An estimate is a well quantified and time bound list of resources used for the successful completion of a project. The very first step in planning a project is to estimate the resources involved in completing the Project. Care should be taken while preparing the estimate for it should have a close approximation of figures against their actuals. Whether or not the estimate actually agrees with the actual cost will depend upon the expertise and quality of tools used for estimating construction costs.

Deciding the budget of the construction and trying to keep it within the limits is one of the difficulties faced in the construction business. There are many problems that crop up during the actual process of construction for which allowances have to be made.

Four areas of Estimating

While the broad definition of estimating is to give a closely accurate idea of what a project is going to cost, it can actually be broken down into four different points. It is important that the estimate is very detailed and accurate, and this requires using four different areas. The four things that are very important to consider when doing constructing estimating in building include materials, labor, plant, and time.

1. Estimate the Materials - When you are estimating construction costs, you need to make sure that you estimate the materials you will need for the job and what they will cost. This will allow you to have a more accurate estimate and will also help you to make the needed arrangements to get the materials that you will need for the project as well.

2. Estimate Labour Costs - Not only will you need to consider materials when estimation, but you will need to estimate labour costs as well. Consider how many workers you will need, and from which categories you will need them. Make sure that you will have enough workers to get the project done on time as well.

3. Estimate Plant/Machinery - Another thing to consider when estimating building construction costs is the equipment. You will need to have an idea of what all equipments you will need to complete your project.

4. Estimate the Time - During the construction of a building, there is a big cash flow in a short time. That is why it’s important to have your resources at hand to prevent any delay in the construction process. At least 40 percent of the total cost of the project is taken up by the labour involved in the actual construction. Construction workers are paid by the hour, and any delay in the delivery of the construction material will mean man-hours lost and will ultimately add to the final cost of the project. One thing that many people forget when they are doing construction estimating in building is the time that it is going to take to complete each part of the process and the time it will take to complete the entire project.

Estimating Residential Construction

When it comes to estimating residential construction costs, most small and medium construction contractors find themselves in a state of flux. They work hard on collecting and collating data, but end up with little or no profits. To top it, they are operating in a fiercely competitive industry that's in the middle of a slump. To convert his estimates into actual sales invoices, a construction contractor has to be on the ball while estimating a residential construction project and here is a small primer on how a contractor must build his estimate.1. Location and environmental costsBefore beginning to work on the actual construction, a contractor should survey the residential plot upon which the building will be constructed. There may come up some building constraints due to various factors, such as the location of the construction site and even environmental factors, e.g., the land being located in a "wetland" kind of area. Other times, a contractor may be asked to clear the site by demolishing an existing structure. These factors add to the construction cost. It is, therefore, important that a contractor be thorough with his research so that these additional costs can be built into the residential construction estimate.2. Construction costsNormally, a contractor is given a house design and asked to give an estimate of the construction cost based on material costs and labor costs. While giving a residential construction estimate, a contractor must break up his quotation into:

a. Foundation: Foundation cost comprises of the cost of concrete used in laying the foundation of the house as well as in footings, walls, slabs and columns, plus the expenditure on the machinery used.

b. Framing and walls: This includes the cost of wood used in the building – paneling of walls, floors and ceilings consumes a lot of wood. Apart from wood, these structures also consume a whole lot of metal, brick, stone, laterite and so on.

c. Roofing: The cost of the roof, whether it is concrete or a combination of truss assembly and metal sheets/ tiles.

d. Flooring: Flooring cost includes costs related to any item used for covering the floor of a home – such as vinyl, tiles, carpet and even sub-flooring material such as carpet pads.

e. Exteriors: This includes the cost of the material required to do the exterior of a home, be it bricks, stones or a combination of these.

f. Interiors: Any material required to bring the inside of a home to a finished state should be included in the estimate, for example, kitchen cabinets, bedroom cabinets, wall paints, or anything extra desired by the client.

g. Doors and Windows: Doors and Windows consume wood, glass and small hardware sundries that must all be factored into the estimate.

h. Electric work: The cost of electrical work includes the costs for wiring, outlet points, lighting fixtures and connections from the main power supply.

i. Plumbing: This includes the cost for preliminary works such as connection to sewage lines and connections from water lines, and the cost of plumbing fixtures for the bathrooms, kitchen and utility room.

j. Appliances: A contractor is expected to finish a home with certain appliances such as fire safety gadgets, anti burglary gadgets, and a garbage disposal facility, so he should build these costs into his estimate. If any other appliances are needed, they can be added on.

k. Heating/Cooling: Central air conditioning costs, ductwork and other heating/cooling costs.Accommodating all the factors that contribute to the total cost is not a precise exercise. There are bound to be ups and downs because a contractor relies on too many variable factors. Therefore, it is prudent that the contractor builds in a contingency reserve, an escalation clause and a market condition allowance into his estimate. A contractor must also be careful if he is outsourcing any of the construction services – and he must insist on written commitments and penalty clauses with his suppliers.Other costs a contractor must be wary of:Normally, a small or a medium construction contractor will plug in the usual construction costs into his estimates. He must also take care to ask the client if he is expected to perform any or all of the following services:

1. Getting the site ready for construction.

2. Handling permit costs, liaison work with the authorities and paying the requisite fees.

3. Demolition of existing building/structure.

4. Landscaping.

5. Modifications to the house plan after construction has started. (This is a rarity, but, still, there's no harm in asking.)

Once the contractor has factored in all the visible and invisible costs, he must begin estimating the residential construction costs, add his margin and hope that the client accepts his estimate. Since a contractor has a whole lot of things to do and manage before and during construction, it will do him a world of good if he relies on an efficient software that gets everything organised and helps to get things done on time. A good construction estimation software will help him strategise and execute his plans without a hitch, without any hiccups in the schedule. Moreover, his estimation on construction costs will be accurate and fluctuations, if any, will be controlled and ironed out with a fool proof estimation software which in turn will give the contractor a solid grip on his business.