Creating estimates can surface some serious commitment issues. That’s because the whole process of estimating for high-dollar-value capital projects, which typically has been complicated and time-consuming, can also be rather intimidating — not only when pinning down a realistic figure, but committing to it.
Construction estimating software itself can help construction estimators and contractors greatly improve the accuracy of their estimates. But software can only do so much. The one thing to keep in mind is they won’t be that precise if the inputs are not precise. As the saying goes: You get out of it what you put into it.
The accuracy and completeness of your inputs directly impact what your estimating software can do for you — from assembling competitive estimates and bids, to helping you make data-driven decisions, to creating risk-mitigating contingency plans, to earning a reasonable profit.
While there’s no set formula or best practices to arrive at this, answering these questions may help to fine tune the accuracy of the data you’ll enter into your construction estimating software:
Scope of work
- What’s the work to be done? Is it fully fleshed out or is it in the feasibility stages? Is the goal to arrive at a high-level, top-down estimate or a more detailed bottom-up estimate?
- What is the proposed schedule? Is it realistic?
- What kinds of craftspeople may be necessary to complete it, and by the desired completion date? If you’ve worked with them before, what are their performance levels?
- What materials and equipment will they need? What are current prices and availability? Once these resources are determined, can you establish a relationship with suppliers who can alert you to anticipated price increases and supply issues?
Benchmarks and historical data
- Does the scope of work resemble any past projects, or project components, you can draw from?
- Do you already have a database of unit costs for materials within your construction estimating software? How about cost-item assemblies?
- What about wage rates? Are those rates still valid?
- Were there any trends to note? Anything from gradual price increases for certain materials to frequent scope creep?
- How close were the costs and schedules to the original estimates? Did your performance metrics venture outside of their established operating ranges for prolonged periods? If so, how far above or below were they, and how frequently? Was it a reflection of an ambitious cost or schedule estimate?
Geography based
- Are you familiar enough with the area where the project will be constructed to be able to apply firsthand knowledge of labor or their wage rates?
- What regulations may be in place there that could impact how, where and when the build is done?
- Are there environmental conditions that could affect the build during its life cycle? If so, could it affect the schedule? Could it impact things like material costs in that area?
Risks in similar past projects
- Have you worked on similar projects that presented risks that may apply to this project? Which were anticipated and which were out of left field?
- What external risk factors occurred? Which internal risk factors? Is it likely you’ll have to account for any or all of these when creating estimates and contingency plans for similar projects?
- Was forecasting performed for those projects? How accurate were they? Did contingency plans adequately account for corresponding cost fluctuations?
Of course, assembling an estimate is about more than simply calculating and inputting objective hard data into construction estimating software. It may require a bit of thought and reflection to factor in the value of subjective real-world experience — from lessons learned about what went awry and how they were addressed, to what steps were successfully taken to keep project performance on track. All the more reason your answers to the questions above, while by no means exhaustive, can help form the basis for making smarter, more informed decisions about the details you plug into your software. And ideally, they help in arriving at a more precise, well-thought-out estimate more quickly. It may even keep you from completely redoing any part of the estimate, outside of expected updates and tweaks, particularly when time is of the essence with submission deadlines.
One other thing to note: With cost overruns based on estimate inaccuracies being a prime culprit in losing out on an already-slim profit margin, every effort to increase accuracy and realism can boost chances for a bottom line that’s in the black.
Get more from your construction estimating software
The answers to the questions at the beginning can not only increase the accuracy of the data you input into your estimating software, but can build cost certainty and boost your confidence in their validity as well. But much also depends on the construction estimating software you’ve chosen, or will choose, for your company. If you haven’t yet adopted a solution, or are looking to upgrade to a more robust one, consider InEight Estimate, created by construction professionals for construction professionals like you. Find out how it works by scheduling a demo.
