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December 10, 2019

Three Ways to Lower Construction Estimating Costs

estimating2-1The construction industry is very competitive. This means that effectively managing internal construction costs is essential to winning more bids and maintain a higher profit margin.

While some may argue that there are external forces responsible for escalating construction cost estimates, the most important step to reducing these costs is to audit internal estimation processes.

Here are some of the most effective ways to reduce your estimates of construction expenses.

1. Stop Using Spreadsheets

Spreadsheet errors have caused construction companies huge losses in the past. A study conducted at the University of Hawaii revealed that 90% of spreadsheets had serious errors. This is a major risk for both small, medium and large construction businesses.

Estimation errors in spreadsheets can cost construction companies huge losses through overpayment, wrongly calculated markups and loss of productivity. This is because popular spreadsheet programs like Excel are not designed to be error-free. So, they tend to magnify human errors during data entry.

Spreadsheets fall short because the processes involved in creating and managing accurate estimates for construction projects are too complex to be managed by spreadsheet cells. So, what are the main reasons why you should avoid using spreadsheets during your estimation process?

Spreadsheets Don’t Have Specialized Features for Cost Estimation

Spreadsheets lack the features you need to perform error-free data entry. Even when the construction cost estimates are accurate, if the calculations are off by just one digit, your bid may be rejected because it’s higher than those of your competitors. While you may be able to avoid some errors through manual verification, the time it requires can be prohibitive. A manual verification process will still be prone to error.

Spreadsheets Don’t Protect Data Effectively

Using spreadsheets for cost estimation of construction projects can put your data at risk every time. It’s quite easy to delete data in one or more cells or columns and lose vital data. Unfortunately, the only data security feature that’s available in spreadsheets – cell protection – is seldom used.

Spreadsheets Waste Time and Effort

Working with spreadsheets makes collaboration more tedious. In a single organization with a lot of projects to work on, employees could end up emailing dozens of spreadsheets to each other every day. In addition, spreadsheets require a lot of manual work to populate the database. You also need to keep creating and editing formulas to check the status of any task in the spreadsheet.

Since errors in spreadsheet data can lead to wrong calculations and financial projections, it’s important for you to take steps to eliminate them and improve the accuracy of your data management process. That’s why it’s essential to use modern software tools like Sage Estimating that eliminate manual takeoff calculations and provide consistent quality in data warehousing.

2. Don’t Monitor Costs on the Phone

The practice of making phone calls to verify estimates is an antiquated practice that should be stopped. New improvements in construction estimation software make it possible to streamline communications and get updated cost estimates in real-time while preparing a new project bid.

A solution like Sage Construction Estimating Software will enable your team to have instant access to all cost data for labor, materials and equipment in different regions of the United States. So, while making purchase decisions or long-term projections on costs, data can be verified instantly before it’s shared with other team members. It also makes it easy to do an accurate comparison of prices and subcontractor bids.

So, instead of allowing your staff to call to confirm prices, you should ask them to reserve phone calls and meetings for interactions that need face time. Then, let your internal communication system be linked with your cloud-based estimating software, so that data reporting and sharing can be done within a few clicks.

3. Focus on Profitability

With accurate cost data and effective communication between members of your team, you can easily analyze bids and choose those that will be profitable for your company. Accurate cost data will also make it possible for you to reduce internal construction costs and still stay competitive.

How Can You Reduce Construction Cost Estimates?

Here is a summary of what we’ve discussed so far:

  1. Produce digital takeoffs: Use a system that has the capacity to create accurate digital takeoffs. Digital takeoffs are produced automatically from blueprint data.
  2. Connect to a robust cost database: Choose a software platform with a large construction cost database, which will make it easy to make cost estimates. The solution should import critical external data and ensure that all your subcontractors are giving you accurate data to produce winning bids.
  3. Improve internal communication: Investigate your internal communications so that your team has accurate and up-to-date data for effective decision making.
  4. Work towards your profit targets: Concentrate on your bottom line when you’re making cost estimates. Make sure that the profit margins are in line with your long-term financial goals. Work with a platform that manages markups to ensure that you achieve the desired profit margin at each stage of your project.

Use Sage Construction Estimating Software

Sage Estimating is the most advanced pre-construction bid creation solution available today. It has the capability to:

  • Build accurate takeoffs and estimates from both 3D and 2D blueprints
  • Integrate fully with top-of-the-line building information modeling solutions.
  • Work with a large collection of pre-populated construction cost databases.

Sage Estimating Software makes it possible for you to cut down on your construction costs and reduce the amount of time needed to create a full cost estimate. It creates digital takeoffs and provides easy access to accurate data for creating bids.

With Sage Construction Estimation Software, your team can reduce your estimated construction costs with minimal effort. It boosts efficiency and productivity by eliminating guesswork and human error during the estimation process. There’s minimal data entry required, so human error during data entry or creation of takeoffs is virtually non-existent.

Contact Us Now for a Free Demo

If you want to revamp your pre-construction and cost estimating process, so you can win more bids and earn more revenue and profits in your business, then contact us today for a free demo.


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