How to Accurately Estimate Industrial Construction Projects?

One of the most effective ways to increase the chances of winning a bid is to estimate industrial construction projects accurately.

Industrial estimation takes more than just crunching numbers. It requires meticulous attention to detail, knowing about recent market trends, and a proactive approach to analysing cost-affected factors. In an industrial project, there are a number of variables to account for. It can seem a little daunting to manage finances for a large project, but once it's broken down into smaller steps, it gets easier.

Factors Affecting Industrial Cost Estimates 

For accurate cost estimates, it's important to know about the basic cost-affecting elements in construction.

• Size: Large construction projects often have a higher cost due to more material and labour requirements. Size is one of the leading factors that impact cost.

• Complexity Level: Some projects are more complex and intricate than others. Sometimes, even a residential project may be difficult to deal with due to its complexity. 

• Type of Material: The material comes in different prices. There's cheap material that is often low quality, and then there are premium luxury materials. It's important to pick good-quality material to balance the cost.

• Market Fluctuations: To estimate industrial construction plans precisely, estimators keep up with changes in market prices. Volatile markets are difficult to deal with as there is a lot of uncertainty.

• Weather Conditions: Construction during harsh weather mostly ends up increasing the cost. This is because specialised labour, equipment, and material are needed to deal with such weather. Not to mention that material procurement becomes difficult.

Steps to Estimate Industrial Construction Projects

Getting to the topic at hand, let's dive into how a contractor or an estimator can estimate industrial construction schemes efficiently.

1) Know the Project

The first step is to gather relevant information on the project. You should have all construction documents, along with blueprints and architectural drawings. Familiarise yourself with the project by analysing the building requirements and preferences of the client.

Best Practices:

• Make a list of any customised requirements and non-standard items that the client wants to add.

• Conduct a site visit and analyse soil conditions, any possible hurdles, adjacent buildings, and the overall condition of the site. If you are working on a repair or maintenance estimate, then it's vital to observe the existing structure.

• Pay close attention to the work package and the contractor-client contract.

2) Quantification of Materials

Quantification of material is an important step in Cost Estimating. The more accurate your takeoff is, the more precise your project cost prediction will be. To start material takeoff, you need to know the exact measurements of the site. Use the right formulas to calculate the materials needed. Construction materials are usually quantified in area, length, volume, and quantity. Estimators may either perform a manual takeoff or a digital one.

Best Practices:

• Make a list of materials to make sure nothing is overlooked

• Digital methods of quantification are much more accurate and quicker

• Always recheck the measurements

• Divide the project into smaller sections to control it better

3) Calculate Material Cost

Material Cost Estimating makes up more than 40-45% of the project cost. To accurately predict it, you need to know the exact prices of materials. After calculating the amount of materials needed, it's time to price them. The exact price of materials can be known by visiting the marketplace and keeping up with the fluctuations. Assign a price to each unit, then sum up their cost to come up with the total.

Best Practices:

• Work with suppliers and vendors to get a fair quote on materials

• Use real-time pricing guides for zip code-based pricing

• Account 10-15% for the wastage of materials

4) Calculate Equipment Expenses

Construction Estimating for equipment expenses includes rental, purchase, and running costs. For industrial projects, heavy-weight machinery is often rented out, while others are purchased. In cost includes the operating cost of equipment such as fuel, maintenance, and repair.

Best Practices: 

• Analyse the risk associated with equipment wear and tear, utilise historical data

• Include lifecycle cost

• Add the transportation cost of the equipment to the construction site

5) Assess Worker Wages

To estimate industrial construction labour cost, one of the best ways is to utilise the square footage method. Most contractors make the mistake of simplifying the estimation process by using the hourly rate method, but that doesn't always work for the industry. Industrial projects are more complex and present unique challenges, so square footage estimation of labour cost is more practical. 

Best Practices:

• Include indirect cost of labour in Construction Estimates as well, such as overtime pay, paid vacation, insurance, and benefits.

• It is best to divide the labour into technical and non-technical categories

• To save money, you can use apprentice labour for performing simple tasks, while for more intricate work, master labour would be needed

6) Include Overheads and Profit Margin

So far, we have calculated the direct expenses related to construction, but we have not considered the indirect costs. Indirect or overhead expenses also need to be included in the budget, such as permits, utility bills, administrative costs, office supplies, etc.

The profit margin to estimate industrial commercial projects is usually 10-15% of the total project cost, so do add that into the bid proposal.

7) Create a Contingency Plan

A contingency plan protects the project from unexpected expenses that threaten the budget. Generally, 15-20% of the total budget is set aside as contingent. This value may increase or decrease depending on the number of risk factors associated with the project.

Outsourcing to Industrial Estimating Services

One of the best ways to gain an accurate cost projection is by taking help from Industrial Estimating Services. Industrial Cost estimators work in the form of teams. They work on the principle of divide and conquer. Their estimates are not only crystal precise but also much quicker. By seeking help from an estimator, one can bid on multiple projects at once and focus on other aspects of the bid package.

Closing Remarks

To sum it up, to accurately estimate industrial construction projects, don't look for any shortcuts. Shortcuts will only lead to inaccurate and imprecise estimates. It's all about focusing on each detail of the project and understanding how it will impact the cost. We understand that it can be tough to keep such a detail-oriented approach towards construction estimation, especially with limited time. Which is why cost estimators shoulder the responsibility of worrying about the cost so you can focus on other important things.