🧮 Construction Estimating Guide
A bad estimate guarantees a bad project. Learn the fundamentals of building accurate, competitive bids.
Your estimate should reflect reality. Don't back into numbers to win — that's how you lose money.
Estimating Fundamentals
What Makes a Good Estimate?
- Complete — Nothing missing from scope
- Accurate — Quantities and pricing reflect reality
- Competitive — Priced to win while making margin
- Documented — Assumptions are clear
- Defensible — Can explain every number
Types of Estimates
| Type | Accuracy | When Used |
|---|---|---|
| Conceptual | ±30-50% | Early budgeting |
| Preliminary | ±15-25% | Schematic design |
| Detailed | ±5-10% | Final bid |
| Definitive | ±3-5% | Negotiated/GMP |
The Estimating Process
1. Bid Review (Go/No-Go)
Before spending time estimating:
- Does it fit our capabilities?
- Do we have capacity?
- Who's the competition?
- What's the probability of winning?
- Is the profit potential worth the effort?
2. Document Review
Thoroughly review:
- Drawings (all disciplines)
- Specifications (every section)
- Geotechnical reports
- Addenda
- Pre-bid meeting notes
3. Quantity Takeoff
The foundation of your estimate. Measure everything:
| Trade | Typical Units |
|---|---|
| Concrete | Cubic yards, square feet |
| Steel | Tons, linear feet |
| Masonry | Square feet, blocks |
| Drywall | Square feet, linear feet |
| MEP | Per fixture, linear feet |
| Finishes | Square feet, each |
Takeoff Best Practices:
- Use consistent methods
- Color-code what's counted
- Double-check quantities
- Document assumptions
- Note unclear items for RFIs
4. Pricing
Labor:
- Production rates (units per hour)
- Crew composition
- Wage rates (including burden)
- Productivity factors
Materials:
- Get current quotes
- Include waste factors
- Account for delivery
- Note lead times
Equipment:
- Owned vs. rental
- Mob/demob costs
- Operator costs
- Fuel and maintenance
Subcontractors:
- Get 3+ bids per trade
- Level bids for scope
- Add/deduct for exclusions
- Verify qualifications
5. Apply Overhead & Profit
Job Overhead (General Conditions):
- Supervision
- Field office
- Temporary facilities
- Safety and cleanup
- Project management
Company Overhead:
- Home office costs
- Insurance
- Administrative
Profit (Margin):
- Market conditions
- Risk level
- Competition
- Relationship value
6. Final Review
Before submitting:
- Check math
- Verify all scopes covered
- Review exclusions
- Validate assumptions
- Get management approval
Common Estimating Mistakes
Quantity Errors
❌ Missed scope — Didn't see drawing note
❌ Wrong scale — Measured at wrong scale
❌ Double-counted — Included in two places
❌ Under-measured — Forgot waste factor
Pricing Errors
❌ Stale prices — Used last year's numbers
❌ Wrong labor rates — Forgot burden
❌ Missed escalation — Project is 18 months out
❌ Incomplete sub quotes — Didn't level scopes
Overhead Errors
❌ Too light on GCs — Supervision, temp facilities
❌ Forgot project duration — Extended GCs for delays
❌ No contingency — Zero cushion for problems
Quantity Takeoff Tips
Organization
- Follow CSI divisions
- Match specification sections
- Create standard templates
- Use consistent naming
Verification
- Spot-check quantities
- Compare to similar projects
- Review with operations
- Question outliers
Technology
- Digital takeoff software speeds work
- Cloud-based for team collaboration
- Historical data for validation
- Integration with accounting
Labor Productivity
Factors Affecting Productivity
| Factor | Impact |
|---|---|
| Weather | -10% to -30% for outdoor work |
| Overtime | -15% after week 1 |
| Congestion | -5% to -20% |
| Height | -10% to -25% |
| Quality of documents | -10% to -20% if poor |
Using Historical Data
Track actual vs. estimated on completed jobs:
- Where were you off?
- Why?
- Adjust future estimates
Bid Strategy
Competitive Analysis
- Who else is bidding?
- What's their history on similar work?
- Are you the favorite or the price check?
- What's owner's budget?
Pricing Strategy
To win:
- Sharpen competitive trades
- Value engineer where possible
- Reduce contingency (if comfortable)
- Consider strategic pricing
To protect:
- Price risk appropriately
- Include adequate contingency
- Clarify exclusions
- List assumptions
The Bid Spread
- If you're way high: Check for errors, missed scope in others
- If you're way low: Check for errors, you may have missed something
- Within 5%: Normal competitive range
Build Better Estimates
Free Template: Download our estimating checklist template.
Track Win Rates: CRM.Construction helps you track bids, analyze win rates, and identify your most profitable project types.