Estimating construction costs is budgeting a project, establishing its feasibility, and computing a bid or budget. Construction estimates guide future project planning, resource management, scheduling, and unexpected adjustments. Consider the building expenditures required to execute a new project and calculate the best price you can offer your prospective client.

Before beginning the cost estimation process, it is critical to determine the project’s scope or order of magnitude. Identify the materials needed to complete the project. Read all planning documentation, including architectural plans, engineering diagrams, and project specifications.

What to expect?

When meeting with your client, determine the project’s order of magnitude by examining their expectations, function, and complexity. Work with your customer to thoroughly explain each project facet so that your estimates match their vision. Ask them for the following information:

Size and layout of the completed building

Complexity and amount of distinct features

Site location and any possible environmental concerns

The project owner and their contracted architect typically agree on specific design specifications. The architect often recruits other specialists with knowledge of the project to build a design team.

More complex projects with restrictions such as acoustic standards and HAZMAT storage typically have larger design teams, which means more individuals to consult when estimating. The architect usually manages the design process, but an engineer may examine some larger projects.

What kind of Estimates are there for me?

Cost estimates vary depending on the level of detail needed and the stage of the design process. There are several types of construction cost estimates, including:

Preliminary: At the outset of the process, this estimate is only a general approximation of the cost based on limited information. This tentative estimate is based on preliminary project information, such as a proposal or abstract.

Cube Rate: This is based on the overall volume of the structure and is commonly used to estimate multistory constructions.

Elemental: Estimates the overall cost of structural frames, floor finishes, and other design aspects based on drawings and specifications.

Full Estimate: This thorough estimate includes a complete list of design features, specs, materials, and labor.

Once you and your customer have agreed on the project’s scope and design, you can start calculating construction costs for each component. Break the project into smaller parts based on the project timetable and goals. As you continue to plan your project, you will be able to estimate the expenses for each phase.

How does residential estimating help me?

Construction jobs can be divided into phases based on the type of job. Most jobs will include one or more of the following phases:

Site preparation

Foundation

Superstructure

Interior finishing and landscaping

The expenses associated with your project’s phases can frequently differ, so dividing each phase into cost categories is critical. Construction costs in all phases can be classified into the following categories:

Direct costs include supplies, equipment, and labor.

Taxes and overtime are examples of additional labor expenditures.

Indirect costs include utilities, legal fees, permits, administrative costs, and labor for creating bids.

Costs of engaging subcontractors for some or all stages of building

Create an initial estimate for each project phase, using the above mentioned categories as a reference. These estimations for materials and labor are referred to as quantity takeoffs. Quantity takeoffs are based on research into construction material prices and serve as a starting point for future, more thorough estimates. The market for various construction materials may vary as the project progresses.

Labor Costs

Labor cost estimates necessitate a study into current local pay for your proposed project. Begin with the average construction wage in your location, then search for the typical rates for workers required at each project stage. Once you’ve determined the competitive rates, repeat the process for any skilled labour or speciality trades your project requires.

Once you’ve determined the cost of each type of work, consider additional factors such as worker productivity, overtime, and labor market conditions. If labor is scarce in your area or your workforce is small in comparison to the magnitude of your project, consider offering a higher wage to attract people.

Equipment Costs

Equipment expenses vary according to the project’s size and complexity. Determine the rental, ownership, and maintenance expenditures for the project’s duration. Consider the cost of all the tools, heavy machinery, and temporary equipment required to complete each phase. 

When estimating construction costs for a project bid, use all the information provided by the customer to generate your estimates. Construction documents may comprise preliminary design estimates and quantity takeoffs based on your client’s specifications.  Potential clients want to select the bid with the lowest total cost while preserving project quality. Your offer will likely be accepted if you can achieve their quality criteria while still providing a relatively cheap construction cost estimate.

Contingency Allowance

Set aside 5-10% of the expected project cost as a contingency allowance. This allows you to account for project schedule, budget, and scope changes. For example, if severe weather delays your building timetable, a contingency provision will ensure the project remains profitable despite the missed time.

In addition to contingency preparations, estimate updates are essential for tracking changes as they occur. When you review the cost of contingencies after the project, you may compare it to your original contingency allowance and adjust your final profit margin accordingly.

Note any changes in scope, timeline, material and labor pricing, or incidental charges.

Residential Construction

The total building budget for your new home is divided into three primary spending categories: materials, labor, and administrative costs (including the design work and permits mentioned above).

Material Selection

Choosing your building materials might significantly impact your costs. Recent supply chain challenges and worldwide resource shortages have pushed prices higher while the market is in low supply. Consult your contractor if you want certain materials in your home. They may be able to recommend the ideal time to buy, especially if you need to order months in advance to ensure prompt delivery.

Labor expenses

Labor expenditures are the third significant expense to consider. This will also vary depending on the size of your project, timeframe, location, and availability of high-quality supplies.

In addition to the general contractor charge, subcontractors will most likely incur additional expenses.

The Building Process

The following is a mere example of the cost of a new home. It is intended to facilitate the masses.

Foundation

A new home foundation typically costs $4 to $25 per square foot. The type of foundation you choose depends on your demands and location.

The monolithic concrete slab is often the cheapest option, with prices ranging from $5,200 to $13,000, while a crawlspace can cost up to $7,000.

New home framing might cost from $20,000 to $50,000. The framing step entails erecting the home’s structure and laying out the backbone from the trusses to the roof. Framers regularly finish the sheathing, subfloor installation, and metal work, which may include windows and doors.

The cost for your new home varies as per your requirements. The more rooms you have the higher the cost will be. That is why residential estimating services are a must for new home construction.

Exterior

Your home defines the exterior of the house. Keeping it simple is advisable. But if you have the money then go big. On average, exterior home finishes range between $40,000 and $60,000.

Major System Installation

The frame is up at this stage, and the structure is starting to resemble a real house. HVAC Installation is a must for any new home construction. That is why it is wise to partner with residential estimating services. The estimates will give you costing concerning your HVAC.

Installing main systems in your new home typically costs between $30,000 and $75,000. This includes rough-in plumbing ($7,000 to $15,000), electrical hookups ($20,000 to $30,000), and an HVAC system ($1,500 to $13,000 on average). These are all rough estimates. 

Interior Finishes

Your home is nearly complete and requires personal touches to create a warm and inviting atmosphere. So it’s no surprise that interior finishes are the most expensive item in the building budget, ranging from $50,000 to $175,000 but often exceeding that amount depending on your chosen materials.

More high-end finishes will quickly raise your price point, so maintain your budget available to avoid overpaying.

Here are rough estimates to interior finishes. These are subject to change. Price is purely dependent on location and materials that the customers request for their new home construction.

Custom cabinetry costs $2,000-$30,000.

Countertops: $2,000-$4,000.

Flooring: $10,000-$35,000.

Interior paint: $4,000-$11,000.

Doors cost $5,000-$20,000.

Lighting: $2,000-$12,000.

Indoor fireplace – $1,000 to $10,000.

Fencing and Landscape

The location of your home is a main factor in the cost of fencing. Currently, it will cost around 16K, but it depends on the size of the project. Building a fence cost typically between $1,330 and $5,550. Once everything is in place, youngsters will have plenty of room to play securely and enjoy the outdoors. 

Inspections

New home construction inspections are an important aspect. By not scheduling those you may lose money. That is why it is prudent for you to always be ready for them. With the help of residential estimating services, you can always be ready for the inspection. Normally, they will cost you 5K as long as the new home construction continues.

Is it wise to buy a house or build one?

Building a home is as expensive as buying one. This is only possible if you have the finances. Other than that, it is your choice. One essential consideration is if you already own the land you intend to build. If your property is already finished, the total cost of building your home may be similar to the purchase price of an existing home.

The answer to this question is specific to you and your purchase scenario. If you are particular about the features of your home and want to have a role in the construction process, the building may be an excellent choice for you.

Choose your price point.

This post presents several data factors that provide a straightforward range of prospective expenses for building a new home. These are a solid starting point when researching local codes, material costs, and contractor rates for new construction in your area.