Back to Blogs TCLI

Top 7 Construction Estimating Mistakes

When taking on a construction project, estimating captures every aspect of the project's budget. However, it’s common for estimators to overlook, underestimate, or leave out elements that should be considered or included in their bid. Let’s look at the most common construction estimating mistakes.

Leaving Out Details

Every bid should have an overall estimated cost to include each item of the project and the resource costs associated with the item. Oftentimes estimators will provide a project price based off an educated guess or base it on experience working on similar projects. These estimating methods overlook the details, leave you vulnerable to mistakes, and make it difficult to justify the project’s final price to the customer. If you are bidding municipal work, your final bid price may be far over or under the median bid price submitted by competitors. Estimating the project cost in detail takes the guesswork out of estimating, helps you justify your final price to your customer, and makes you more competitive in the marketplace.

Not Using the Top-Down Approach

During the construction estimating process, analyzing the project as a whole is just as important as the details. You should take a top-down approach and look at the costs of the entire project. After looking at the overall costs, look at the distribution of costs. This approach makes it easier to adjust numbers and ensure you have appropriate margins of profit. You can adjust overruns and underruns and move money around to maximize your estimate and potential of winning the bid. Without a software to give you that top-down analysis and built-in calculations to make those adjustments, this type of approach to estimating is extremely hard to pull off.

Lack of Margin Calculation Algorithms

When you are calculating your profitability, you must include factors other than the flat markup of the cost. Typically, estimators who use manual calculation methods will use flat markup that they believe covers all overhead, G&A, profit, etc. This can be a dangerous0001-682258849 approach.  Professional construction estimating software includes a margin calculation algorithm that is built into the program. This mathematical function easily maintains your profitability based on the percentages/numbers you set. It is set up to include things like overhead, G&A, taxes, bonds, indirect costs, profit, and more to ensure you are calculating those critical items on your estimate.

Underestimating Labor Costs

Labor costs are challenging to estimate for construction projects. Things like varying wages, insurance, taxes, and fringe benefits for each employee make an impact on estimating labor costs. Subcontractor labor is also a factor that must be considered. To understand what your true labors cost will be, including every penny is crucial to ensure you don’t underestimate what your labor will cost you on a project. Estimating software calculates all those details for you so you can be confident in your numbers. It also allows you to quickly compare and copy similar projects and adjust the numbers as necessary.

Not Planning for Risks

If you do not plan for risks during construction, setbacks are more likely to happen. A lack of risk assessment and calculations can cause you precious time and money; it could even cost you a loss on a project. Look back at previous projects to see what unexpected events increased the costs. Construction estimating software help give you instant visibility into those projects and helps you assess potential risks so you can calculate them into your current project costs.

Seeing a Limited View of the Project

When you are gathering information for a civil construction bid, you need to see the project in its entirety. Without being able to break your bid down into different datasets, it is difficult to validate your project costs. Estimating software gives you the ability to break your project down and instantly report on different data to ensure your final bid numbers make sense.

Forgetting Last-Minute Changes

It is common for last minute prices changes for resources like material, fuel, and subcontractors.  Your customer may also make a change to the scope of the project. If you are using manual methods, recalculating a bid can take as long as putting it together for the first time. Estimating software makes last minute changes and recalculations on a project easy. Copy information, include or exclude bid items in a click, update resource prices to automatically update your total bid price, add alternates, and so much more.


The Estimating Link Difference

If you relate to this article because you or members of your team have made one or more of these mistakes, you’re not alone! So many estimators struggle just like you because they don’t use software that takes the guesswork out of estimating. Now’s the time to invest in Estimating Link, construction estimating software for heavy/civil contractors. You’ll eliminate those mistakes, increase your accuracy and profitability, be more productive, and win more bids! Ready to try Estimating Link? Click Here to get started with your Free Trial!

Elevate your Business with Software from the Construction Link, Inc.

Fill out the form to learn how TCLI's software solutions can take your business to the next level.