Construction Cost Estimation Importance in Project and Bid Management System
Construction cost estimation importance can be better defined with its application in Bid and project management system. Cost estimation in project management is the procedure to predict the cost and additional funds which are essential to complete a project within a specified range. The project site is never finalized until the project feasibility report has been done. At that point, professional construction estimators calculate all resources which are required for the project including the total budget of the project.
Generally, the construction cost estimating is categorized in 5 different levels which are based on one of AACE’s recommended practices, shown below.
Construction contractors said that a good estimate not only has a project cost associated but it also has all other data relevant to the project evaluation of the expense consuming items and it provides a tradeoff among the possible outcomes.
In the initial phases of the project, several approaches are implemented to build estimates on behalf of available data. In beginning the processes are involved:
- Capacity Factoring
- Equipment Factoring
- Parametric Estimating
Then after the selection of the best budget estimate path the project moves to its execution phase.
If the software is used as the project cost management system which comprises parts of project controls then do not avoid the execution changes after the approved budget through estimating data.
Because the designed structure of software compels any changes to be rinsed out and be certainly discriminated from the foundation. So to create exact and dynamic results we have to update the execution values of a cost estimate.
Why Project Cost Estimation?
- The process of construction estimation project and bid management systems is the process to identify the total project cost and gives alternatives choices if new conditions are essential to be added.
- The correct project cost management plan can provide expected benefits against estimated costs.
- Project cost control can support in right investment decisions
- Contractors can get alternative plans through proper construction estimation and material takeoff
- Cost validation can give more strength to determine the construction project expenses.
- Cost budgeting in the project management system comprises the estimation of the cost by setting a determined budget and controlling the real costs. The comparison of real cost and estimated cost show us the performance of that project which can define cost control, project management, and bid management.
Types of Estimates
There are several tools and techniques are used to accumulate estimates which can change directly or indirectly due to the type, phase, and size of a project.
Cost estimation and takeoff is the need for almost every project. It is the liability of a professional cost estimator to diagnose the total cost to define a project budget. There are three main types of estimates which are listed below here:
Accuracy. Huge infrastructures, industrial or mining projects use such estimation models. Many industries use projects to estimate an extensive level to complete the project in a defined budget and time. Furthermore, accuracy based estimates have five types:
- Order of Magnitude
- Feasibility
- Preliminary
- Substantive
- Definitive
Source of Data. There are four methods which are representing source-based estimates in the project management system
- Expert Judgment
- Analogous estimating
- Parametric estimating
- Three-point estimating
Estimating Techniques. It has two types of techniques which are:
- Top-Down estimating
- Bottom-Up estimating
Contractors are using a lot of advanced tools but still, an experienced construction cost estimator is very essential to define the quantities, cost and hours. This process requires expert judgments to get positive results.
Construction Cost Estimation Importance
Affordability is the most important section of any structural project. On the other hand, an independent cost estimating service is very significant for the construction of a building or for a project of renovation.
An independent estimate can provide a standard price, which we can use to test the builder’s given price and material takeoff. This is how you can measure the affordability of your building project and can set a budget.
The role of a commercial building cost estimator is to establish cost by rendering the design in financial conditions. The cost accuracy in building estimate depends on three key points:
- Scheduling (Organizing the list of all tasks to finish the works)
- Take-off (measurement and tasks quantification)
- Costing (labor and material rates implementation)
The building cost estimate and accurate calculation can give a lot of benefits. If you know the local or global market rates of labors and materials so you can control a lot of things because of this useful information.
World Estimating is providing extraordinary and accurate estimating solutions to all clients. We are the best Construction Cost Estimation Company in New York, USA. We believe in long term business relations so the client’s satisfaction is our first and last priority.
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