Before undergoing a construction project, it is important to estimate how much the materials and labor are going to cost during construction. During this process, we can utilize different models to come up with possible scenarios depending on how you approach the job. The estimation will include the total cost of the project based on various activities within each phase. While some expenses are fixed, others are contingent on different factors. We use four types of tools to estimate costs when budgeting a project:
● Analogous Estimating
● Parametric Estimating
● Three Point Estimating
● Bottom-up Estimating
Let’s take a look at them in depth.
Analogous Estimating (Conceptual)
This type of estimation is used when we are taking on a new project unlike anything we have done before or our client is unable to give us enough information about specific factors and information needed for the site. When this occurs, we have to go with analogous estimating. We do this by comparing the job with similar projects that we have previously completed. In most cases, an analogous estimation is faster and produces quick results. The downside is that analogous estimating doesn’t always provide the most accurate insight into a project's cost. We can produce a ballpark number with analogous estimating, but we would prefer to use other methods if possible.
Parametric Estimating (Past Experience/Historical Data)
Parametric estimating is different than analogous estimating because we can use historical data to calculate estimates. The difference is that we use statistical data from past jobs and apply it to the current job. We gather measurements such as square footage or a total number of pieces used in a given material.
Three-point estimating brings more advantages to you as it reduces bias and uncertainty when calculating the cost by providing more than one answer. We add up costs three different ways, show you three various estimates, and then take the average of the three. The average is ‘somewhere in the middle’ and reduces uncertainty and risk.
Of all the estimation techniques we listed, bottom-up estimating is by far the most accurate. It is, however, more time-consuming and costly during the planning phase. The goal is to target the final estimate as close as possible by taking the extra time to go over every detail of the project. This approach produces very accurate results. There still needs to be some flexibility for deviations in the owner’s wants and needs, site variables.
Commercial General Contractors in Minnesota
If you are getting ready to undertake a construction project, contact Shingobee Builders today. We provide a comprehensive package of services including restaurants, retail building, office, and green building construction. Our project management professionals can help you with your construction from start to finish. For an initial consultation, call us at 763-479-1300, or you can message us at email@example.com.