Estimating is one of the most important but also most difficult components in construction. Inaccuracy in estimating a renovation project can be a very costly mistake as profits from projects usually depend on how accurate renovations estimates are. Having one bad estimate will not put you out of business but if you string together a few unprofitable projects, you might find your construction company shutting its doors for good. Hence, getting yourself a good estimator for all your renovations estimating projects is crucial. Here, we discuss the top five most common renovation estimating mistakes.
1. Underestimating overall costs
Sometimes to win bids and projects, it can be tempting to swing a low estimate to look good for a client and stay optimistic. However, often, low estimates result in huge losses as construction projects usually go slightly off-course. Inaccuracy in renovations estimating can occur for several reasons, with the most common being a lack of experience in pricing renovation projects, underestimating the complexity of projects, not having a clear direction and a lack of availability of historical data on similar projects.
The largest cost that many construction companies fail to account for properly is labour costs. Labour is a pivotal part of any construction project but is also famously difficult to estimate. At the top of your head, you might just apply a straightforward hourly rate to the number of hours worked and then the number of workers – but how do you know how many people you need and how long it will take them to complete the project? The difficulty lies in the inability to gauge every worker’s experience as well as whether you might need subcontractors to come on board. Rates can also vary depending on a worker’s qualification, the location of work and the possible need for overtime.
Recently, there have been significant and unprecedented materials costs experienced in all our years in the industry. We have taken time to update our internal material rates on structural steel, timber supply and other trades that rely on steel and timber (concrete, metalworks, masonry etc).
2. Failure to assess risks and build in contingencies
When thorough assessments of risks are not performed and risk management plans are not factored in, cost variations can easily occur. Without awareness of the risks involved and proper planning ahead of time, you will end up taking an unplanned and corrective strategy. This would involve reacting to problems only when they happen which can slow your renovation project down and increase the overall project cost. Thus, having a good renovations estimator to review your proposals and project requirements is vital in ensuring proper analysis is conducted and all threats are detected beforehand. Experienced estimators are usually able to identify these easily and can advise if a project is no longer viable.
3. Failure to conduct a site visit
Often, a site visit is mandatory to submit a bid, and this is with good reason. Site visits allow estimators to understand the nuances of a site. When conducting a site visit, it is important to:
- Take measurements of the site to check if your projects are viable and realistic
- Check the site topography
- Confirm what materials require demolition (brickwalls vs plasterboard walls)
- Identify existing structures that require demolition
- Understand access and traffic to the site
- Note the proximity to labour and material sources
- Determine space available for staging, equipment and materials delivery and storage
- Identify environmental protections that may be required
Without having all these details before commencing on a project, unexpected and costly issues can arise when the construction gets underway.
4. Inaccurate take-offs
Take-offs are detailed measurements of materials and labour needed to complete a construction project. These are usually developed by an estimator during the pre-construction phase and involves breaking down renovation projects into smaller parts that are easier to manage and measure. Having an inaccurate take-off is very similar to the first point of underestimating your overall costs. If your take-offs are incomplete or incorrect, your estimates will likely be wrong, and your project will either be overestimated or underestimated.
5. Lack of a thorough audit of estimates
While it can be tempting to simply assume your estimates are right at your very first go, it is important to remember that everyone can make mistakes. Time pressures can lead to errors in calculations or even human errors in data entry. When it comes to renovation estimating, even the smallest of mistakes such as picking an incorrect unit of measurement can result in huge consequences. Ensuring you allocate sufficient time to review your estimates before you begin your project is necessary to reduce inaccuracies and costly mistakes further down the track.
Looking for a renovation estimating service?
Accent Estimating can provide quality and accurate estimating services all over Australia. With the ability to work remotely, we have a distinct advantage and the flexibility to provide you with excellent and precise construction estimations wherever you are in the country. Our team has years of experience delivering accurate and efficient estimating services and have an extensive portfolio – you can rest assured knowing you are in good hands.