Construction is deemed a capital-intensive process since it entails the use of large amounts of capital in time, finance, and resources. An accurate estimate from the early stage of the project is very important in planning the next course of action depending on the performance of the activity. These estimates are offered by construction estimating firms before the actual work of construction commences which is known as the execution phase.
Why Initial Estimates Matter
The overall value and all significant decisions about the project are first based on preliminary cost or estimated cost. An initial estimate is used to determine the project’s scope, cost, necessary investment, pricing, etc On the other hand wrong estimates lead to overcosting, project delay, loss, and sometimes project failure. It is the role of construction estimating companies to offer the necessary information which is based on the experience, facts, and figures of initial estimates.
Setting Realistic Budgets
The owner budget is normally derived from the first estimate developed by the estimating service. If this early estimate is low, it will be difficult to achieve budgets and place much pressure on the Project Manager. A ‘real’ budget is a budget figure that is obtained right from the start, giving a clear picture of expected project costs to avoid drastic alterations.
Allowing Time for Changes
Initial designs and plans may feature alterations during the construction period, which is why a first estimate should include buffer funds and timelines. While providing estimating services, service providers consider this so that necessary improvements can be incorporated without going beyond cost limits.
Getting Investments and Financing
The preliminary estimate is used by investors and lenders to determine how much capital a project would require before committing to it. An estimate that incorporates each cost-bearing factor is useful in mobilizing the requisite funds easily. Construction estimating company cover estimates to be used for this kind of purpose.
Procuring Materials Economically
On average it is understood that if construction materials that are considered essential in the construction process are purchased in advance based upon the estimated cost, then a great deal of money could be saved. The optimal price of materials when the estimating services forecast large quantities can allow for procurement of such material.
Optimal Resource Planning
This category is an initial estimate, which gives an understanding of the scale of the resources, manpower, equipment, tools, etc., required for the project to be completed. Consequently, Construction companies can guarantee the right positioning of the important resources, thus enhancing efficiency.
Minimizing Risks
Valuable information about the preliminary estimates to describe the cost elements that have the highest shares. Construction estimating service providers also focus on aspects that are likely to present risks of variation. It also allows contractors to plan for how to minimize risks to elements that are most susceptible to them.
Selecting the Best Bids
In tendering, offers from the subcontractors are evaluated with the basis estimate come up with by the owner, which is usually done by construction estimating firms. What is more, any very low prices can then be checked again to prevent awarding contracts to ineffective individuals.
Analyzing Project Viability
Owners review the first estimate to determine whether management would be generating satisfactory returns on invested capital in the project given market conditions. The preliminary estimate is provided with all the requisite measuring services by estimating services.
Estimating is not a static activity whereby specific values are assigned to the cost, scope, time, and quality of a project at a particular point in time.
The first estimate will thus form a project cost baseline While a range of estimates may be created, estimates have to be updated as the design progresses. Nonetheless, quality preliminary estimates do help achieve good cost outcomes. Approximately or high-caliber construction estimating firms dedicate a lot of effort to developing initial estimates.
Conclusion
A proper and precise preliminary estimate defines the core around which all the important aspects of a construction project revolve – budgets, costs and timelines, funding sources, resources and risks, and even the project decisions. Thus, to achieve better results, reputed construction estimating services invest their best efforts in early-stage estimation.
However, the first estimate serves to set or break fundamental budget and schedule parameters as the estimations progress through the different phases of the project life cycle. Estimating companies understand that the precision of early estimates is intertwined with project success and this is evidenced by their comprehensive estimation procedure.