Why is Estimating Important?

“There is no such thing as an absolute value in this world. You can only estimate what a thing is worth to you.” – Charles Dudley Warner

Estimates are a functional part of our everyday lives. We estimate the time to reach a place, the total money spent, and other details. People around us live by estimation.

The role of estimating is critical in a contractor’s life. As service providers, they are constantly assessing the worth of their work. Each contractor offers a different worth and value, depending on various factors, including skillset, demographics, certification, and experience. So, let’s continue reading about what is an estimate and why is estimating important.

Why is Estimation Important in Daily Life?

We touched base on the fact that we need to estimate all aspects of our daily life. Say you are traveling from point A to point B, you will calculate the total fare cost and the cost during the travel. This is one way of deducing approximations in your life.

You will look at the past few months’ budgets to check the fixed and variable costs you incur based on that, you can estimate your current budget.

From your mathematical equation’s exact answer to your daily budget, everything results from estimation. If your estimates are accurate, you are assured of optimal lifestyle and proper spending.

Estimations in daily life help you make the right decisions and help save a lot of your time and effort. For instance, if you didn’t estimate your budget, you would spend more and waste a lot of time figuring out how much you spent.

It allows us to make the right judgment about things and identify how things need to be done.

What is the Importance of Estimating?

At this point, you might ask why estimating is essential to you as a contractor or business owner. Let’s put this into perspective. Every business owner or contractor has a different vision for cost estimates. The owner wants to know the spending they are likely to incur with the help of an estimate. Similarly, it will help them identify if the scope and management costs to match.

The estimate will help them realize whether the work to be taken up is worth the money or not. Here we will take you through the actual purpose of the estimate.

• It showcases the experience of the contractor and their understanding of the scope of work. For instance, the estimate tells the client and the contractor what materials will be used, how long the job management will go on, and the approximate cost. The detailed estimate showcases the contractor’s strength.
• When you sign a contract with your client, you want to make sure you have identified the true scope of work. You are entering a deal over the money and the scope and timelines. The estimate will be your go-to for the contract. It will help both parties know what needs to be done. If either party misses out on a single point from the scope or timeline, they can always go back to the estimate.
• The estimate is your first step to proper planning and defining milestones. You have already determined what work needs to be done, the total scope of work, and the timelines. It becomes easier to explain the phases during the planning stage, add the work-to-be-done in those phases, and manage the milestones.
• You will know if the project you are planning is profitable or not. The estimate helps identify the project view and allows you to manage it properly. The project estimate should be detailed and in sync with the project requirements. It will give a headstart to the project manager during the planning phase with purchases to be made, details to be taken care of, and the outsourcing of work.

Benefits of Estimating for Contractor

We have seen why contractors should estimate, i.e., the purpose behind estimating. We will now talk about the real benefits associated with estimates.

1. Speed Benefits

   As a manager or contractor of the project, your sole aim is to ensure the project is completed on time. You will strive to manage the timelines. With the estimation unit, you get a headstart that you don’t get otherwise.

   Let us explain this part. You already know what your project consists of, how long it will go on, and other details. This makes it easier for you to plan and divide the entire project into workable phases. Eventually, you will complete the project and your scope of work on time.

2. Insightful Decisions

   When you are landing a project and estimating the cost, you can do a complete cost-benefit analysis. It helps to know if the project is worth spending your time and resources on. For example, it will prevent cost overruns for contractors. The entire construction cost estimation helps you know if the project is profitable.

   Similarly, specific projects would offer profits, but they don’t work in your favour timeline-wise. It helps you know whether to take a project or not. There is enough factual data or compile detailed data points to support your decisions.

3. Resource Planning

   This is a critical consideration for most projects. You want to know if your resources for the particular project are essential and valuable. It is equally important to know how many resources your project will require.

   When you have the actual cost estimate ready, it helps you know if the resources you have planned are enough or not. It will also prevent you from spending more on resources. The estimation techniques makes resource planning and hiring easy and hassle-free.

Why is an Estimator Important?

Let’s look at the estimating process manually. You will connect with the client, get the scope of work,job schedule type the entire project breakup on an excel sheet and calculate the timelines. Imagine the number of hours you spend creating the Gantt charts and preparing the project timelines.

Let’s now get to the estimator software solution for a cost estimate, which will help ease the process. There are several benefits associated with incorporating technology for estimating your project for your construction company.

1. Cost Savings

   If you were to do this exercise manually, you would also need to search for capable vendors that accommodate your budget the traditional way. It can consume a lot of your money; in fact, you might end up spending more than you planned. The estimator will find vendors that match your cost and quality requirements.

   You can even identify the vendors who offer the lowest price for the materials and save more money.

2. Error-free Estimations

   This is, in all likelihood, the best benefit of having an estimator by your side. When you enter the details manually and cost estimate the scope, mistakes increase, and you might end up adding more direct and indirect costs or resources (or vice versa). However, the estimate generator makes sure you can reduce the mistake significantly.

   This will help you justify the joint costs better and make sure you have estimated perfection.

3. Improves Planning Abilities

   Planning is pivotal to ensuring you determine the milestones and know the phases of your construction project. The experienced cost estimator gives you proper inputs on what each stage will contain. It will also help you plan, buy and manage the materials. It also enhances your resource planning abilities, knowing when you will need more resources. This is typically true for construction cost estimation and projects.

4. Better Communication

   When you have an estimator, it ensures better planning and helps with managing the project. It allows the stakeholders to view the project’s progress, and the savings made during the different stages of the project and helps with collaboration.

   It helps set expectations for the project right at the start and helps everyone involved towards a common goal.

5. Managing Deadlines

   In construction projects, you need to adhere to deadlines. It is essential to maintain your reputation. Accurate construction estimates help you plan through the whole project duration in a better way. It also enables you to be more prompt about your tasks and manage the construction better. You are more organized and better at planning due to your management and planning capabilities.

6. Exceed Customer Satisfaction

   With a construction project estimator, you get to report the daily updates and get complete visibility into the project. The detailed and easy-to-understand reports help contractors and managers fully view the project and its progress. They would know what is lacking and what areas to improve. Eventually, it helps towards enhancing customer satisfaction.

Conclusion

Accurate cost estimates are significant to ensuring the timely completion of your project. In most cases, construction project managers don’t account for delays in the projects or scope because there is no proper planning.

You would notice that many construction companies tend to face overruns because they had not planned properly or there were inaccuracies in planning.

It is essential to consider the project scope, cost estimators, and project duration for successful planning. If you don’t want to waste your time estimating manually, you can adopt estimate and invoicing software like InvoiceOwl that will help you to create construction estimates and invoices in less than a minute. That way, you will still maintain your reputation and improve your abilities.

When planning a new construction project, you should implement the right technology partner to solve your estimation needs. You should invest in a good estimator software solution to enhance your project goals and improve efficiency. You can start your free trial today and start making use of this software for saving your time and creating an accurate estimate.