Cost estimation in construction is the method that estimates the price of the construction of physical structures. Of course, both builders as well as clients are both concerned about the financial implications of cost overruns as well as failing to finish a project. This is why they dedicate the time and effort to estimate the amount a project will cost prior to deciding to proceed with the project.
When considering projects of a large size, clients often need multiple cost estimates which include those provided by contractors as well as those estimated from independent estimates. Owners of projects make use of the construction cost estimating process to assess the project's scope and viability and allocate budgets. Contractors use them to decide whether or not to bid for projects.
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It is typical to prepare estimates using input from engineers and architects to ensure that the project will meet financial feasibility as well as scope requirements. A cost estimate that is accurate prevents the builder from losing money and will help the customer avoid paying too much. It's an integral part of earn value management which is a management method that monitors the project's progress against the total cost and time estimate.
An excellent starting point is this construction estimate template.
The process of cost estimation is a matter of having an understanding of the process of construction. These are the nine essential elements of a construction project:
- Commissioning a Project
- Determining requirements
- Establishing a Design Team
- The Designing of The Structure
- Bidding based upon The Scope of Work