Effective cost estimating strategy in construction project management

Written by LetsBuild

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What does it take to have accurate estimates when it comes to construction project management? To have a successful project, you have to start from the cost management. Let’s put it like this. You won’t get the final picture of the project until you accurately calculate the whole cost. What would construction managers do?

They tend to find a shortcut and skip this step. That’s totally wrong. This is one of the biggest reasons why they suffer big losses and have unsuccessful projects. You, as a construction project manager, need to establish a cost estimating strategy. That’s a must.

If you ask other managers who play under the same rules, how they do it, one of their key features would be accurate construction management cost. It’s like going in the market. You have accurately calculated the cost at home. You know exactly how much money you will spend and you can already predict the final outcome. You get the point.

Now, how to develop a good cost estimating strategy? Three simple steps will lead you to the most accurate cost estimate. All three are designed to lead you through the whole process. By incorporating them, you will satisfy the cost management with all the knowledge you’ll get while designing the strategy – mixed with the knowledge from all the previous projects you’ve handled.

1. Initial rough estimates

You already know what’s in this step. This step is developed during the first phase. It’s largely based on all the information provided in the high-level scope along the info from previous projects the manager dealt with or similar projects he has heard about. This first rough estimate needs to be presented as a part of the Concept Proposal.

2. Intermediate estimates

When the planning phase is ongoing, the analyst and project manager both develop the customer’s review and approval. This will later define and clarify the project estimates. Furthermore, more details will be provided to the project management team.

They will help the project manager with the estimates. After this, the project manager is creating a detailed project schedule. It will contain:

  •      Duration and effort for every task
  •      Assignment of resources for every task
  •      Complete and detailed cost management of the project effort

3. Final detailed project estimate

These detailed project estimates allow the project manager to refine some of the tasks and add the whole estimation of costs. This includes hardware, software, equipment tests and additional space for the project team. When you as a project manager get to this point, you will be allowed to update the initial estimates created for the Concept Proposal. You can make replacements to reconcile the more accurate total project cost info. This new estimate needs to be communicated to the project stakeholders.

You can definitely try this strategy today and see if it is right for you. Also, one of the main things here is the fact that you should constantly be on a lookout for improvements or add-ons to this strategy. You can do this by having a cost control during the execution.

Supplement this article with related cost estimating blog posts like the one on project cost estimation, valuable steps to take before doing a construction work estimate, and a general guide on how to reduce the high costs in a construction business. Top it all off by downloading a free ebook on improving productivity on the work site.