutions to lessen the chance of errors and the under or overestimating construction costs. Building construction cost estimating software&nbsp;is a key part of accurate construction costs and construction project management. It&nbsp;helps with accuracy, allows for&nbsp;greater&nbsp;collaboration and&nbsp;means&nbsp;tasks&nbsp;are done faster.<\/p>\n<h3><b>Estimating Software Solutions&nbsp;<\/b><\/h3>\n<p><iframe title=\"Develop accurate estimates up to 5x times faster with Buildxact\" width=\"1200\" height=\"675\" src=\"https:\/\/www.youtube.com\/embed\/91BjHIAn82k?feature=oembed\" frameborder=\"0\" allow=\"accelerometer; autoplay; clipboard-write; encrypted-media; gyroscope; picture-in-picture\" allowfullscreen><\/iframe><br \/>\nIf you\u2019re a small residential builder or remodeler looking to improve your estimating process through speed and accuracy,\u202f<a href=\"\/us\/features\/construction-estimating-software\/\" target=\"_blank\" rel=\"noopener noreferrer\">Buildxact<\/a>\u202fhas a solution. Designed specifically around the needs of the small builder, remodeler, and contractor,&nbsp;Buildxact&nbsp;offers easy-to-use construction estimating software.<br \/>\nIt is a must-have to accurately estimate indirect costs, direct costs, capital costs and maintenance costs. An efficient cost estimation process using software for construction cost estimating should be part of every construction process. Providing a customer with a detailed estimate sets you apart from the competition, which, in turn helps your business grow.<br \/>\nAccurate estimation is the fuel that propels growth for construction businesses because it ensures that the construction estimate matches the total project cost at the end.<br \/>\nMoreover, you create accurate estimates in a fraction of the time \u2014 up to five times faster\u2014 with complete on-screen takeoffs and \u202flocalized dealer price files\u202f. You create professional-looking quotes once and use them again and again in just a few clicks. You\u2019ll never miss an item with our built-in checklist reducing common mistakes.<br \/>\nYou can also store customer information and documents like permits, quotes from subcontractors, material items (like customer images) along with photos you take onsite, and easily send them along to your customer.<br \/>\nBuildxact is more than just a construction estimating software. It\u2019s a complete, easy-to-use project management system, from first takeoff to the final invoice. Buildxact will help you consistently achieve accurate estimation for your construction estimate every single time. Calculating your building costs, overhead costs, supervision costs, equipment costs and all other costs, will be quick and easy.<br \/>\n<a href=\"\/us\/features\/\" target=\"_blank\" rel=\"noopener noreferrer\">Learn more<\/a>&nbsp;about how our software can help you be more efficient and accurate in your business.<\/p>\n","protected":false},"excerpt":{"rendered":"<p>Creating an accurate construction estimate takes practice, skill and reliable data because each job has different variables. It remains one of the most challenging yet most important skills in construction. A recent study by\u202fQuickbooks\u202fdetermined that just two or three inaccurate estimates can be detrimental to a business.<\/p>\n<div style=\"display:none;\" class=\"postcatlist\"><a href='https:\/\/www.buildxact.com\/us\/tag\/estimating\/'><span>Estimating<\/span><\/a> <a href='https:\/\/www.buildxact.com\/us\/tag\/takeoffs\/'><span>Takeoffs<\/span><\/a><\/div>\n","protected":false},"author":1,"featured_media":7867,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[25],"tags":[103,91],"contributing_author":[],"class_list":["post-7201","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-blog","tag-estimating","tag-takeoffs"],"acf":[],"yoast_head":"<!-- This site is optimized with the Yoast SEO Premium plugin v27.2 (Yoast SEO v27.2) - https:\/\/yoast.com\/product\/yoast-seo-premium-wordpress\/ -->\n<title>The importance of construction cost 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