How to Make an Estimate: Without Losing Money

A Comprehensive Guide to Accurate Project Estimation: Ensuring Profitable and Reliable Quotes

Understanding Estimates and Preparation Techniques


If you work in the construction industry, manage electromechanical assemblies, or are engaged in any similar field, this video series is essential for you. They provide detailed guidance on how to prepare reliable estimates that will help you avoid financial difficulties and ensure your bids are competitive and accurate.

In this video series, we cover:

Estimating Direct Material Costs – Learn how to accurately assess the cost of materials needed for your projects.
Estimating Direct Labor Hours – Discover techniques to estimate the time needed for labor and ensure your workforce is accounted for effectively.
Cost of Machinery and Equipment – ​​Understand how to estimate expenses related to the machinery and tools needed for your job.
Avoiding Cost Overruns – Learn how to prepare estimates that cover all aspects of the project without compromising your financial stability.
When preparing a bid, it is critical that the quoted price covers all project costs and ensures a reasonable profit margin. An inaccurate estimate can result in significant losses and missed opportunities.

This concise video series will improve your skills in accurate budgeting, whether you want to learn new strategies or refresh your existing knowledge.



Guide to Accurate Estimating

Guide to Accurate Estimating: Essential Insights for Project Estimators


Discover expert tips and strategies for precise project estimation here.


If you’re involved in the construction industry, managing electromechanical assemblies, or engaged in similar fields—or if you're about to dive into these areas—this video series is highly recommended. It outlines the essential steps and precautions you need to take to ensure that your estimates are both reliable and effective.

When preparing bids, it's crucial to ensure that your quoted price not only covers all project expenses but also provides a reasonable profit margin. Failing to do so could mean winning a contract that leads to significant financial problems rather than success.

This video series is an excellent opportunity to either learn new techniques or refresh your existing knowledge on creating accurate estimates. Explore this guide tailored specifically for project estimators and enhance your estimating skills today.







Estimating a Construction Project

 

How to Estimating a construction project

Estimating a construction project involves analyzing the various components of the project, including direct and indirect labor, materials to be used in the project, input and consumption materials, equipment, logical assembly sequences, general costs, and numerous other associated costs, to determine the total cost of the project. 

Here are the general steps to follow when estimating a construction project:


1. Project Scope – Start by understanding the requirements and scope of the project. Review project plans, specifications, and any other relevant documents to gain a comprehensive understanding of the work to be performed.


2. Break down the project – Break the project down into smaller components or tasks (we covered this in the previous post) This breakdown allows for a more accurate estimate and ensures that all aspects of the project are considered.


3. Quantity Takeoff: Determine the amounts of materials needed for each task. Review project plans and specifications to identify required amounts of materials, such as concrete, steel, forms, piping, electrical components, etc.


4. Get Vendor Quotes – Contact vendors and subcontractors to get quotes for required materials and services. Request detailed quotes that include prices, delivery times and any special terms or conditions.


5. Estimate Labor Costs – Assess the labor requirements for each task. Determine the number of workers needed, their skill levels, and the time required to complete each task. Consider factors such as wages, benefits, overtime, and productivity rates to calculate labor costs.


6. Equipment Costs – Identify the equipment needed for the project and estimate the costs associated with renting or purchasing the equipment. Consider factors such as equipment fees, fuel consumption, maintenance, and transportation.


7. Overhead and Indirect Costs – Consider overhead costs such as administrative costs, insurance, permits, utilities, and other indirect costs that are not directly related to a specific task but are necessary for the project.


8. Profit and Profit Margin – Add a reasonable profit margin to cover the risks and uncertainties associated with the project. This margin usually takes into account contingencies, market conditions and desired profit levels.


9. Summarize and present the estimate: Consolidate all cost components into one complete estimate. Present the estimate in a clear and organized format, including a breakdown of costs by task, materials, labor, equipment, overhead, and profit.


10. Review and Adjust: Review the estimate to see if it is accurate and complete. Compare it with previous similar projects to ensure consistency and adjust as needed based on specific project conditions or requirements.


11. Update and track – As the project progresses, update the estimate with actual costs and track any changes or variances. This will help refine future estimates and improve accuracy.


Estimating construction projects can be complex and it is important to involve experienced estimators or construction professionals to ensure accuracy and reliability.

ENGINEER | ARCHITECT | HOW TO ESTIMATE A CONSTRUCTION PROJECT

The image shows a truck entering the site of a construction site.

Engineer | Architect | How To Estimate a Construction Project

Contractors evaluate project specifications in order to prepare a cost estimate of the work to be tendered.
In order to reach a reliable estimate, it is necessary to comply with the tender documents and to establish, with the help of advisers, what is the logical sequence of tasks to be performed and what constructional methods to use.
A detailed list of each task is then prepared to meet the project requirements in a timely manner.
From this list, the Contractor will assess for each task the required resources of materials, labor, equipment, etc.,  to provide a reliable estimate of construction costs.
              
In this step, we are going to analyze the Itemized offer, we will make a careful analysis of essential activities for each task of the new Construction Work

A popular and usual implementation  is dividing the tasks of Construction Work, according to the different specialties, for example:

Specialties: Civil, Piping, and Equipment, Electrical, Instrumentation, and Control, Pre-Commissioning, and Commissioning

Then one divides each skill into different tasks and these at different sub-items. (For smaller works, these tasks can do with only one person that has a large experience of Construction work).

Examples of  Construction Cost Estimation for:

Civil works category

Task: Reinforcement concrete base.

A -1-1 Cutting, folded, and armed of steel.
A -1-2 Construction, and erecting formwork.
A -1-3 Filling of concrete.
A -1-4 Removal of formwork, and cleanliness.


Piping, and equipment category

Task: Assemble piping

B -1-1 Prefabricated piping.
B -1-2 Test hydraulics of spool.
B -1-3 Painting of spool.
B -1-4 Mount of spool, supports, and spool adjustment sections.
B -1-5  Hydraulics test piping.

Electrical assembly category

Task: Channelling

C -1-1 Excavation.
C -1-2 Laying of pipes.
C -1-3 Construction and concrete filling.
C -1-4 Wiring - Identification and connection of cables.

Based on all of the above, we arrive at the total unit cost of each task for materials and person-hours per unit of measurement for each sub-element.

Example: Construction Cost Estimation for Reinforced Steel

Task: Cutting, bending, and assembly of the armor.


Note: The sum of material plus labor for a kg of rebar is $6.
It should be noted that in each region the local values of labor and cost per kg of steel for reinforcing bars should be used.

The Excel spreadsheet is built one time and is used on all jobs, adapting to each specific job.
Excel makes no mistakes and also allows you to update any factor rapidly.
Software is now being used to automatically calculate the materials and times needed for assembly and construction.
As regards the valuation of labor costs, it is convenient that it is the Accounting section that sets these values.