Estimation or construction estimation is a concept widely used in the construction, interior design, and many other related industries. So, what is an estimate, what is its significance, and how can beginners prepare an estimate for a construction project? Join LPC to find answers to these questions in the article below!
What Is an Estimate?
Estimation (Estimate) can basically be understood as the process of forecasting figures related to upcoming work. Accordingly, the relevant parties need to forecast figures in advance by calculating the overall scope of work before beginning the actual implementation.
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To arrive at the most reasonable estimate, the relevant parties must rely on existing standards and actual data. An inaccurate estimate will be too high if it exceeds the actual result, or too low if it does not correspond to the actual result.
Today, the concept of estimation is widely used in the construction industry. Normally, before starting a construction project, the relevant parties prepare a project or annual investment plan. At this stage, the investor is responsible for making a preliminary calculation of the total investment value based on established standards. This allows specific estimates to be prepared for each component of the project.
Purpose of Preparing Estimates in Construction
– Preparing an estimate helps investors forecast the costs that need to be spent on construction items in advance. This allows them to prepare sufficient capital or develop a funding plan when necessary, preventing interruptions to the construction process later.
– Investors can use the estimated cost plan to assess the expenses and actual value of the construction projects. It is considered an important document that should be carefully preserved in the project records because it has a significant impact on the final settlement of the project between the investor and contractor after completion.
– Based on the figures estimated in advance, investors can provide actual project data to banks. This can help them obtain financing when they need to borrow capital.
– An estimate also provides a basis for calculating technical indicators, comparing, and selecting reasonable construction design options for projects. This helps ensure quality while keeping costs as low as possible.
– The estimated cost plan also serves as a basis when signing contracts between contractors and investors. It is also used as a basis for the contractor to settle the project after construction is completed.
– Finally, estimation helps investors easily select contractors that are most suitable for their projects.
How to Prepare a Construction Estimate for Beginners
Quantity Estimation
Beginners who are first introduced to estimation will start with quantity estimation. To do this, the first step is to read and understand the drawings. Therefore, this can be a relatively difficult task for people without specialized construction knowledge.
Accordingly, when beginning quantity calculations, you must never overlook the main quantities. As for smaller quantities, you can complete them later once you become more familiar with the work or ask experienced people for their input.
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Unit Price Calculation
After completing the quantity determination, you will move on to calculating unit prices. This is because you can only calculate the estimate once you have both quantities and unit prices.
To calculate the unit price, you need to determine four figures: the current labor cost (wages per working day); the applicable norms; market material prices; and equipment operating costs.
Material Cost Estimation
Estimating material costs is a highly complex task. Therefore, beginners may encounter many difficulties. However, the complexity here is not related to the calculations themselves, but rather to where the materials are sourced and whether the quoted prices are acceptable.
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Therefore, the person preparing the estimate needs to research prices on websites and forums. In addition, they should check prices at local stores because prices may vary from one region to another.
Once specific statistical data has been collected, the estimator can calculate the figures and prepare the final estimation plan.
Summarizing Costs and Coefficients
After completing the steps above, depending on wage levels, the estimator adjusts the coefficients for various costs. Specifically, these costs include labor and construction equipment costs. Accordingly, they consist of general costs, direct costs, contingency costs, and applicable taxes.
The above explains LPC’s perspective on what an estimate is, the purpose of estimation in the construction industry, and how beginners can prepare an estimate. Based on the information presented above, LPC believes that readers now have a better understanding of the concept of estimation and related issues. We hope this article will be a useful source of information for those interested in this topic.
If you have any questions about the article or related topics, please contact LPC for consultation and support as quickly as possible.
— Lam Pham Construction Co., Ltd. – LPC
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