In a Design Development Estimate, an Architect often brings in a friendly contractor or professional estimator. These are often based on the square-foot costs of similar properties in the area. Once the general scope of work has been determined and there is some vague notion of the quality of the expected materials, a Schematic Design Estimate can be performed. These are often generated, like real estate prices, from comps in the area. This is the least thorough and, therefore, least accurate. This kind of estimate is usually done well before the design has started, just to give the owner a very rough idea of what a particular type of project might cost. And in traditional bidding, the contractor only gets one shot based on the final construction documents.Īccording to the American Society of Professional Estimators (ASPE), there are 5 levels of cost estimates as follows: Level 1: Order of Magnitude Estimate At other times, an Architect might pull an estimator into a project at some point along the design process to check that they’re within budget. Often two or more of them - sometimes all of them - will be used throughout the course of a project.įor instance, in a design-build process, the estimators are on board from the conceptual phase of design and will employ each estimate level along the way. They’re called tiers because they build on one another, growing in complexity as the design is finalized. Most project managers and estimators recognize five tiers of estimate that coincide with the standard five phases of the design process. Read more: Common estimating mistakes to avoid on renovation projects The Five Levels of Construction Cost Estimates It’s important to understand the difference between an estimate and a contract, and clearly communicate your intention with the client. A deeply researched and reasoned estimate will make sure you understand. Most project and payment disputes are the result, not of greed, but of misunderstanding. This means you can bill for and you can prove that it’s required and that it’s done. If you’ve really taken the time to count every lag bolt and account for every bit of formwork, you know every component of your work. One of the greatest advantages to proper construction estimating is the deep familiarity with the project you get as a result. You may have to carry that cost until the end of the job. Or, if you missed the labor burden on your employees, you still have to pay it. In fact, you may not be able to bill for it at all if it wasn’t in your estimate. If your estimate didn’t include renting a crane and now you realize you need one, it’s going to be hard to put the crane rental on the Application for Payment in a timely fashion. Knowing your costs up front at every stage of construction means you can bill for those costs as soon as they’re incurred. You can’t bill for work that’s not on the schedule. As your first communication with a potential client, a bid will provide a sense of your thoroughness, your attention to detail, your organization, and your transparency.Ī slightly higher estimate presented in detail and in a professional format will always be considered over a lower number scrawled in pencil on a piece of paper. And the bid reflects more than just the price you’ve set. This is particularly true in bid work, where the owner will consider more than one company’s proposal.Īccurate construction estimating will be the difference between winning the bid or not. The most important role of a construction estimator is to win work for the company. As a result, it’s critical that your educated guess is as well-informed as possible. If you guess too low, you don’t get the profit. If you guess too high, you don’t get the work. You have to estimate the cost of building something that has never been built before. “Estimating” really sums up both the difficulty and opportunity of being a contractor. Read more: What to include in a construction budget And that calculation is the construction estimate. But the contractor has to determine how much the building will really cost. Owners typically work from a budget, which is the amount they expect (and hope) the building will cost. Every bit of it must be accounted for, because if the owner doesn’t pay for it, you will. Temporary shoring, project accounting, equipment rental, insurance…the list goes on and on. This means it should include every single item on the plans and in the specs.Īn estimate will contain many factors not shown on the plans and specs, but still required to realize the building. A good estimate accounts for every single expenditure associated with a project. Avoiding Common Construction Estimating MistakesĮstimating is the process of forecasting the total costs to complete a construction project.Level 4: Construction Document Estimate.The Five Levels of Construction Cost Estimates.