5 Ways to Improve Your Construction Estimates

By: Kenneth Wardle | Chief Executive Officer

The very best estimates balance profitability with customer satisfaction. For those working in the construction industry, accurate estimates are the keystone of business. Price too low and projects could end up costing you money. Price too high and you may end up losing business to competitors. When estimates are correctly tailored to the project, both the builder and the client will be happy at the end of the work.

The best practices can protect your business and profits. Here are 5 ways to improve the quality of your construction estimates.

Start with the Basics when Creating Construction Estimates

Start at the beginning. Take a look at the entire project to get an overall sense of the scope of the work. Measure everything since an accurate reading on size will help price both materials and labor. Investigating the true magnitude of a project will make breaking it down into pieces much more accurate.

Communicate with your customers, too. For projects that involve more than a simple repair, you will need to understand where they are in the planning process. Making an estimate based upon finished drawings is very different than making an estimate based upon dreams and a wish list. You may need to guide your clients to the point when a truly accurate estimate is possible.

Your clients will appreciate your candor from the very beginning of a project. Above all, a comprehensive construction estimate will help avoid costly surprises or an unrealistic budget that is impossible to maintain.

Consider the Risks

Previous experience will inform your estimates, especially when it comes to assessing risk. For example, if a neighborhood usually has water main issues, factor that into the total cost of the project. Or if you are repairing an older building, you may anticipate complications that come with integrating newer materials. Experience helps you recognize when old plumbing or electric wiring will need to be completely replaced.

This is an area where it is great to realize your own limitations. You might be an expert in several aspects of the project, but you may need to reach out to a specialist for a little assistance. For a general contractor or builder, a quick consult with a plumber, electrician, or designer might go a long way in getting an estimate right from the beginning. A specialist might immediately see a challenge that would be outside of the realm of your experience.

Be Realistic about the Labor Involved

Making a realistic estimate about the amount of labor involved in a project will also be informed by your experience. Communicating with your customer about reasons why a job might take additional labor is important when creating your estimate. For example, if the job site is difficult to access and it will take additional time and effort to get equipment moved into the site, your labor estimate will be higher. If you know your team will need to spend additional time preparing the site because of trees or rocky terrain, that should be noted in your estimate, too.

Always include a contingency amount, even when including subcontractors, to cover any complications. Some builders have a set percentage they always include as a contingency, but you may decide to be more flexible depending upon the job. A routine plumbing installation may not require very much contingency while a more complicated job might need more.

Looking at similar projects will help guide your process, too. If you have a recently completed a job that is close in scope, double-check your labor estimate to see if you are on track.

Remember to include company overhead costs, too. Protect your profits by including the administrative time you will spend on the project and the insurance you will purchase to protect employees.


According to Construction Business Owner,1 project owners have become more sophisticated in what they want from an estimate. When estimates miss costs that come up during construction, there is less patience from your customers since they expect more from the initial projections.

Luckily, computer modeling and more sophisticated spreadsheets and reporting tools can improve your estimates. However, there is no substitute for communication and an open dialog throughout the estimation process. If a customer wants to swap out tile in the kitchen, they need to understand how that can dramatically affect their costs. It might be more than an increase in material costs if there is also more labor involved.

As you prepare your estimates, include as much detail as possible. Communicate with your clients when you see the possibility of a costly complication. No one likes surprises, especially when they are working within a budget. A comprehensive, clear estimate will keep your clients happy throughout the construction process.

Include costs for permits, additional equipment rentals, and payments that might be required throughout the building process.

Make the Most of Your Software

Keeping track of the many moving parts of a construction project has become much easier with the powerful software available on the market today. Your estimates should be making the most of this technology, especially since you can track changes much more easily.

A comprehensive software management system like CoConstruct allows builders to create libraries of material costs, integrates with QuickBooks, and create templates. These features make creating estimates faster, so you can get your paperwork to customers quickly. This can help you earn more projects. Once you sign the project, CoConstruct will help you manage the entire process.

ClearEstimates has a more estimate-focused approach that pulls information from national databases like RemodelMAX for accurate pricing. According to their website, this information is updated every three months.

Whichever software builders use, they should expect a tool for inputting measurements and pulling in data from plans. They should look for a variety of customizable worksheets that can show a variety of levels of detail. And if the software includes an integrated cost database, they should double-check to see if pricing is updated or if pricing needs to be adjusted manually.

Capterra has a list of the Top 20 Construction Estimating Software products HERE.

At Jet Capital, we understand that cash flow management is essential to your business. Accurate and detailed estimates help keep budgets on track - for you and your customer. And when a situation tests your cash flow, we can help with fast alternatives to a commercial construction loan.

If you need working capital quickly to keep your construction business moving ahead, consider a merchant cash advance from Jet Capital. Apply online today or give us a call at 866-845-9674!

1. Therkildsen, M. (2012, November). The Top 10 Construction Estimating Mistakes. Construction Business Owner. http://www.constructionbusinessowner.com/topics/software/estimating/top-10-construction-estimating-mistakes


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