The construction phase of a successful project actually happens months before digging begins. Planning a project successfully requires an understanding of the costs involved, and this is the stage where preliminary estimating services become essential. These services capture the early project cost, allowing owners, developers, architects, and contractors to understand costs and formulate plans before the design and budgeting phases happen. By helping solidify financial resources and provide estimated costs, preliminary estimating services create a strong base for a project’s success and strives to eliminate the financial ambiguity of a project.

What Are Preliminary Estimating Services?

The estimate of the cost associated with a construction project in the early stages of a project’s development is the provision of preliminary estimating services. In the absence of construction drawings, an estimator relies on the project’s preliminary scope, past project data, and professional judgment and compares the information to the construction industry standards to derive a cost estimate.

These cost estimates typically include:

• Project Materials

• Labor

• Construction Equipment

• Site Preparation

• Construction Trade

• Contingency

These cost estimates, although not final, are associated with a high degree of project planning and provide essential financial guidance when making project-related decisions.

Promoting Improved Budget Planning

The ability to create an accurate project budget at the outset is one of the key benefits of using preliminary estimating services. Financial difficulties are common in many construction projects, and this is usually due to costs being underestimated in the planning stages. Stakeholders are aided with a preliminary estimate to understand the level of anticipated investment and determine the financial viability of the project. This enables the developers and the owners of the project to obtain financing and appropriately plan the required support and resources and also helps avoid financial difficulties that occur as a result of the project being underfunded. Good budget planning reduces the chances of project funding-related delays.

Enabling Stakeholders to Make Cost-Effective Decisions

Numerous project-related decisions are made at an early stage of a project, including decisions related to project design, the materials to be used, the methods, and the scope of the work. These decisions are difficult and can be very risky if accurate cost forecasts are not available. Preliminary estimating services allow preliminary cost forecasts for the various project options. As an example, project owners can evaluate and select between design options that best achieve project goals within the established cost parameters.

Mitigating Financial Exposure

Cost uncertainty is an inevitable aspect of a construction project. Preliminary estimates are an effective tool to reduce cost uncertainty. Before construction begins, preliminary estimates provide an indication of what the construction costs will be. Cost estimators provide preliminary estimates, analyze the project, and identify what is likely to be the cost of construction. By identifying the cost risks early, stakeholders are able to plan for cost overruns, modify funds, and develop plans to financially support the project. This would help reduce the financial exposure of the project. Cost uncertainty is a severe exposure that stakeholders of a construction project would like to avoid.

Streamlining Design and Planning

Architects and engineers incorporate preliminary estimates for design phase cost estimates. These estimates assist design teams in developing plans that meet a project’s financial constraints. Design decisions often come at budget implications. Inevitably, this will result in large revisions for the project. These estimates help teams reach the proper balance of creativity, function, and cost. This iterative phase of design also optimizes project development and reduces the replication of designs that are infeasible due to budget constraints.

Improving the Analysis of Project Viability

Preliminary estimates need to be developed so that project viability can be evaluated. These estimates provide important cost information for project feasibility. This information allows the potential project risk to be assessed, cost estimates to be developed, and the economic viability of the project to be evaluated. Good preliminary estimates allow project investors to make confident decisions and reduce the project evaluation constraints.

Making Communication Easier

There are many participants in construction projects. These include the owner, the contractor, architect and engineering consultants, and the financial institutions. Preliminary estimates enable a common cost framework and improve communication amongst all participants. Understanding cost constraints allows the stakeholders to agree project goals and facilitates collaborative decisions. This improves communication and reduces the time to develop a project.

Conclusion

Essential to the planning of a successful build, early costing services reduce the risk of overspending by informing the budget. Early likely costing also aids the feasibility study, risk analysis, and the decision-making processes. Uncovered likely overspends on potential financial challenges allow stakeholders the opportunity to adjust plans and avoid financial surprises. Whether an industrial, commercial, or residential build, early estimating services help create the success built within a budget. Early likely costing should be considered a vital aspect of contemporary construction management, rather than an additional service.