How to estimate construction costs

construction costs

How much is it worth?

You are getting ready to build that new deck or put a new roof on your house but you don’t have any idea what it will cost. What do you do and where do you go? How do you predict your construction costs? For most homeowners cost estimating is a complete mystery but, figuring out what a construction project will cost is important not only for your budget but sometimes to keep your contractor honest.

Part science and part art, construction estimating are actually easier than it looks. Following a few simple rules, you can get a very close idea of what a construction project will cost. By using the concept of unit pricing, the stick estimation method, and having a good understanding of the construction process you can predict with good accuracy all but the most complex construction tasks.

Establishing the Scope of your Project

The first step in any estimation project is to establish the scope of your project. Defining the scope is about establishing what you intend to do and how you intend to do it. If you are building a deck it might involve calculating how big the deck will be and how many feet of handrail you will need. Additionally it will mean deciding what type of deck you are going to build.

To unit price you must first answer the what and how much questions for your project. For example, if you are installing a new roof, how much roofing are you installing and what type of roofing are you going to be using? Most of the time these questions are easy to answer with a tape measure and your own personal preferences.

You can easily measure the roof area and you may decide to use a 35-year premium composition roofing. If the task is a more complex just break it down into more manageable steps. For example, when you are installing a fence; how many posts do you have to dig? How many fence boards will you have to install and how many gates do you have to put in? Treat each task as a separate item and then add the items together at the end.

In this way construction estimators can figure the most complex costs of even something as difficult as a high rise office building. After you have established the scope of your project or a series of smaller scopes you are ready to begin your estimate.

Unit Pricing

Unit pricing is the easiest and quickest way to predict a construction cost. Unfortunately it is not always as accurate as other estimating methods. Unit prices are the average cost it takes for a group to perform a construction task. These average prices are readily available on the Internet and in construction estimating books at your local library.

Contractors often use unit pricing to establish the overall cost of a construction project. They are also used to check more detailed construction estimates. Many times unit prices may give you all the information you need for your project budget or to check your contractor’s proposal.

To predict a construction cost using unit pricing, start by locating the best unit price for the project you are planning. Many simple databases exist that have vast amounts of pricing for every construction task imaginable. If you are planning a new roof, sometime the local roofing supply center can give you the unit prices for different types of roofs in your area. When you have these numbers you are ready to calculate your costs.

In our area cedar wood decks install for $ 12.50 per square foot and the railings install for $ 10.28 per foot. The unit price book lists this as $ 1.82 per foot for materials and $ 8.46 per foot for labor. Using these prices, all you have to do is simply multiply out the numbers.

For a deck 10 feet x 20 feet, I have 200 square feet of area times $12 .50 per square foot or $ 2500.00 for my deck cost. The additional 40 feet of railing will cost me 40 ft times $ 10.28 per foot or $ 411.20. This is very quick and easy estimating method but make sure you have the right units and that the unit price you are using is the correct one.

The Stick Method

If you need a more accurate estimate, the best method to use is something called the stick method. The stick method adds up the costs all the necessary sticks of materials you will need and then adds the cost of labor. To use this method however, you must know more about the construction process. You must know how the project will be built and where you will be getting the materials. For this you will usually need a set of plans.

This can consist of anything from a simple drawing done on a pad of paper to a fancy plan that you pay an architect for. With a plan you can begin by calculating what you will need for materials. This can be done for by yourself but many lumberyards or hardware stores will also do a material take-off for free and will tell you what the materials will cost. This will give you your material costs for the project.

Figure the labor costs by thinking carefully about how many hours of labor will be needed to accomplish each task. If you think the roof will take six men for two days that is 96 hours of labor. The labor costs will be labor hours times an hourly labor rate. Use an hourly rate you think is appropriate for your area. If the labor task is too difficult to calculate, break it up into smaller tasks.

For example, in building a deck, you know it will take so many hours to get the deck materials at the lumber yard, so many hours to build the posts, so many hours to lay out the joists and so many hours to put the decking on. The total hours for each of these tasks is the number of labor hours to build your deck. Add your material and labor costs and you have the basic construction costs for your project.

If you have figured all the materials accurately and have been very careful in calculating the labor needed your basic material and labor predicted cost will be extremely good. Of course when you use a contractor to do this work, you must also add to this basic cost the overhead and profit a contractor would charge you. This usually runs anywhere from an additional twenty-five to fifty percent depending on the contractor.


Now that you have learned the tools of construction estimating, you should be able you predict many of your construction costs. Before you open the doors to your new construction company however, remember there are always unpredictable elements to any construction project. Each construction project is different and even contractors make mistakes. Predicting construction costs is never an exact science.

The more you know about your project and the more carefully you can define your project, the closer your predictions will be. Establishing a scope lets you unit price your project. If you need a more accurate estimate, you can calculate all the materials and labor and add any additional overhead costs but this is only your costs for the predictable. To account for the unpredictable, add money for what estimators call the contingency factor. These are the things you can’t predict.

Things like extra materials for wastage or allowances for slower labor in bad weather. What other factors may cause you more cost? The larger the uncertainty factor the bigger the contingency should be. The contingency will leave you a buffer in case things don’t go according to plan and as one old contractor has learned for certain; things never always go according to plan.

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