Estimating, Quoting and Construction Cost Control

About this course.

Accurate estimating matters because in construction the price is usually committed early, on incomplete information, and then the business must live with it for the whole job — so an error made in an hour of estimating can cost money every day of a project that runs for months. An estimate that is too low wins work that loses money, eroding or wiping out profit and, if repeated, threatening the survival of the business; an estimate that is too high loses work to competitors and starves the business of turnover. Getting it wrong costs far more than the immediate shortfall: it costs the profit that should have funded wages, overheads, tax and reinvestment, it consumes cash the business may not be able to spare, and it damages confidence, reputation and morale. Estimating is not paperwork before the "real" work; it is where a job's profitability is largely decided.

The first reason accuracy matters is timing. In most construction work, the price is set at the beginning — in a quote or tender — before much of the detail is known and long before the work is done. Once accepted, that price usually becomes a commitment: the contractor must deliver the agreed scope for the agreed money, whatever it actually costs to build. Unlike a business that can adjust its prices day to day, a builder is often locked into a number decided weeks or months earlier. This means the quality of thinking that goes into the estimate has a very long shadow. A generous few hours spent estimating carefully, or a rushed guess, both determine the financial outcome of a job that may run for many months.