Benefits of Independent Construction Estimating: Management & Control
Independent construction estimating is critical for gaining an understanding of the cost of commercial construction projects, which are as multifaceted as the facilities, developments, venues, and complexes they bring to life. In our last article, we explored the main areas for which independent construction estimating provides clarity on cost: labor—including general and specialized labor, subcontractors like mechanical, electrical, and plumbing systems (MEP) experts, materials, and equipment, and indirect costs.
In this second installment of our two-part series, we’ll look at why independent construction estimating is so important. For owners, developers, and design teams, it is the key to saving time and money for an overall increased profit margin and mitigation of potential budget pitfalls along the project timeline. These benefits span commercial construction projects in industries ranging from education, healthcare, and entertainment to hospitality, sports, theme parks, and more, and include:
Independent construction estimating provides reliable and actionable data to assess the feasibility of a project under consideration. The first step to determining whether a given project may be a profitable undertaking is establishing expense with the greatest degree of certainty possible. The number and complexity of factors involved in large scale commercial construction makes it virtually impossible to accurately assess feasibility without the expertise of an experienced independent construction estimating team well versed in market conditions, construction techniques and trends, and direct and indirect costs.
For design teams, independent construction estimating can be the difference between a project winning and profit-making bid and one that misses the mark and loses the project or, just as bad, secures a project whose budget is unrealistic and untenable. Design teams walk the line between bidding too high and having their offers passed over in favor of more cost effective competitors, and bidding too low, which can send up a red flag about quality or win a bid that will yield a poor profit margin. Independent construction estimating safeguards against both of these extremes and sets design teams up not only for successful bids, but smooth interactions with owners and developers as they progress on time and on budget along the project timeline.
Every commercial construction project requires the buy-in of stakeholders on multiple levels. From internal stakeholders like members of a board of directors and corporate management to external stakeholders like chambers of commerce, municipal and regulatory authorities, investors, and more, every individual and entity with a stake in the success and ROI of the project will require accurate data on projected cost to make critical decisions about supporting the build. Project leads and conceptualizers equipped with sound data from reliable independent construction estimating will find it easier and faster to achieve stakeholder buy-in to advance their projects.
Whether the funding for a proposed commercial construction project is coming from venture capital, shareholder investment, grants, crowdfunding, commercial construction loans, subsidies, or a combination thereof, the bottom line is that no organization, individual, or institution will disburse funds without knowing how much is needed and how it will be spent. Equally important is the degree of confidence investors or lenders have in the accuracy and feasibility of the project’s budget. Inaccurate or incomplete cost estimating will result not only in difficulty securing funding, but in potentially difficult relations with lenders and investing partners if the cost spirals or diverges greatly from the estimate as the project progresses.
Independent construction estimating does more than provide critical and accurate data surrounding the cost of commercial construction projects. The process can also identify ways in which costs can be managed or reduced without any compromise of quality. A good construction cost estimating firm will thoroughly examine every aspect of a project to discover the possibilities for cost-reducing alternatives while maintaining the integrity of the original vision for the build. With sound data and viable alternatives, project managers can make timely and informed decisions that can benefit the project as well as the overall budget.
It would be a rare commercial construction project that did not experience some adjustment along the way, but change orders can be a source of significant and repeated financial loss if not anticipated, planned for, or thoroughly reviewed. Independent construction estimating reduces the chance that unexpected change orders will derail a project budget or timeline by accounting for contingencies in the early phases of estimation and facilitating change order negotiations as they arise.
The benefits of independent construction estimating for commercial developers, owners, and design teams are clear and compelling: the ability to accurately assess project feasibility, to make profitable bids, to facilitate stakeholder buy-in, to more easily secure funding, to manage costs, and to anticipate and navigate change orders in a cost-effective manner. Working with a independent construction estimating firm provides the reliable data needed to make sound decisions resulting in a strong ROI on even the most complex commercial construction projects.
Image Credits: Piqsels @ Creative Commons.