When it comes to building a property, cost estimates are an essential part of the process. It enables decisions to be made about the feasibility of the project. It helps you plan budgets and manage resources. To estimate construction costs correctly, you need the right perspective. Perspective takes into account a number of factors that influence the cost of construction, and therefore the estimate. These include the scope and complexity of the construction project, materials and construction methods, site-specific conditions, labor and much more. Perspective plays an essential role in estimating construction costs.
The different types of perspective
There are two types of perspective: internal and external.
The internal perspective
Knowing the details of the project is the foundation of a solid internal perspective. Builders need to understand the scope and requirements of the project, in terms of design, materials, labor and finishes, so they can identify the costs associated with each element of the project. Analysis of plans and specifications can also detect details that could have a significant impact on costs. Determining construction methods, meanwhile, enables us to assess the costs of labor, equipment and materials. These, too, influence the average construction price.
From an internal perspective, the analysis of direct and indirect costs is also important. Direct costs refer to expenses incurred specifically for the realization of the project. Indirect costs are those incurred to support the realization of the project. They are therefore not directly linked to the construction itself.
The external perspective
Unlike the internal perspective, which focuses on the specific details of the project, the external perspective involves examining factors external to the project that may influence costs. These include market conditions, economic trends and the availability of resources.
To adopt an effective external perspective, it's essential to know the real estate market. Find out about trends in material prices. Material prices can fluctuate according to global demand, energy costs and geopolitical events.
Also, familiarize yourself with regulatory requirements. Regulations and building codes also have an impact on the price of construction. Finally, don't forget to consider the competitive environment.
An external perspective makes it easier to assess project costs in relation to market trends and demand.
The impact of perspective on construction cost estimates
Perspective makes it possible to produce accurate and more reliable cost estimates. But how?
Examples of scenarios where the wrong perspective led to inaccurate estimates
During the construction of an office building, the builders are familiar with the details of the project. In their estimates, they considered only materials, labor and construction methods. After their analysis, they estimated the total cost of the project at 10 million euros. The team did not take into account local regulatory requirements for fire safety and accessibility. As a result, significant changes had to be made to the project design. These modifications resulted in a cost increase of 2 million euros. As a result, the total cost of the project increased by 12 million euros. The initial estimate of $10 million was inaccurate due to poor perspective. Had the team taken into account local regulatory requirements from the outset, they could have produced a more accurate estimate. This enabled them to avoid cost overruns.
Discussion of how an accurate perspective can improve the quality of construction cost estimates
An accurate perspective is very important for improving the quality of construction cost estimates. But how? Perspective helps to improve planning, budgeting and risk management. By not overlooking any construction-related costs, estimates based on an accurate perspective are more realistic and complete. Accurate estimates based on a precise perspective help reduce cost overruns. The result is better planning and resource management. This promotes trust between project stakeholders.
Our tips for improving perspective in cost estimation
Here are a few tips to improve your cost estimation perspective.
Working with construction experts
Call on experienced estimators. They are very familiar with construction practices and costs. Also, consult architects, engineers and other industry professionals. This way, you'll get information on the design, materials and construction methods involved in the project. Involve subcontractors in the estimating process, too, to get their input on labor rates and the cost of building materials.
Use project management software to visualize costs more accurately
To break down the project into smaller elements and quantify the costs associated with each, use project management software. This software lets you visualize the impact of different design and material options on total project costs. It helps you track actual expenses. It allows you to compare data with initial estimates. This enables you to identify discrepancies and make adjustments during the course of the project.
Follow market trends and adapt accordingly
Stay on top of the latest news. Stay abreast of fluctuating sales prices. Analyze historical construction cost trends for similar projects in the region. In this way, you'll improve your perspective when estimating costs.
Conclusion
A well-developed perspective, whether internal or external, results in more accurate and reliable estimates. By taking into account all aspects of the project, from materials to regulations, and keeping an eye on market trends, you'll avoid cost overruns. You optimize resource management.
To improve the accuracy of your estimates, we recommend working with experts, using efficient project management tools and keeping a close eye on market trends. Adopt these practices today to ensure the success of your construction projects.
