Construction cost estimation is the primary aspect of any project. This includes many components and is very important for forecasting the budget of the project. Based on your cost estimation only, you will be able to arrange finances.
Not to worry, these days automated software for estimation is made available by companies like Buildxact.
The following are some elements involved in cost estimation.
- Quantity of materials: This is the primary component that will go into the estimation. The cost estimator identifies the quantity of materials required for the project. Though the exact quantity cannot be arrived at, it gives an estimate so that the project is not hindered by any shortage. The type of project, the cost of raw materials, and the source of supply are all crucial in determining the quantity.
- Man hours needed: It is essential to estimate the number of hours of work that will be put into the project. The actual fieldwork is done by the labor involved. So in cost estimation, this gains a lot of importance. Different stages of the project require different levels of productivity. Between stages of the project, sufficient rest must also be provided. The cost estimator takes into account idle time too. Some part of the construction is very complicated while some others are not. So depending upon the nature of work, labor participation will be decided.
- Labor rate: The cost estimator will help to arrive at the wages to be paid. Basic wages based on hours spent are normally calculated. Any extra work done may include overtime payment. While estimating labor cost, the estimator takes into account the taxes involved also. An increase in the duration of the project will lead to an increase in the labor cost. A provision for deviation should also be made in the estimation.
- Material cost: The cost of materials involved in construction is also to be estimated. This largely depends on the source of procurement. If procured from a place that is far away, the transportation costs also add up along with state taxes. Material cost estimation becomes difficult in fluctuating market conditions. The price tends to vary from the time of estimation to when the actual project is executed.
- Equipment cost: All equipment is not bought for a specific project. Many of them are rented. The rental cost also adds to the equipment cost. The cost estimator includes this too. The equipment may have to be transported from a different place. So, transport cost also gets included. The duration of usage decides the cost. If due to circumstances, the timeline gets extended, then you have to pay extra cost for the same.
Cost of sub-contractor: Some parts of the project may be outsourced and so the cost estimator should also include costs involved here.