According to the NAHB, over 60% of the final house price is attributable to its construction costs. Developing a construction cost estimate for your new residential property is the most crucial aspect of the project. It directly impacts your profit margins, and even a small error can lead to costly delays and project losses.
Hiring a construction cost estimating services can help you keep your project in-line with the schedule and budget. With an accurate and comprehensive construction cost estimate at-hand, you can determine precisely how long the project will take, what materials will be required, and how much they will cost.
And to help you develop accurate estimates, we’ve shared ten excellent tips in this article.
1. Get to Know the Current Market
First, you need to know how much it costs to build a home in the current market. Amidst the pandemic, the construction industry—like every other indusrty—has taken a massive hit. A predictive study shows that overheads and profits have increased by $55 per square foot.
What’s more, the costs are lower in the southern region and increase as you move towards the north. In most situations, you’re more likely to gain profits if you add a basement or some luxury finishes instead of bedrooms.
2. Calculate Quantity Takeoffs
The next step is to convert structural, architectural, plumbing, electric, and all other design plans into a list of quantifiable items. A quantity takeoff estimator can help you understand the nitty-gritty of actual, current, future, and incurred costs on your residential project.
They’ll help you determine whether your project is profitable or not.
3. Consider the Material Grades
Numerous types of construction materials are used in building a home. To make your project profitable, you must know the type, quantity, and grade of construction material used.
Here’s a list of things you should include in the estimate:
Material
Labor hours and number
Machine
Electricity / Water Charges
Transportation
Overhead Costs
Contingency costs
4. Include All the Types of Construction Estimates
Every home needs electrical, plumbing, flooring, and roofing systems, and so does its estimation! A construction estimate must include installation costs, labor component of the price, and material supply and demand.
Other critical junctures of your home are the concrete, metal, exterior and interior finishing, paint, lumber, and drywall. Leave these detailed and time-consuming estimations to professional estimators and concentrate on other tasks involved in winning bids.
5. Calculate Costs per Square Foot
The final cost of a new home depends on its size. Here are some important factors to consider when calculating size-based construction costs:
Square and rectangular buildings incur a lower cost to build compared to multi-story and angled-designs.
The quality and quantity of cabinetry, floors, shingles, doors, and windows impact your overall costs.
Value additions such as HVAC systems, curved staircases, and vaulted ceilings elevate cost per footage.
Include the costs related to obtaining permits, site preparation, and time delays due to unforeseen circumstances.
The cost always exceeds the original bid price. Work with your builder, contractor, or hire an estimator to stay as precise as possible.
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