Estimates & Bids
JMS-LLC Estimating – Art & Science
In the construction industry, the importance of construction estimating is pivotal. Successful project completion is primarily based upon the calculations made for construction estimation. If estimation is not done properly, a completed project may have much more escalated costs than budgeted earlier, as it has been based on incorrect estimates. This would be due to budgeted estimates having been calculated on the lower side.
Construction Cost Estimating is both Science & Art.
It is a science because a systematic method has to be adopted to create accurate construction estimates. An experienced estimator will first formulate a detailed estimation plan after all factors of the technical and commercial requirements of the construction project are considered and determined. Next, the estimator will calculate the material and labor requirements for the construction project in terms of the detailed material lists and man-hours of labor. Statutory requirements, location, logistics, price escalation, time lines, weather factors, various contingencies, and special client requirements must also be considered and calculated.
To determine various material costs, the estimator will multiply estimated quantities by the matching unit costs derived from supplier quotes to determine total estimated material costs. Most suppliers offer 30-60 day quotes and the estimator must factor in a realistic percentage for price escalation based on the project time line. Labor costs are based on the number of man-hours and the nature of the work performed by each skilled worker. The estimator will also factor in the added costs of construction equipment, scaffolding, utilities, worker housing and per diem, equipment maintenance, etc. Historical data and past experience is used to calculate contingency expenses, basically utilizing the practical knowledge a seasoned professional accumulates over time.
In addition, fixed costs, overhead, costs of working capital and financing must be calculated and included in the estimate. Total everything listed thus far and to be ultimately safe, a margin for project cost escalation should be added to the total. And finally, profit margin must be considered and added to achieve a grand total, which is when the ‘estimate’ becomes a ‘quote’.
Construction estimating is also an Art. The art lies in keeping the estimates accurate yet realistic enough to win the contract!
JMS estimators have ‘been at it a long time’. It’s a tedious process, our methods are ‘old school’ and very little estimating software is used. We prefer to use the architectural and structural drawings to mentally build the project in ‘our head’, all while carefully calculating and determining every material type and quantity. Next, the costs of labor to install are estimated, which is another variable, relying heavily on the estimators experience. Lastly, every line item is added to summarize the total costs and formulas based on our own experience are applied to check for possible errors and omissions.
And because we are so confident in our construction estimating abilities, we are able to GUARANTEE our material takeoffs. Compare this to a material supplier who will issue a price quote for a limited time period based on an estimate they do not guarantee. The difference is easy to recognize and a major reason to carefully consider JMS proposals.
