Accurate cost estimation is crucial for construction projects. So, be sure to use the correct type of cost estimate to ensure success. Keep reading to uncover the different types of cost estimates in construction.
One of the first steps towards a successful construction project is a definitive cost estimate. This is necessary for satisfied clients / employers, and an accurate understanding of the direction and scope of the project. Getting the estimate done efficiently from the start can help to avoid wastage, unnecessary cost variations and budgeting issues which could put a project at risk from going ahead.
Different Types of Cost Estimates
There are a number of different types of estimates, ranging from early stage estimates with limited information available, to definitive estimates based on detailed design. Here are some key estimate methods used for pricing construction projects:
Also called rough order of magnitude or approximate estimates, preliminary estimates provide a rough idea of how much a project may cost.
Of the different types of estimates, the preliminary or conceptual phase is just about providing a non-final figure at the early stage of a project’s life cycle, which is based on conceptual designs or limited design information.
Plinth Area Cost Estimate
A method in determining the approximate building cost, this estimate covers the built-up area of the building. This is the entire area that the external dimensions of the building cover on the ground floor or any floor level. A plinth area rate of building is estimated by identifying the plinth area cost rate of similar constructed buildings in the area.
Important factors to be considered when applying this method: foundation type, building height, type of materials to be used, roof construction and finishes.
Cube Rate Cost Estimate
A cube rate cost estimate is an effective strategy for working out cost estimates for multistorey buildings. This type of estimate involves multiplying the volume content of the building by a rate/m3.
This is a more accurate approach than just a plinth estimate, as it covers the whole volume of the building – from floor to rooftop.
The elemental estimate or elemental cost plan is a more accurate method and analysis of construction costs as it is based on further detailed drawings and specifications. Often clients employ the services of Quantity Surveyors who follow guidelines (as set out by various institutes) and this supports consistent and accurate costing. To ensure an accurate analysis, the building is split into components (e.g. structural frames, facades, floor finishes etc.) which in turn are broken down into smaller categories with quantities, multiplied by cost rates, providing a total cost per component. Based on the area of the component a cost per square meter can be quantified. All components are summed up to provide a total building and cost/m2.
A detailed estimate is the next step in obtaining an accurate estimate. By this stage all construction information should be clearly detailed in order to draw up a comprehensive cost estimate, often in the format of a Bill of Quantities. The BoQ is divided into trades with bill items categorised under these various trades. The contractor will price each BoQ item (including for all labour, plant, materials, etc.) to obtain an accurate estimate of the works. Bid estimates need to be accurate as this is what the client / employer will expect to pay, and it’ll help to prevent unwanted cost over-runs for the contractor.
Using Estimating Software for Accurate Results
As a contractor, no matter what type of estimation you are doing, you want them to be as accurate and efficient as possible. Poorly done estimates can result in wasted resources, wasted time, and the risk of running over budget. When creating an estimate, it is important to remove any risk of error.
This is where using estimation software can make a world of difference. Using software like Candy helps estimators to produce faster, more accurate results. This can help you to win more bids and run projects more smoothly.
Cost estimations are a critical part of any project. They help contractors to understand the requirements of the project going forward. They also help clients to understand their budget and financial needs. Different types of estimations are used during different stages of the project to keep things moving along efficiently.
Estimation software is very useful for calculating cost estimates and helps contractors to enjoy greater accuracy and create estimations faster. This leads to winning more bids and a greater chance of overall success!