Whether you are a property owner or a contractor, you want to have a clear and accurate forecast of how much a building project will cost and how long it will take before you begin.
Every construction project has a unique set of variables, from the specifics of the site to the building’s design and how tight the labor market is for specific vendors at the time and in the place you need them. Underestimating and overestimating can both have negative consequences.
Since a cost estimate can only be accurate with a well-defined project plan, it is a best practice to create multiple estimates during the pre-design and design phases. These become more accurate as the project’s level of definition increases.
These estimates, prepared during a project’s pre-design and design phases, start with an order of magnitude estimate or screening estimate, which determines which construction methods and types are most feasible. Then a preliminary estimate, or conceptual estimate, is prepared based on the schematic design. Then comes the detailed estimate, or definitive estimate, which is based on design development. The last of the design estimates is the engineer’s estimate, which is based on the construction documents.
Contractors prepare bid estimates when bidding to construct the project. Contractors will draw from a number of data points to prepare their estimates, including direct costs, supervision costs, subcontractor quotes, and quantity take-offs.