Estimating and

Bidding I
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Lecture 1
 Definition

Estimate
-an approximate calculation or judgment of the value,
number, quantity, or extent of something.
 Definition

Construction Estimate
-A construction estimate is used to forecast how much
it will cost to build the structure in your project plan.
Understandably, this is one of the most important steps
taken at the early stages of any construction project
management process.
 Purpose of Estimate

The purpose of an estimate has a different meaning to
different people involved in the process. To the owner,
it provides a reasonable, accurate idea of the costs. This
will help him or her decide whether the work can be
undertaken as proposed, needs to be modified, or
should be abandoned. To the contractor, it must
provide the cost of materials and labor to install the
project as well as make a profit
 Purpose of Estimate

The estimates help to get an idea about costing and plan
accordingly to complete the project efficiently.
A lot of times the costs often overrun the budgeting, so
it is crucial to have cost estimation before the job
begins. It helps to keep the estimates realistic and
holistic.
 Importance of Estimate

Estimates for construction help determine how much a
project is likely to cost and how much profit a
construction business can expect to make. You can also
utilise these estimates to ensure that you remain within
budget and are able to purchase all of the items you
require during the construction process.
 Importance of Estimate

Here's a closer look at some of the reasons why
building estimates are important:
 Predict profit margins
 Give accurate bids
 Keep the budget in check
 Determine the scale of the project
 Predict profit margins

It's possible to also predict your profitability using an
estimate for construction. Having this information
allows you to justify charging more than the project's
cost to generate a profit. To guarantee that you earn a
profit from your project, an ideal estimate for
construction includes all costs plus potential lost
supplies and materials.
 Give accurate bids

An estimate for construction also helps you to provide
clients with more precise bids or an estimate of how
much you may charge for a job. Customers like a
precise bid so they know exactly how much money to
pay for the job. You could reduce your bid price point
and attract more consumers by using a detailed
estimate for construction.
Keep the budget in check

Your estimate for construction assists you in
developing and maintaining a project budget. The
estimate serves as the foundation for your budget,
which most likely includes prices for other parts of
construction, such as supplies and permits. It's easier to
stick to your budget during the project duration if you
have an exact estimate to follow.
Determine the scale of the project

An estimate for construction can sometimes assist you
in determining the scale of the project. For example,
you may realise that certain materials are too expensive,
the project has become too large and the timeframe is
too tight, allowing you to make changes before work
begins. This is essential for determining how many
employees you can afford to hire.
What are the benefits of cost estimation?


The following are some of the advantages of cost
estimation:
 Better planning
 Risk mitigation
 Identifying issues
 Efficiency
What are the benefits of cost estimation?


Better planning
Accurate cost estimating allows you to plan the sub-
tasks needed to finish a task properly. You can more
quickly create a task breakdown structure and
guarantee that your project team sticks to the project
schedules.
What are the benefits of cost estimation?


Risk mitigation
Improper planning and unforeseen circumstances make
finishing the task on time and budget unfeasible.
Proper estimating allows you to account for both
expected and unforeseen expenditures, safeguarding
profit margins.
What are the benefits of cost estimation?


Identifying issues
Having a clear understanding of the tasks and
timescales at hand allows you to discover resource
shortfalls and recruit people as needed.
What are the benefits of cost estimation?


Efficiency
Proper planning aids in the completion of projects on
schedule and within budget. This strengthens the
relationship with the client and ensures that the builder
receives repeat business.
Advantages of Estimate

1. Estimate gives the estimated duration of the work.
2. The estimated cost of the work can be known from the
estimate.
3. More accurate estimates simplify the project.
Unexpected costs and blocked working capital can
therefore be avoided.
4. Properly guessed work is flawless, and projects are
completed quickly.
5. Various things related to that work can be made
available.
Advantages of Estimate
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6. Staff can be counted from estimates such as
supervisor, engineer, senior engineer, etc.
7. Work planning can be made easier with estimates.
8. The estimate is made keeping in view the previous
years so the mistakes made in the previous years can be
removed.
9. Materials can be ordered as required
Disadvantage of Estimate
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1. The estimate cannot communicate between labor and
supervisor.
2. Changing the method of estimation does not
maintain the quality of the material.
3. Good efficiency cannot be achieved with every task.
4. Certain types of overhead costs cannot be controlled.
 Conclusion

Before the construction begins budgeting is very
important. Once the construction starts it is more
important to keep a check on timely manner. A feasible
budget is vital for the success of any project. When
faced with the question of the budget the company has
to determine and analyze whether the approved budget
is sufficient to turn their vision into reality, which can
only happen with an accurate and well researched
construction estimate.
 Conclusion

If the projects go beyond the scope of the estimate,
clients will often have to provide for the additional
costs or sacrifice certain design elements. To avoid
these mishaps, it is vital for the clients to look for more
than costs and duration while reviewing bids and also
to spend the necessary amount of time during the
estimation period.
 Conclusion

Every project is meant to be created for achieving its
desired result. It is important to do the accurate
budgeting but it needs to be done by selecting what is
the best for the project.
In the end the essential part of any project is
profitability. Thus, using qualified cost estimators and
appropriate construction cost estimating services is
equally needed.