Avoiding Construction Estimation Pitfalls

Cost estimation is a vital process in the construction business that can determine the profitability of a project. While it is impossible to calculate every possibility involved in a dynamic project (especially large-scale scenarios with multiple complexities), there are some important things to consider to improve the accuracy of an estimate.

A high estimate may cause customers to reach out to competitors with more reasonable rates, while low estimates may result in losses and additional budget expenses that compromise developer-customer relations. Therefore, decision-makers and architects should follow a detailed and structured approach to eliminate the blind spots regarding construction cost estimation.


#1 Underestimating Labor Costs

Labor cost is an umbrella term with various considerations. Decision-makers should consider individual requirements rather than strictly measuring labor fees according to the number of hires and hours worked. Some of these variable fees include certified expertise (e.g., operating specific heavy machinery), industry experience, federal wage taxes, incentives, overtime costs, and, if necessary, additional subcontractor fees.


#2 Skipping Site Inspection

The cost estimation generated with a project specification may lack crucial site information that could significantly affect the final calculated sum. Some physical site considerations include:

  • Demolition: the required removal of old structures or barriers to the current project
  • Topography concerns: terrain and site layouts that affect the placement of construction equipment and transportation.
  • Site access: height and weight limits, the width of travel lanes, and other considerations that affect the delivery of machinery, equipment, and raw materials.
  • Location: the distance between job sites and warehouses, determining the amount of fuel and hours required in transportation.


#3 Forgetting Contingencies

An accurate construction cost estimation should include potential surcharges or add-ons based on calculated risks. Essentially, architects and decision-makers should prioritize contingency costs on more volatile/unpredictable aspects of the project.

These contingencies may include specific construction procedures outsourced to specialized subcontractors, material fees subject to volatile market movements, and the removal of pipelines and other buried (undocumented) components in old sites.

A contingency fee reduces the pressure on all parties involved in an unanticipated construction event, keeping the project within budget and underway despite the shock. While contingencies are crucial in cost estimation, owners and architects should always justify fees with reliable historical and industry data to provide customers with assurance and professionalism.


#4 Omitting Soft Costs

Soft costs are the less obvious fees required in a construction project, but they still add to the total sum. Unlike “hard costs,” which tie directly to the project, soft costs relate to the non-tangible items from various project phases. It is easy for owners and architects to omit soft costs in the cost estimate, only to realize the lapse late into the project, which often forces them to absorb these fees, reducing their overall profitability.
The most common soft costs include legal fees, worker insurance, design fees, and in some cases, recurring building maintenance fees for post-construction.


#5 Rushing an Estimate

The project team may rush through an estimate based on external pressures, but this could lead to flagrant errors and inaccuracies. Some common mistakes include material specification errors, using the wrong units of measurements (e.g., meters instead of yards), and applying outdated data to estimates (e.g., previous worker wage systems).
Decision-makers can reduce error risks by pacing their calculations and taking a systematic approach to cost estimation. For added assurance, owners and decision-makers may apply a BIM (building information modeling) solution that automates realistic project models with accurate cost calculations. Utilizing the Building Information Model can mitigate some risks of human error in hard cost measurements and calculations.


#6 Relying on BIM and Construction Estimate Software

The best BIM and automated construction solutions lack the capabilities of factoring in the latest environmental, industry, and market variables. Therefore, relying solely on these solutions may result in inaccurate cost estimates and complications in the long term, such as budget overruns and project delays.

BIM and construction estimate software are tools that facilitate solid cost calculations, (e.g., material dimensions and quantity or the price assessment based on project area) they do not function well as standalone solutions. That’s where a construction consulting specialist like Willis Consulting comes in to provide the expertise for a comprehensive estimate.


Willis Construction Consulting – A Trusted Name in Construction Estimates

Willis has provided accurate cost estimates for over 30 years in the construction business. We specialize in complex construction projects (e.g., sports stadiums and destination resorts) where multiple cost considerations abound, each with a significant and far-reaching impact on the finalized sum.

Our consultants possess years of experience on the ground and across diverse projects to provide the most insightful data and the most updated cost estimates for owners and architects. Additionally, our construction experts can help owners adjust and refine their costs through strategic negotiations with other parties (e.g., reducing supplier fees with bulk/early deliveries).

The combination of construction consulting expertise with the most advanced BIM and estimation software will help owners, architects, and decision-makers avoid the most common pitfalls in the cost estimation process — and establish transparency, trust, and chemistry with customers right from the beginning.

Arrange for a consultation with the Willis team today to optimize the accuracy of your cost estimates and elevate your project experience every time.
Image Credits: Freepik @Creative Commons

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