An estimate is a predicted expenditure of a project. It is usually taken out to get an understanding of the total budget required for a particular project. There are various types of estimates used in the construction industry, which are discussed below:
The preliminary estimate is a rough estimate given to give a general idea about how much a total project will cost. It is done at the beginning of a project when only limited information is available.
Such estimates are taken out to understand the total budget of a project. It helps to decide the contract price. An estimate taken out at a very early stage is called a screening estimate. It is based on information available from past projects.
For example- A contractor is asked to build a backyard for a house. He had built a similar backyard a few months back to use the cost incurred in that project as an estimate for the new project.
As the scope of the project is better known, one can take out a detailed estimate. Usually, a preliminary estimate is converted to an exact estimate when more information is available.
Such estimates contain details of cost, quantity, rate, description of all required goods, etc. It is used as a budget estimate. It helps him to understand whether he needs additional financing. A detailed estimate contains the below information:
A quantity estimate is an estimate which includes complete quantitative details of the material required to complete the project. It gives quantitative details of all goods required along with their cost. It is the most important estimating method in construction.
Cost estimates are calculated by multiplying the dimensions of the project with the per-unit cost.
For example, a painter has to paint a building, and the cost per square foot is Rs.5, then he calculates the total cost by multiplying the total square feet area with the per square feet cost.
Total cost= 5,000 square feet multiplied by Rs.5 per square feet = Rs.25,000.
A bid estimate is calculated with an expectation to win a project. It is shared with potential clients. A contractor usually tries to bid the best price to win the contract. Such an estimate is calculated based on standard industry costs or past projects.
There are three types of cost estimates based on the type of information used to make an estimate.
Example- Mr X wants to build a fence around his garden. This project has two tasks:
You have to build a 100 feet long fence which requires 10 posts. You visit a local shop and get an estimate of Rs.50 per post. So, total cost = Rs.500.
This is called a parametric estimate. One of the neighbours says that similar fencing cost him Rs.1,000 (excluding the cost of fence post) six months back. Using such an estimate is called a historical estimate. Adding up both these estimates gives you a bottom-up estimate.