How to calculate construction costs and budgets

Whether you are creating a competitive construction estimate for a bidding project, or simply trying to figure out the costs for the construction, remodeling, or repair work you want to do, follow the steps below to ensure that your construction costs and budgets are accurate and organized and complete.

Before you begin, review all plans and specifications and consider whether you will need the services of suppliers or contractors to complete the task. If that is the case, give them the information they need to quote their construction or remodeling work as soon as possible. Generally, waiting until the last minute causes the quote to be inaccurate.

In order to ensure that you have sufficient time to receive and review the prices of your suppliers and subcontractors, set a delivery date for quotes, which must be at least one day before the tender expiration date. Ask suppliers and subcontractors to make their proposals in writing and in detail. If time does not allow, take detailed notes of the bids that you give over the phone.

If possible, obtain at least three estimates. Construction costs and budgets for subcontractors typically cover a considerable scale of prices and if you have three estimates for each job, you can make a better informed decision about the number you should use in your construction budgets. As the quote process progresses, make sure your subcontractors receive any changes or revisions you make.

Once you have the estimates in your possession, prepare a comparison sheet and list the major items that subcontractors will include. Often, contractors who present estimates of the same job include different elements in their proposals. Use the comparison sheet as a guide to review and collate the quotes you receive. Add money to a contractor’s proposal for something it has excluded and others have included.

Make a summary of estimates for all your costs and tenders. Divide all costs into three basic categories:

Construction materials costs include all materials, labor, equipment, etc. needed to build a building (e.g. foundations, windows, roof).

Costs not related to construction or remodeling, also referred to as general conditions costs or general direct costs, include all materials, equipment and costs directly attributable to the performance of the work but which are not a real part of it (for example , temporary sanitation services, waste containers, supervision costs, the cost of electricity for the project).

General overheads include other costs necessary to maintain your business, which are not directly attributable to the project (for example, rent, telephone, office electricity). Identify and quantify these costs and then increase your hourly labor rate to cover them or add a budget line to your construction budget for each project you are calculating.

The costs of general (non-production) conditions may include 20 or 30 budget items, depending on the complexity of the project. Make a summary sheet and list the various costs and items you envisage. Many of these are directly related to the time taken to complete each task, so you should have an idea of ​​the duration of the project. For example, if you estimate that you will need two temporary health services a week, you will need to know how many weeks to use them to determine the total cost.

Once you have the costs of construction materials and the general conditions, determine the partial total. Your profits, overhead, and insurance costs are usually calculated as a percentage of that total. Combine these costs with your partial total and you get the full estimated cost.

Calculate the cost of work now

Before you start any quantity deduction of the drawings, read the specifications in writing. Often, the specifications manual includes special requirements or important differences and you must note them before continuing.

When you begin reviewing the blueprints to determine the amount of building materials and workers needed to do the work, these suggestions will help you stay organized:

First, check all the blueprints to get an idea of ​​what the job will require.

When making your detailed deductions, use felt-tip pens or colored pencils to mark the drawings. So you know when you have included something.

There are many ways to get the amounts you will need to prepare the estimates. Some contractors use software programs, many use special business forms and others have created their own forms. In any of these you use, note the number of the sheet of the plane in the article. This has four objectives:

If you first calculate the quantities of all materials, it is easier to go back to allocate labor costs if you know the detail you were considering. Floor-level installation of a 2 × 4 wood around a window opening requires much less work than one to 40 feet in the air under an eave.

The detailed description and the additional sheet make it easier for someone to review your work.

In the event of a revision of the plan, you can easily compare the new details with the previous ones and verify the impact of the change.

When the project is under construction, you will be able to more accurately compare the actual costs of materials and fieldwork. If in your estimate the work appears in a lump sum, it will be impossible to determine where it was calculated in less and where in more.

When calculating quantities, be sure to know the scale used in the drawings and details. Check the scale with other flat sheets; sometimes the architect scores an incorrect scale on the plans. If you think you are viewing 1/4 inch drawings and are actually 3/16 inch, your quantities will be wrong and this will significantly influence your labor and material costs.

Once you have calculated the amounts of building materials, add an appropriate amount for the waste material. Next, determine the cost of materials and labor to install them, as well as other related equipment costs.

Contact your supplier to find out the building materials you need and if they do not give you a price for the total amount, find out the prices per unit and determine the total costs of materials. For example, you need 434 feet of 2 × 4 pressure treated wood. Your vendor sells that material in 16-foot lengths, at $ 15 each. Divide 434 linear feet between 16 feet and round the figure to the next complete piece. In this case, you would need 28 2 × 4 lumber, 16 feet long, for a total of $ 420. Do not forget things such as screws, glue, sales taxes, delivery service charges and other incidental costs. Once the material costs have been calculated, proceed to calculate the labor costs.

Calculating labor costs requires experience. Concentrate first on the larger budget items, since an error in them can lead to a large difference in total estimated costs. Depending on the amount of materials, try to determine the rate of production. For example, your project has a wood base of 1,250 linear feet. Calculate that your carpenter can measure, cut and install 20 feet of base per hour. Divide 1,250 feet out of 20 to determine you will need 63 hours. Remember that someone will download the material and distribute it to the various sections of the project. This also requires time, so you must add this extra time to the hours you calculated to install the base.

Multiply the hours per hour rate. Hourly rates vary widely but the basic points are the gross hourly wage, plus benefits, and state and local taxes. Many contractors add a value to the hourly rate to cover a portion of their overhead. Once you have the total number of hours for each budget line, add up the total hours and multiply them to get the labor costs.

The next thing you should consider for all construction budgets is the costs of construction equipment. Do you need to buy or rent a scaffold or perhaps a motorized raised basket? Once again, time is a key factor. Determine how much time the equipment will need to calculate the cost correctly.

Once materials, labor, and equipment costs have been completed, get the total cost for that section of the estimate. The goal is to include everything in a format that you can follow later, or use in future estimates for comparison purposes.

Finally, have your mathematical operations reviewed on the worksheet and material sheets, and prepare your tender.