The valuation and costs estimates for some is an easy and uncomplicated process, while being a nightmare for others. This process absorbs a significant amount of time very often. It would be great to think how that process could be accelerated and improved. It’s possible to change tools being used for that or to reanalyze the process while paying attention for the most time consuming elements. In this article, I’ll try to show which direction is best to take, what to keep in mind and what to pay attention for, to make the process of estimation as possibly low on time consuming as possible while being enjoyable in creation.
Valuation of construction works - construction cost estimate
Whether in a large investment, building a house or renovation, a document is prepared presenting the scope of work, costs, workload or estimated use of materials. Construction cost estimates are financial documents, therefore they are accepted by the parties involved in the process of implementing the entrusted project.
In the construction industry, we can distinguish several types of costs estimates:
Investor’s cost estimate – prepared by the contracting investor. Usually prepared at his request by a unit providing services in this area. It estimates the value of construction works before their commencement.
Offer cost estimate – prepared by subcontractors who declared their willingness to participate in the tender. It’s performed before signing the contract for the performance of works. It may contain a list of the works carried out, their duration, materials needed and costs associated with them. Based on the information contained in the offer, decisions are made on the number of employees needed to carry out the work contained therein.
As-built cost estimate – is performed after the completion of the work. It’s used when, for some reason, it’s not possible to estimate the works in advance or the parties have simply agreed on such a model of cooperation. The settlement is made according to the current settlement for time and material according to the agreed rates.
Offer cost estimate
In this article, I’ll focus mainly on the valuation preparation, based on the offer cost estimate. Such an estimate must take into account many cost and realization abilities affecting factors. It would be best to write them on a piece of paper and analyze them one by one. It’ll also be useful to plan an audit of the place where the work will be carried out. You also need to collect the costs of materials, and if we keep them in the warehouse, you’d have to find the purchase invoice to check the price for which it was bought. In addition, there’s an analysis of the equipment owned, or whether the equipment will be available for the duration of the implementation. Maybe it has been rented or is on a different construction site and now you should buy or rent a new one. If we throw all these things into the proverbial bag without proper labeling, it’ll be difficult to find. Of course if the company carries out orders serially, i. e. starts with new orders immediately after the already started, such problems will probably arise less frequently. All these aspects are condensed by the Contractors.ms software, which collects all these information on an ongoing basis.
A well-prepared valuation of construction works:
Includes costs and duration of required work
Collects estimated quantities of materials and their costs
Helps to optimize the process
Predefines the order of execution
It’ll help when talking to subcontractors
It’s a component of the as-built analysis, in which you’ll be able to compare the costs at the valuation stage to the actual implementation