8 Common Construction Estimating Mistakes (2023)

Estimating is one of the most difficult jobs in construction. It is also one of the most important. Profits are typically won or lost based on how accurate your estimates are and how closely they match up to your final project costs.

So, how accurate are your estimates? A survey from QuickBooks and TSheets shows that nearly a third of construction companies make less profit than expected based on their estimates. That’s not too surprising given that 40% of respondents aren’t that confident in their estimates.

Chances are that one bad estimate on a project that loses money won’t put you out of business. String together a couple of unprofitable projects and you might find yourself closing the doors for good. A quarter of all respondents indicated that it would only take two or three bad estimates to ruin their business.

Getting accurate estimates is no easy task and a good estimator is worth their weight in gold. There are a lot of variables that must be accounted for to deliver accurate estimates on every project. Everything from nailing down accurate labor and material costs and understanding workers’ productivity, to getting precise takeoff measurements and factoring in items like risk contingencies and overhead must be nearly perfect.

One or two mistakes could throw your estimates completely off and will result in a bad bid, one that you will either lose because it’s too high or win because it’s so low that you won’t make a profit. Here’s a look at some of the most common construction estimating mistakes and how to prevent them.

(Video) COMMON CONSTRUCTION ESTIMATING MISTAKES AND HOW TO AVOID THEM [ENG SUB]

Not Conducting a Site Visit

Most bidding opportunities provide prospective bidders with a chance to attend a pre-bid meeting and visit the jobsite. Often, these are mandatory in order to submit a bid and with good reason. No two jobsite are identical and unknown site conditions can cause unexpected, and costly, issues when construction gets underway.

When conducting a site visit you’ll want to take measurements, inspect the topography, and take some soil bore samples if that hasn’t already been done. You also want to look at road access and traffic to the site, determine how much space there is for staging, equipment and materials delivery and storage, and what environmental protections will be needed during construction.

Be sure to have any subcontractors whose work may be impacted by the site condition make a visit as well. This allows them to assess the site for themselves and factor in any additional costs that existing site conditions might present into their estimates and bids.

Inaccurate Takeoffs

Your takeoffs lay the groundwork for your estimates. If they’re incomplete or incorrect it can really screw up your estimates. Accurate takeoffs help you determine the exact quantities needed for all your materials and supplies. They are also required to determine your labor and equipment needs. If you miss items during takeoff or don’t get accurate measurements, you’ll either overestimate the project and not win the bid or you’ll underestimate and risk winning a project that won’t be profitable.

Takeoff software is a great option to ensure that you get accurate measurements for your estimates. It’s also a huge time saver over doing takeoffs manually. These tools are only as good as the user, so it’s important that estimators get the proper training and are comfortable using the software.

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Labor Costs

Labor costs are probably the hardest item to nail down accurately when it comes to your estimate. In that survey from QuickBooks and TSheets, construction business owners say “labor costs are the hardest to estimate and are ranked as the most expensive project cost.” There are several variables in play when it comes to estimating labor costs including the number of available workers for the project, their experience level, rate of pay, and productivity.

A good, experienced worker may make a higher salary but are more productive and can get more done in less time than a worker with less experience who makes a lower salary. Focus on determining how many man-hours it takes to perform a task to use as a guide when estimating labor costs.

Don’t forget to determine whether prevailing wages are required on the project, which may or may not be different from what you typically pay each worker. Always keep records of job costs, especially labor costs, as you can use this historical data for more accurate estimates on future projects.

Materials & Supplies Costs

Building materials and supplies are another big cost for construction projects and rank high in being hard to accurately estimate. Prices for materials can fluctuate dramatically from the time you start an estimate to the time that construction commences. Demand for materials is high and uncertainty over tariffs and their impact on prices are making it even harder to get estimates right.

Establishing relationships with your building product manufacturers and suppliers has its advantages. Not only can they help you lock in accurate prices while you put together your estimates, but they can also steer you to alternative materials that might be a better fit for your project.

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Locking in prices for your materials is crucial but don’t forget to make sure that you provide quantities to your suppliers. This allows them to ensure they can fulfill your order and deliver on time. Costly delays caused by workers not having the materials they need is embarrassing and will hurt your bottom line.

Failing to Assess Risks & Creating Contingencies

Every construction project comes with risks. Completing a risk assessment should be part of your estimating process. For one, it helps in your bid/no-bid decision-making. A good estimator can identify a project that is too risky and pass on submitting a bid. It also helps to determine how much to estimate for contingencies.

Failing to assess risks and build in contingencies to your estimate will be detrimental when things go wrong. The bigger the risk, the more time you should spend on determining ways to mitigate them and how that could impact your costs. You likely won’t be able to recoup the losses that occur should an unforeseen issue crop up once construction is underway.

Making Uneducated Guesses

Don’t gamble on your bids by making uninformed or uneducated guesses in your estimating. Tracking job costs on every project is a great way to ensure your estimates, and ultimately your bids, are as accurate as possible.

Job costs for labor, materials, and equipment should be based on the most current data available. Make sure to factor in overhead costs and soft costs such as those for permitting and inspections that can often be forgotten or neglected. You also want to make sure that you have the workforce and equipment available for the project. Having to unexpectedly subcontract additional work or rent extra equipment can quickly eat up your profits or wipe them out completely.

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Not Reviewing Your Work

Everyone makes mistakes. Estimators are no exception. Small estimating errors or omissions might not make much of an impact but big ones like omitting scope items, inaccurate measurement, or using the wrong units of measure can spell trouble. Take the time to carefully review your work or have another person on your estimating team review your estimates. Double-check your measurements are accurate, and your math is correct for all your costs.

Give yourself adequate time to put your estimates and bid together. Rushing through your work just to meet a bid deadline will only result in mistakes that will cost you in the end, so take the time to get it right the first time. Profitability on a project is almost always determined by your estimates. If you underestimate your bid, there’s usually no amount of cost-cutting measures that will be able to make up for the shortfall.

Not Reviewing Subcontractor Estimates

If you’re a general contractor, chances are you are going to have to subcontract out some of the work to trade contractors. Be sure to review their bid estimates and proposals thoroughly. Make sure they understand exactly what aspects of the projects you are wanting them to bid on and complete. This will avoid duplication of work in their estimates that are being covered by you or another subcontractor.

Accurate estimates start with accurate takeoffs. ConstructConnect helps you find the right projects and complete fast and accurate takeoffs for any construction business.

8 Common Construction Estimating Mistakes (1)

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FAQs

What are the common errors in costing and estimating? ›

Conceptually, there are three major types of estimating error. These include quantity errors, rate errors, and errors of omission. Most companies underestimate how much these errors are costing them.

What are the 5 principles of estimating? ›

Principles Of Estimating
  • Tender schedules.
  • Non-Price Criteria & Priced Criteria.
  • Direct Pricing & Indirect Pricing.
  • Estimating (rating) methods including First Principles, Second Principles & Bench Marking.
  • Cost Planning.
4 Jun 2019

What are the five 5 main stages of an estimate? ›

Let's take a more in-depth look at each level in the construction estimating process.
  • Level 1: Order of magnitude estimate.
  • Level 2: Schematic design estimate.
  • Level 3: Design development estimate.
  • Level 4: Construction document estimate.
  • Level 5: Bid estimate.

What are the most common cost estimating problems? ›

Top 5 challenges to cost estimating
  • CHALLENGE #1: Quantifying cost impacts. An engineer may need to reduce the cost of a component by 20% through design modifications. ...
  • CHALLENGE #2: Resource constraints. ...
  • CHALLENGE #3: Quality of available data. ...
  • CHALLENGE #4: Large number of organizations involved. ...
  • CHALLENGE #5: Consistency.
11 Apr 2016

What is standard errors of estimate? ›

The standard error of the estimate is the estimation of the accuracy of any predictions. It is denoted as SEE. The regression line depreciates the sum of squared deviations of prediction. It is also known as the sum of squares error. SEE is the square root of the average squared deviation.

What are 4 techniques of estimation? ›

Major project estimation techniques
  • Top-down estimate. ...
  • Bottom-up estimate. ...
  • Expert judgment. ...
  • Comparative or analogous estimation. ...
  • Parametric model estimating. ...
  • Three-point estimating.
27 Apr 2022

What are the 4 steps to accurate estimation? ›

Use these steps to make accurate time estimates:
  1. Step 1: Understand What's Required. Start by identifying all of the work that needs to be done within the project. ...
  2. Step 2: Order These Activities. ...
  3. Step 3: Decide Who You Need to Involve. ...
  4. Step 4: Make Your Estimates.

What are the 3 main types of estimates? ›

There are three types of estimates that can be used to communicate costs to clients, including ballpark, budgetary, and definitive.

What are the two types of estimation error? ›

The total error of the survey estimate results from the two types of error: sampling error, which arises when only a part of the population is used to represent the whole population; and. non-sampling error which can occur at any stage of a sample survey and can also occur with censuses.

What are some common problems with project cost estimation? ›

5 common project estimation mistakes
  • Confusing estimates and targets. Targets are an 'ambit' position often used to frame tenders. ...
  • Underestimating the effect of dependencies. ...
  • Unbalanced resources across the project schedule. ...
  • Ignoring the things you can't change. ...
  • Misapplying risk and contingency.

How do I become a better construction estimator? ›

Construction estimator skills: How to be a good estimator
  1. Math.
  2. Organization.
  3. Data Analysis.
  4. Critical Thinking.
  5. Detail Oriented.
  6. Effective Communication.
  7. Technical Skills.
  8. Time Management.
22 Feb 2021

What are the six levels of construction cost estimates? ›

There are five main types of construction cost estimates: preliminary, detailed, quantity, bid, and control. Each is used for a different purpose at a different time in a project lifecycle.

What skills should a estimator have? ›

Key skills for estimators
  • Numeracy.
  • Attention to detail.
  • A methodical approach to work.
  • Commercial awareness.
  • Teamworking, relationship-building and influencing skills.
  • Negotiation.
  • Communication.
  • Organisation and time management.

What is a Level 4 estimate? ›

Class 4 estimates are generally prepared based on limited information, and subsequently have wide accuracy ranges. They are typically used for alternatives or concept screening, determination of feasibility, concept evaluation, and preliminary budget approval.

What are 3 things a cost estimate must include? ›

These include the project's scope, timelines, and budget.

What is the most commonly used method of estimation? ›

The most commonly used method in three-point estimation technique uses the Program Evaluation and Review Technique (PERT) model. Three types of estimates are determined before using their average to arrive at the average cost estimate.

What is the most accurate estimation technique? ›

Detail Estimating

This approach is closely related to scheduling, planning and resource allocation and is both time-consuming and costly. It requires a good knowledge of the activity and also needs to have a reasonable level of definition. It also results in the most accurate estimates.

What are the 3 major types of error in error analysis? ›

Researchers have identified three broad types of error analysis according to the size of the sample. These types are: massive, specific and incidental samples.

What is a high standard error? ›

A larger standard error indicates that the means are more spread out, and thus it is more likely that your sample mean is an inaccurate representation of the true population mean.

How do I calculate error? ›

How to calculate error
  1. Subtract the actual value from the expected value. First, subtract the actual value from the expected value. ...
  2. Divide by the actual value. After you find the difference between the actual and expected value, you can divide the result of the calculation by the actual value. ...
  3. Multiply the value by 100.

What is PERT calculation? ›

PERT is determined using three points: Optimistic (O), Most Likely (M), and Pessimistic (P). PERT combines probability theory and statistics to derive a formula for the average activity from the three-point estimates. PERT estimate formula is: (O + 4M +P) / 6.

What are the two methods of estimating? ›

Types of estimation methods
  • Top-down estimation. ...
  • Bottom-up estimation. ...
  • Three-point estimation. ...
  • Analogous estimation. ...
  • Parametric estimation. ...
  • Expert judgment.
18 Apr 2022

What are the 3 different ways to estimate the project? ›

3 Ways to Estimate Projects for Project Managers
  • Analogous Estimation.
  • Bottom-up Estimation.
  • Parametric Estimation.
15 Jun 2015

What are the two main method used to building estimate? ›

Following are the three different methods used for estimating building works: Long wall – short wall method. Centreline method. Partly centre line and short wall method.

What are the three important characteristics of a good estimator? ›

Statistics are used to estimate parameters. Three important attributes of statistics as estimators are covered in this text: unbiasedness, consistency, and relative efficiency.

What is the three-point estimating technique? ›

Three-point estimating is a management technique to determine the probable outcomes of future events based on available information. The term refers to the three-points it measures: the best-case estimate, the most likely estimate, and the worst-case estimate.

What are Type 1 2 and 3 errors? ›

Type I error: "rejecting the null hypothesis when it is true". Type II error: "failing to reject the null hypothesis when it is false". Type III error: "correctly rejecting the null hypothesis for the wrong reason". (1948, p.

What is Type 1st and type 2nd error? ›

What are Type I and Type II errors? In statistics, a Type I error means rejecting the null hypothesis when it's actually true, while a Type II error means failing to reject the null hypothesis when it's actually false.

What makes a good estimation? ›

A good estimator must satisfy three conditions: Unbiased: The expected value of the estimator must be equal to the mean of the parameter. Consistent: The value of the estimator approaches the value of the parameter as the sample size increases.

What are the 7 most common reasons of why projects often fail? ›

7 common causes of project failure (and their solutions)
  • Unclear objectives. Problem: Your team isn't aligned on project goals, and there's no way to measure success. ...
  • Scope creep. ...
  • Unrealistic expectations. ...
  • Limited resources. ...
  • Poor communication. ...
  • Scheduling delays. ...
  • Lack of transparency.
22 Jul 2022

What are the top 10 reasons of project failure? ›

10 Reasons Projects Fail
  • 1) The Poorly Understood Business Case. ...
  • 2) Unsupported Project Management Culture. ...
  • 3) Scope Creep. ...
  • 4) Lack of Effective Leadership. ...
  • 5) The Accidental Project Manager. ...
  • 6) Poor Monitoring & Controls. ...
  • 7) Unreliable Estimates. ...
  • 8) No Risk Management.
1 Jun 2022

What are estimation problems? ›

There will be clues in the problem to let you know if estimation is a good option for solving that specific problem. Estimating means finding an answer that is an approximate answer. When estimating, your answer must make sense, but it does not need to be exact. You need to find an answer that is reasonable.

Is estimator a stressful job? ›

As estimators, your team is responsible for procuring new work for your construction company. It's a lot of responsibility and pressure, and as every estimator knows, the job can be stressful.

Are construction estimators happy? ›

Based on 635 responses, the job of Construction Estimator has received a job satisfaction rating of 4.02 out of 5. On average, Construction Estimators are highly satisfied with their job.

What are two traits of a good estimator? ›

In determining what makes a good estimator, there are two key features:
  • The center of the sampling distribution for the estimate is the same as that of the population. When this property is true, the estimate is said to be unbiased. ...
  • The estimate has the smallest standard error when compared to other estimators.

What are the 7 stages of construction? ›

Here's the process:
  • Step 1: Design. During this phase, the client places a project for bidding. ...
  • Step 2: Pre-Construction. ...
  • Step 3: Procurement. ...
  • Step 4: Construction. ...
  • Step 5: Commissioning. ...
  • Step 6: Owner Occupancy. ...
  • Step 7: Project Closeout.

What is P50 cost estimate? ›

P50 represents the estimate of costs such that there is a 50 per cent probability of the project being delivered within that cost estimate. This method can be used to address the optimism bias discussed earlier.

What are the 4 main areas of construction? ›

The four key types of construction include residential, commercial, industrial, and infrastructure, which covers nearly every construction project.

What tools do estimators use? ›

Estimation Tools and Techniques
  • Expert Judgment.
  • Alternatives analysis.
  • Bottom-Up Estimating.
  • Published Estimating Data.
  • Project Management Software.
4 Feb 2021

What is L0 and L1 estimate? ›

L0: Integer that's manually entered by management. L1: Calculated field to sum the L1 field on related Epics.

What is a Class 1 cost estimate? ›

Cost estimate classifications
Estimate classNamePurpose
Class 4IntermediateConcept study or feasibility
Class 3PreliminaryBudget, authorization, or control
Class 2SubstantiveControl or bid/tender
Class 1DefinitiveCheck estimate or bid/tender
1 more row

What is a Class C cost estimate? ›

Class “C”: A class “C” estimate is prepared when a project is at the “Preliminary Design” stage. Preliminary design is when the space program of a project has, for the most part, been developed but additional changes or additions to the program are still being made.

What are the common errors in costing and estimating write their causes and remedies? ›

  • 4 Common Cost Estimating Mistakes and How to Avoid Them. Estimating. ...
  • Forgetting to Visit Your Project Site. Inexperienced or highly confident contractors tend to overlook the importance of site inspection. ...
  • Surprises and Contingencies. ...
  • Ignoring Soft Costs. ...
  • Errors in Labor Cost Estimation.
10 Jun 2019

What are the three common errors? ›

Types of Errors
  • Gross Errors.
  • Random Errors.
  • Systematic Errors.

What are the three most common types of errors? ›

There are three types of errors: systematic, random, and human error.
  • Systematic Error. Systematic errors come from identifiable sources. ...
  • Random Error. Random errors are the result of unpredictable changes. ...
  • Human Error. Human errors are a nice way of saying carelessness.

What are two types of estimation error? ›

The total error of the survey estimate results from the two types of error: sampling error, which arises when only a part of the population is used to represent the whole population; and. non-sampling error which can occur at any stage of a sample survey and can also occur with censuses.

What are the 5 sources of error? ›

Common sources of error include instrumental, environmental, procedural, and human. All of these errors can be either random or systematic depending on how they affect the results. Instrumental error happens when the instruments being used are inaccurate, such as a balance that does not work (SF Fig. 1.4).

What are basic errors? ›

Some common errors are with prepositions most importantly, subject verb agreement, tenses, punctuation, spelling and other parts of speech. Prepositions are tricky, confusing and significant in sentence construction.

How many types of errors are there? ›

Generally errors are classified into three types: systematic errors, random errors and blunders.

What are the five 5 different types of error detection techniques? ›

Error Detecting Techniques:

Single parity check. Two-dimensional parity check. Checksum. Cyclic redundancy check.

What are 4 common types of code errors? ›

Today, we're going to talk about the seven most common types of programming errors and how you can avoid them.
  • Syntax Errors. Just like human languages, computer languages have grammar rules. ...
  • Logic Errors. ...
  • Compilation Errors. ...
  • Runtime Errors. ...
  • Arithmetic Errors. ...
  • Resource Errors. ...
  • Interface Errors.
18 Feb 2020

What are the general types of errors? ›

Types of Errors
  • (1) Systematic errors. With this type of error, the measured value is biased due to a specific cause. ...
  • (2) Random errors. This type of error is caused by random circumstances during the measurement process.
  • (3) Negligent errors.

What are the 5 errors that affect trial balance? ›

Trial Balance Accounting and Searching of Errors
  • Wrong totaling of the debit amounts and the credit amounts in the Trial Balance.
  • Error in the total of Subsidiary books.
  • Wrong posting of the total of Subsidiary books in the ledger.
  • Omitting an account balance in the Trial Balance.

What is compensation error? ›

Compensating error is when one error has been compensated by an offsetting entry that's also in error. For example, the wrong amount is recorded in inventory and is balanced out by the same wrong amount being recorded in accounts payable to pay for that inventory.

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