When construction companies fail to make a profit or lose money on a job, it is usually the result of poor estimation practices. Construction estimation is one of the key determinants on whether or not a project can be profitable, and errors can be quite costly. It is a process that should be handled with precision, and managers should be wary of the numerous pitfalls that can cost their company over the life of a project.
These are some of the most common construction estimating errors and how to best avoid them.
Not Looking at Every Angle
It’s good practice to take a top-level approach to the project and site, but you should also be concerned with the specific line items, as those costs can really add up.
Additionally, it pays to focus on where your experience lies, and who on your team may be able to offer valuable insights into areas that you aren’t as familiar with. If you are experienced with materials handling, but not so much with equipment costs, then bring in someone who is more familiar with that aspect of the job. By accepting the advice from your entire team, you will be able to predict costs as closely as possible.
Don’t Forget About Permits
The costs of obtaining permits and inspections are a part of the process as well. Don’t forget to contact the local municipality to obtain the necessary documentation for the job. Also, building codes and regulations must be taken into account in order to avoid incurring fines throughout the duration of the job.
It’s necessary to consider permits as an expense, but it’s also important to consider the other element that they can cost you: time. Don’t get caught off guard by a waiting period that costs you big money. Ensure that you’re scheduling, rentals, labor force, and budget are all ready for the ways that waiting for receipt of a permit can impact the job you’re taking on.
Brushing Aside Labor Costs
It’s easy to focus too heavily on permits, materials and other factors of the project, all the while forgetting about one of the most hard to predict factors: labor costs. The price of labor is never set. It is always commensurate upon the professionals you will need to bring onto the job site, as well as their experience.
This can be a tricky cost to predict, so you will want to be as detailed as possible when it comes to which types of workers you will need onsite, for how long they will be there and what their average rate of pay usually costs.
As you move forward, know that keeping detailed records can help you to better estimate labor costs in all of your future projects. No two projects are exactly like, but having a firm foundation to base your estimates off of is far preferable to taking a random stab in the dark.
Keep All Your Information in One Place
One of the best things that an estimator like you can do is stay organized, especially when you are working across multiple projects at the same time. A good construction estimating software can be a game-changer when it comes to managing multiple projects at once. Plus, it can help you determine which projects are worth taking and which are worth passing over.
Sage Software is easy to implement, and learning the ropes of the program can help you make the best choices for your company. Contact us today to learn about how Sage software can help you avoid estimating errors in the future.