How to Write an Estimate for Construction – A Step-by-Step Guide

Have you ever faced difficulty answering questions about the scope and cost of the construction work to a new client in initial conservation? If yes, you’re not the only person. Eating this piece of cake requires time, knowledge, and experience. 

Construction business can be tricky. In the same way, its estimation is also a challenging task and requires a lot of paperwork. It is okay if you don’t know how to write an estimate for construction. This guide will help you write a construction estimate to win more bids and get projects.

What is a Construction Estimate?

Before going on to write a construction estimate, you must first understand construction estimates. Just imagine you want to buy a car. What would you do? 

Just go to a car showroom and buy one. 

No. You would do planning before making any decision. For instance, you would consider everything from car model, price, budget, and specification.

In a similar vein, construction estimates let you plan a building project. It also helps to determine the materials that will be needed in the project, the cost of these materials, and estimate the project’s overall cost. 

In short, it is an estimated cost associated with any construction project. According to a report, the global construction estimation market was valued at $898 million and is expected to reach $1117 million by 2029. 

Unbelievable? Yes, it is a vast market. So, could you not take it lightly?

Writing a successful construction estimate helps the clients grow their business and enables you to excel in your business field too. Below are some crucial steps to answer your question, “How to write a construction estimate?”.

• Get a Detailed Scope of the Project

Understanding the project’s scope and gathering all essential information are the first and foremost steps for writing an estimate for construction. You can only write a construction estimate if you understand the project entirely.

So, when you meet with a client, make a detailed list of all necessary questions. Like, 

• What type of construction project does the client want to start?
• What services do you offer, or do you need any subcontractor?
• How much will the cost be?
• Do your clients want to complete the payment or break down the cost?
• What is the completion date, and what are the client’s expectations?

After getting all the essential information from the client, you must evaluate the construction estimate components.

• Evaluate Essential Components of Estimate

We know you’re curious to get to know about “how to write an estimate for a construction job?”. But before writing it, you must clearly understand its components.

To create a good estimate for a potential client, you must put all the correct elements in it. The best way is to provide as much information as possible to help clients make an informed decision. Generally, a good estimate should include:

• Details of the work that you’ll be doing
• An estimation of the material that will be used
• Number of labor that will be involved with its cost
• Total cost of the project
• Payment method and terms and conditions
• Company’s contact information

There may be other things that you can add to your construction estimate as per the client’s requirements. 

• Use Advanced Estimating Software 

Luckily, there are various technology advancements available that a business contractor can use in estimating. Some of the software is developed in such a way that it helps to build up a database of construction costs per company. This software makes the auto-generating new estimating incredibly simple.

In addition to this, some integrated advanced financial software can improve your overall estimating process. With the help of this accurate and precise software, you can organize your expenses, store your data, and manage your books efficiently.

• Determine Cost and Markup

Without any doubt, your burden will be significantly reduced after utilizing the estimating tools and software. But there is something that you have to do by yourself, like calculating costs and markup. 

Firstly, you have to calculate the material cost for your client’s project. It involves multiplying the unit cost by the total quantity of material that will be used. Remember to add the material waste!

Next is to estimate your labor cost. This will be calculated by determining how much time each task will take and how much workforce will be needed. After selecting the figures; multiply them with average labor wages. Don’t skip the equipment cost and make a list of all equipment and tools that you’ll need.

Finally, calculate the markup cost that you plan to add to your unit cost on a project. You can understand this by a simple example. For example, consider the selling price of a product is $10, and the cost to produce is $7. Then, the markup is 43%. But there is no need to show your markup percentage to the client. It is something that looks great behind the scenes.

• Write up an Estimating Document

Once you gather all the essential information, understand the project’s scope, and calculate the estimated cost, it’s time to write up all these in documentation form. Turning your estimate into a successful bid proposal includes many strategic steps, and each one is critical for your proposal’s success. Here is a list:

• Write a Project Overview

At the start of the estimate document, write a summary of the project, including its scope, objectives, and any possible associated challenges. This document illustrates to clients that you have an understanding of the project.

•  Itemize Costs

Provide a detailed breakdown of costs and itemize each of them for transparency. This list helps clients to understand where and why their money is being spent.

• Add Project Timeline

Add a project timeline with all key milestones and provide a clear picture to the client of the project’s completion date and progressions.

• Outline the Team Structure

Explain who will work on the project in the estimate document, their expertise, and qualifications. This point ultimately demonstrates your team’s competence and reliability.

• Include References and Testimonials

Add past completed projects and testimonials in a similar scope to increase your credibility.

• Specify Payments Terms

State your payment terms and conditions. Ensure that they are all fair and realistic to make good clients.

Additionally, use simple language and drawings to make this document professional and authentic. This document highlights your business and will tell the client you’re the best choice. So, make it impressive!

• Revise the Document

Revising and fine-tuning the construction estimates is crucial to ensure all assumptions and project details are correct. This revision also gives you the confidence that all the base cost estimations you’ve made reflect the work scope and the schedule.

The revision also ensures no double counting of material and no missing components. This step is critical for your credibility in front of clients, as any small blunder can become a reason to lose your new client. 

• Address Possible Challenges 

Construction estimators must complete this critical step in drafting their construction estimate documents. Before starting his construction estimation, the estimator must tell the client about the possible challenges and pitfalls regarding the project. So, at the end of the day, when the client meets with these pitfalls, he’d not blame the estimator for not informing him.

These challenges and pitfalls include poor project performance, shortage of labor, shortage of material, inadequate risk management, slow production process, safety issues, and many more. 

All of these challenges and pitfalls are out of your hands, as, of course, at the time of estimating, you don’t know what will happen in the future. So, address these challenges to clients in the estimate document or one-to-one meetings.

Conclusion

A true mastery of details is the quality that differentiates good businesses from ordinary ones. To take your construction estimation business to the next height, you have to invest time in understanding the process of providing accurate estimation.

Even though estimating looks like another step in getting new business, your company must consider this critical step. This crucial step provides you and your future client with an accurate financial picture of the project.

We hope that after reading this blog, you get your answer on how to write an estimate for construction. We’ve mentioned some steps above that will help you save time, resources, and money. In addition, you could increase trust and loyalty with your customers through these steps.