Why is Estimation Important in Construction in Australia?

Tuan Duong

As a professional in the Australian construction industry, you know that accurate estimation is crucial to the success of any project.

But if you’re not sure what this entails, in a nutshell, estimating is the process of predicting the costs, resources, and time required to complete a construction project.

It’s also a critical skill that every construction manager, contractor, and business owner must master to ensure the profitability and sustainability of their ventures.

And if you’re not exactly a pro in estimating, you don’t have to worry – cost estimators (like those at Duo QS) are readily available to help you get on track.

The Role of Estimation in Construction

Essentially, construction cost estimation plays a vital role in the industry, forming the basis for project planning, budgeting, and decision-making. 

Beyond that, here are some more key reasons why construction estimates are so important:

  1. Project Feasibility: Before starting any construction project, it is essential to determine its feasibility. This involves collecting accurate cost estimates, assessing resources, and time required to complete the project and comparing them to the available budget and timeline. An accurate construction estimate helps you make informed decisions about whether to proceed with a project or not.
  1. Budgeting: Estimation is the foundation of project budgeting for construction companies. By accurately estimating the costs of materials, labour, equipment, and other resources, project managers can create a realistic budget that will guide your project from start to finish. This helps you avoid cost overruns and ensures you have sufficient funds to complete the project.
  1. Resource Planning: Estimation also helps you plan for the resources needed to complete a project. This includes materials, labour, equipment, and subcontractors. Using an accurate estimate, you can assess your resource requirements, and ensure you have everything you need to complete the project on time and within budget.
  1. Risk Management: Construction projects are inherently risky, with many variables that can impact the final outcome of the project management process. Accurate estimation helps you identify and manage these risks by clearly showing the project’s scope, timeline, and budget. This allows you to develop contingency plans and make informed decisions about mitigating potential risks.
  1. Competitive Advantage: In the competitive construction world, accurate estimation can give you a significant advantage over your competitors. By providing accurate and competitive bids, you can win more projects and build a reputation for reliability and professionalism.

Best Practices for Accurate Estimation

Now that we’ve established why estimation is so important, let’s look at some best practices for ensuring accurate estimates on your end:

  1. Use Historical Data: One of the best ways to ensure accurate estimates is to use historical data from similar projects. This can help you identify patterns and trends that can inform your current estimates.
  1. Break Down the Project: To ensure accuracy, it’s important to break down the project into smaller, more manageable components. This allows you to estimate each component separately and then combine them to create an overall estimate.
  1. Consider All Variables: When going through the construction process for a project, it’s important to consider all the variables that can impact the final outcome. This includes weather conditions, site conditions, availability of materials and labour, and potential delays or disruptions.
  1. Use Construction Estimating Software: There are many software tools available that can help you create accurate estimates quickly and easily. These tools can automate many of the calculations and provide a standardised format for presenting your estimates. However, we recommend enlisting the help of a construction estimation team to help you with your project, instead of relying on tackling new software.
  1. Collaborate with Your Team: Estimating is a collaborative process that requires input from all team members. By working together and sharing information, you can ensure that your estimates are as accurate and comprehensive as possible.

Tip: Use a construction cost calculator to help you assess the numbers you’re dealing with.

Time to Use Construction Cost Estimating Services?

While many construction professionals in Australia have some experience with estimation, there are times when it makes sense to bring in a professional cost estimator – like us.

Construction cost experts specialise in creating accurate, detailed budget forecasts for all sizes and types of construction projects. Here are some ways that professional cost estimators can help:

  1. Expertise and Experience: Professional cost estimators have extensive training and experience in creating accurate estimates. They are familiar with the latest estimating techniques and software and deeply understand Australia’s construction industry.
  1. Objectivity: Because they are not directly involved in the project, professional cost estimators can provide an objective, unbiased perspective on the project’s costs and resources. This can be especially valuable when the project team has competing interests or conflicting opinions.
  1. Time Savings: Creating accurate estimates can be time-consuming, especially for large or complex projects. By bringing in a professional cost estimator, you can free up your own time to focus on other aspects of the project.
  1. Risk Mitigation: Professional cost estimators are trained to identify and assess potential risks associated with a project. They can help you develop contingency plans and make informed decisions about mitigating these risks through unit cost estimating.
  1. Improved Accuracy: Professional cost estimators use specialised software and techniques to create more accurate and detailed estimates than generalists. This can help you avoid costly mistakes and ensure your project stays on track.

Key Takeaways

  • Estimation is the process of predicting actual construction costs, resources, and time needed for a construction project.
  • Accurate estimation is crucial for project planning, budgeting, and decision-making.
  • Estimation helps determine project feasibility by comparing estimated costs and resources to the available budget and timeline.
  • Estimation assists in resource planning, ensuring necessary materials, labour, equipment, and subcontractors are available.
  • Hiring or enlisting the services of someone who specialises in construction estimating is recommended for any construction company in Australia.
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Disclaimer: Please note that every effort has been made to ensure that the information provided in this guide is accurate. You should note, however, that the information is intended as a guide only, providing an overview of general information available to property investors. This guide is not intended to be an exhaustive source of information and should not be seen to constitute legal or tax advice. You should, where necessary, seek a second professional opinion for any legal or tax issues raised in your investing affairs.

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Tuan Duong

Tuan is an award winning Quantity Surveyor and leads Duo Tax Quantity Surveyors – Australia’s fastest growing provider of Tax Depreciation.

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