March 1, 2021

Can you describe what goes into creating an initial estimate for a construction project?

Jim Olson, AIA, NCARB
Director of Business Development-Southern Wisconsin

An early stage estimate of the project cost differs from a construction budget, as it relies on the contractor’s past experience, and involves some art and some science. It allows the Owner an opportunity to organize funding sources and plan actual expenditures in advance.

When information and plans may not be complete, the estimator must blend known data, such as a building’s size and scope, with other details based on unit costs, assumptions, historical data, and best judgment. As the design is refined, the final budget is based more on solid information.

When creating a preliminary estimate, the estimator first must assess the level of detail of the plans to determine the best method of approaching the estimate. He’ll then assess the site and existing conditions, considering overhead power lines, presence of hazardous materials, site grades, etc. that will require additional scope and labor.

Estimators next must prepare accurate quantity take-offs based on the plans, determining the materials needed and factoring seasonal effects and price trends. The estimator will then extrapolate the associated labor needs, wage rates, and equipment needed to install. Finally, general project requirements such as permitting, insurance and design fees are also incorporated.