What estimating costs your company
The real cost of estimating is the cost per won job. It depends on hours per bid, the estimator's burdened rate and your hit rate.
16 hours per bid x $55 per hour = $880 per bid. At a 20% hit rate, each win carries $4,400 of estimating cost. Cut hours to 10 and it falls to $2,750; raise hit rate to 25% at 16 hours and it is $3,520. Use your own numbers.
In-house versus outsourced
Estimating services typically charge per takeoff, per project or by the hour; in-house estimators cost salary, benefits, software and training. Outsourcing can cover peaks and unfamiliar trades. In-house keeps knowledge of your crews, production and pricing, which is where accuracy comes from. Many firms outsource or automate measuring and keep pricing and review in house.
Estimate types and accuracy
Not every estimate needs the same precision, and problems start when a rough number is treated as firm. AACE International Recommended Practice 56R-08 classifies estimates for building and general construction from Class 5 to Class 1 by how complete the project definition is:
| Class | Definition complete | Typical use and method | Typical accuracy range (80% confidence) |
|---|---|---|---|
| 5 | 0% to 2% | Concept screening; SF factoring, parametric, analogy | Low −20% to −30%; high +30% to +50% |
| 4 | 1% to 15% | Schematic design; parametric or assembly models | −10% to −20%; +20% to +30% |
| 3 | 10% to 40% | Design development, budget; semi-detailed unit costs | −5% to −15%; +10% to +20% |
| 2 | 30% to 75% | Control or bid; detailed unit cost with forced detailed takeoff | −5% to −10%; +5% to +15% |
| 1 | 65% to 100% | Check estimate, bid, change order; detailed takeoff | −3% to −5%; +3% to +10% |
AACE notes that ranges depend on the project and on appropriate contingency; a Class 5 estimate for a repeat project can be as accurate as a Class 3 for a novel one. Label each estimate with its class or basis, documents and date, and say what would change it. See the conceptual steel estimating guide for a worked early-stage example.
Common construction estimating mistakes
- Wrong or outdated documents: a missed addendum or a superseded sheet.
- Scope gaps: items in specs or other disciplines' sheets not taken off.
- Unit and scale errors: a wrong scale on an enlarged plan, inches versus feet.
- Waste double-counted, or missing.
- Production rates that ignore conditions: height, access, phasing, occupied space.
- Division 01 costs ignored: submittals, testing, temporary facilities, closeout, bonds, insurance.
- Escalation not addressed on long jobs or volatile materials.
- Vague exclusions and clarifications that leave the GC to assume.
- No second check before the number goes out.
How to prevent them
- Keep a document log with sheet revisions and addenda acknowledged.
- Use a trade-specific scope checklist and read Division 01.
- Verify scale on every sheet.
- Keep net quantities and waste separate.
- Compare unit costs and labor ratios against history.
- Have someone else review the ten biggest lines and the recap.
- Make every quantity traceable to its sheet.
Construction cost estimating books and data
- Estimating in Building Construction by Frank Dagostino and Steven Peterson (Pearson; the 10th edition is current).
- Construction Estimating Using Excel by Steven Peterson (Pearson, 3rd edition).
- Construction Cost Estimating: Process and Practices by Len Holm and co-authors (Pearson).
- Published cost data such as RSMeans (Gordian), useful for conceptual numbers and checks, adjusted with location factors.
- Trade references: NECA Manual of Labor Units for electrical, PDCA Cost and Estimating Guide for painting, AISC and MBMA publications for steel.
Books teach method; your own cost history and production rates are what make an estimate accurate. The American Society of Professional Estimators (ASPE) offers education and the Certified Professional Estimator credential.
Practice projects
The best practice projects are real public bid sets, which many owners post on their procurement sites. Pick a small building (a fire station, school addition or retail shell), choose one trade and do a complete takeoff and estimate: document log, quantities with sources, pricing, exclusions and a one-page proposal. Then redo it after an addendum and track the delta. If the owner publishes bid tabulations, compare your number with the bids received. For training teams, give the same set to two estimators and compare line by line.
Where RenderDraw fits
RenderDraw proposes quantities from your drawings with a link to the source on every row and flags uncertain items for estimator review. That targets several mistakes above: outdated documents, missed scope and unchecked quantities. Try it with a free sample takeoff on a bid you already priced.
