In an era where project complexity, cost, and schedule pressures continue to grow at an unprecedented pace, inaccurate construction estimates are no longer acceptable.
Construction industry leaders have always recognized the importance of estimating and the many ways inaccuracies can lead to serious problems during (and after) construction, but the estimation tools of the past left them with limited options. Advanced estimating software provides a solution for this age-old dilemma.
The Real-World Cost of Inaccurate Estimation
9 out of 10 construction projects experience cost overruns, with estimation errors or flawed estimates causing the majority of the issues. Inaccurate estimates early on can lead to schedule and cost problems that continue throughout the lifespan of a project. They can also lead to disputes when contractors plan their time and materials based on inaccurate information, are unable to complete their tasks as planned, or choose to walk away from a project unexpectedly.
These scenarios ultimately lead to dissatisfied clients and lost opportunities. As the construction industry becomes more competitive and reviews and recommendations are shared more freely, the result can be long-term reputation damage that is difficult to overcome, or lost profits that are difficult (if not impossible) to recover.
What Causes Estimating Errors?
Like most errors or miscalculations, estimating errors in construction are primarily caused by a lack of project information. Any gaps related to design, materials, site conditions, transportation costs, or project risk factors can potentially lead to inaccurate estimates. Additional factors that frequently contribute to errors include:
- Poor data-sharing between teams and stakeholders
- Manual data transfers from drawings and Excel spreadsheets
- Inadequate change and revision control
- Failing to account for contingencies
- Inadequate review of subcontractor bids
RIB’s construction estimating software eliminates many of these common problems by creating live links between design files and cost databases. Advanced 2D and 3D quantity takeoff capabilities eliminate manual data transfer processes, while access to historical data supports more precise estimation and benchmarking activities.
The Role of Modern Estimating Tools
Software tools for 3D takeoff and estimation are the best examples of modern technology at work to transform and improve the construction estimating process. Cloud-based software makes it possible to create centralized data locations that ensure everyone involved has access to the latest information.
Advanced reporting features and standardized templates eliminate time-consuming, manual steps while ensuring the output meets stringent industry standards. As artificial intelligence (AI) becomes part of the digital toolkit, information gaps will be filled with more accurate and intelligent assumptions based on machine-learning and predictive algorithms.
Case-in-Point: Estimation in Preconstruction and Tendering
Accurate estimates are essential during the preconstruction and bid tendering phases of a project, since they form the foundation for initial project budgets and competitive bids that ensure contractors complete their tasks on time while still making a profit. Early estimates also provide greater insight into the feasibility and profitability of each project to support decision-making processes.
In some cases, these early estimates will lead to design changes and other modifications to better align the project budget and client expectations. The bid tendering process becomes a win-win when contractors submit realistic proposals that foster trust and transparency with their clients.
Looking Ahead: Why Estimating Will Define Construction Success in the Next 5 Years
Estimating has always been an important element of the construction process, and this importance is expected to grow significantly over the next few years. Tighter profit margins and stricter regulations are leaving little margin for error, which will make the inaccurate methods of the past obsolete quickly. In addition to improved predictions, AI and automation are expected to bring:
- Quick and accurate building sustainability assessments
- Automatic supplier price checks
- Efficient scenario testing of various design options
Software advancements will turn estimating into a strategic capability, rather than a routine technical activity. Fast integration and analysis of historical data and design information will make estimates more precise, as the project risk factors are analyzed and weighed to create more realistic buffers and contingencies.
Final Thoughts
For industry leaders and contractors looking to improve their on-time performance, quality, and profitability, there is exciting news on the horizon. Construction estimation software already provides an avenue to eliminate
manual processes, data entry errors, and time-consuming research. The best is yet to come, as AI and machine learning take predictive analytics to new heights in the decades ahead.
Companies of any size that still rely on the methods of the past to plan and create the buildings of the future should take a second look. Cost-effective estimation software provides instant benefits that continue to pay dividends throughout the project lifecycle.
