Estimating in Construction: The Fine Art of Balancing Costs and Resources
In the world of construction, estimating is at the heart of every project, dictating the resources, costs, and feasibility of each endeavor. Estimating is the process of determining the quantities and costs of materials, labor, and equipment required to complete a construction project. Done well, it enables a company to confidently bid on projects with the assurance that they can complete them on budget and at a profit. Inaccurate estimates, however, can spell financial disaster, either by overbidding and losing contracts or underbidding and taking on unprofitable work.
The American Institute of Architects (AIA) defines the “work” in a construction contract as the services, materials, and labor required by the contract documents. This is often called the scope of work and includes everything needed to fulfill the contractor’s obligations. Estimating thus becomes the first critical step in defining how much of each resource the contractor will need and at what cost.
The Role of Estimating in Construction Company Operations
In any construction company, success relies heavily on the accuracy of cost estimates. Estimates that are too high result in the company being consistently outbid and, as a result, facing a lack of work and potential financial distress. Conversely, estimates that are too low lead to underpriced projects, costing the company money and jeopardizing its financial health. Therefore, estimators perform a delicate balancing act, striving to be both competitive and profitable.
The Estimator: A Critical Role with Specialized Skills
The estimator is the key individual in charge of preparing these cost estimates. In larger companies, this responsibility may fall to an entire estimating department staffed with multiple professionals, while smaller companies might rely on a single estimator, a project manager, or even the company owner. Regardless of the company’s size, an estimator is essential to its success, as they meticulously evaluate the necessary resources and associated costs for every aspect of the project.
To excel, an estimator needs a specific skill set:
- Specialization and Understanding of Construction: Construction is a broad field with diverse methods, materials, and types of skilled labor. Estimators often specialize in specific construction areas, such as residential, highway, or commercial construction, or in trades like electrical or mechanical work. Specialized knowledge allows estimators to accurately project costs in their field, considering regional preferences and labor capacities.
- Mathematical Precision and Blueprint Literacy: Estimating often involves meticulous calculations to determine quantities of materials, the amount of labor required, and equipment costs. Estimators must be able to read blueprints, understand the architect’s or engineer’s vision, and calculate what is needed to bring that vision to life. Strong mathematical skills are indispensable, as miscalculations can lead to costly errors.
- Market-Specific Knowledge: Because markets differ by state or region, estimators also need knowledge of the specific markets in which they operate. This local expertise ensures that estimates are not only accurate but also reflective of the market’s unique materials, labor costs, and regulatory requirements.
Estimating as a Balance of Competition and Profit
An effective estimator’s primary goal is to deliver estimates that are competitive yet profitable. They must integrate the cost of materials, labor, and equipment along with a reasonable profit margin, all while ensuring the estimate is competitive with other firms. This requires deep expertise, intuition, and a comprehensive understanding of market conditions and construction practices.
Estimating is as much an art as it is a science. In the hands of a skilled estimator, it guides construction companies toward successful projects, growth, and profitability.
Continuing from our exploration of the essential skills an estimator must possess, we see that an estimator’s job goes far beyond crunching numbers and calculating costs. An effective estimator must be versatile, balancing technical knowledge with communication, software proficiency, and an eye for detail—all while handling high-pressure situations with confidence. Here’s a deeper look into these skills and how they contribute to a company’s success:
1. Communication Skills: Building Strong Vendor and Subcontractor Relationships
An estimator is often a liaison between a construction company and its vendors and subcontractors. They need to be persuasive to secure the best bids from suppliers and subcontractors, ensuring competitive pricing for every project. Communicating clearly about pricing needs is crucial, as is conveying the specific responsibilities of each party involved when the project is awarded. This can take the form of purchase orders, subcontracts, and direct communication with on-site superintendents. In some cases, estimators may even present their estimates directly to owners, making good presentation skills a valuable asset, while written communication skills are essential for creating compelling proposals.
2. Proficiency with Software and Technology
Modern estimating requires strong computer skills, as estimators use a variety of digital tools to streamline their work. Commonly used software includes Excel for data analysis, On-Screen Takeoff for quantity takeoffs, and other specialized estimating programs. These tools help estimators efficiently calculate costs and quantities, produce reports, and collaborate with team members on project documentation. Additionally, proficiency in word processing programs is essential for preparing contracts, proposals, and other documents that formalize agreements and proposals.
3. Detail Orientation: The Key to Accuracy
Estimating is a precision-driven task, and even the smallest oversight can lead to costly errors. Estimators must examine every detail, ensuring that all specifications are fully understood and accounted for. Missing key information—like an unusual concrete mix or mistaking half-scale drawings for full-scale—can turn a well-calculated estimate into a financial setback. Being detail-oriented also involves double-checking quantities, unit costs, and other essential metrics to avoid oversights that could harm the project’s profitability and the company’s reputation.
4. Decision-Making Under Pressure
Bid deadlines are often intense. With numerous bids from vendors and subcontractors arriving just before the deadline, estimators must make rapid decisions, incorporating last-minute pricing while staying accurate. This requires not only quick analytical thinking but also a willingness to trust their instincts and expertise in the face of limited information. Poor or delayed decisions in this fast-paced environment can mean lost bids or, worse, a project that runs over budget and turns unprofitable.
5. Commitment to Professional Development and Continuous Learning
Estimating is a field where ongoing learning can make a significant difference in performance and career progression. Estimators who actively seek improvement—by joining professional organizations like the American Society of Professional Estimators (ASPE), attending seminars, and studying industry literature—enhance their skills and stay updated on best practices. This commitment to professional growth benefits not only the individual but also the entire company by contributing to better, more competitive estimates.
The Art of Estimating: Mastery through Practice and Principles
Estimating, with its many variables and unknowns, is often viewed more as an art than a science. Because costs can vary and unforeseen challenges can arise, developing accuracy in estimating requires a blend of technical knowledge, intuition, and experience. Becoming a skilled estimator is a gradual process, similar to learning a musical instrument. Practice is essential, but practicing without good habits and foundational knowledge can cement poor techniques. Thus, the adage “practice makes permanent” rings true here—effective estimating demands a solid grounding in its core principles.
If you aim to become a proficient estimator, consistent practice, thorough study, and an understanding of fundamental estimating concepts are vital. Here’s a structured approach to help you build strong estimating skills:
1. Read Each Chapter Carefully
Each chapter in this book introduces you to key principles of estimating. Take your time to understand each concept deeply, as a solid foundation will be crucial for handling real-world projects with confidence.
2. Verify Example Problems with a Calculator
As you go through example problems, use a calculator to check each step of the math. This process will reinforce your understanding of how quantities and costs are calculated, giving you a better grasp of the methods involved in estimating.
3. Master the Five Quantity Takeoff Methods
Chapter 4 discusses five essential methods for determining quantities: counted items, linear components, sheet and roll goods, volumetric goods, and quantity-from-quantity goods. Make sure you understand each method thoroughly. As you encounter different problem types, keep track of which method applies to each and how these methods are used in practical scenarios.
4. Refer to Project Drawings for Realism
When working on example problems based on the provided project drawings (such as the garage drawings in this book), take the time to analyze the drawings and try calculating similar material quantities yourself. Though minor differences in rounding may occur, practicing with real drawings will improve your spatial and quantitative skills, critical for accurate takeoffs.
5. Complete Computer Exercises and Customize Sidebars
Modern estimating is often conducted using digital tools. Complete all the computer-based exercises to become familiar with estimating software and tools, like Excel. Take this further by customizing templates and sidebars to fit your specific estimating needs. This will help you build efficiency and accuracy in the software you’ll be using daily.
6. Solve All Chapter-End Problems
Working through the problems at the end of each chapter gives you hands-on practice with estimating. These problems are designed to test and reinforce your understanding of each chapter’s content. If possible, ask an experienced estimator or instructor to review your solutions, as feedback can help you identify and correct any mistakes.
7. Prepare Complete Project Estimates
The book’s Appendix G includes projects like the Johnson Residence and West Street Video. Preparing comprehensive estimates for these projects offers valuable practice in handling real-world scenarios. When possible, seek feedback from others to fine-tune your approach and learn from their insights.
8. Seek Out Practical Experience
Practical exposure is invaluable. Volunteer to assist seasoned estimators on actual estimates whenever possible. Observing their methods and asking questions will give you insights beyond textbook knowledge. Engaging with fellow estimators to discuss challenges and best practices will further enhance your skills.
A Commitment to Lifelong Learning
Estimating, as a field, is continually evolving with changes in technology, materials, and market demands. Just as any craft requires time and dedication to master, learning to estimate is a journey that takes time, patience, and commitment to growth. By combining study, practice, and continuous improvement, you can develop the skills necessary to excel as an estimator, balancing the demands of accuracy, efficiency, and adaptability in this rewarding profession.