In the world of construction, planning is everything. Whether you're a contractor, project manager, or part of the estimating team, creating a preliminary estimate is a crucial first step that can help set the tone for a successful project. A preliminary estimate is the best way to get a rough idea of how much a project will cost before diving into the nitty-gritty details. This early estimate allows you to identify potential risks, adjust budgets, and create a plan for moving forward.

In this blog post, we’ll walk you through the steps for creating a preliminary estimate. Plus, we’ll share some practical tips to make the process more efficient and accurate. So, whether you're new to estimating or just looking to sharpen your skills, let’s dive in!

What is a Preliminary Estimate?

A preliminary estimate is an early cost prediction made during the planning phase of a project. Unlike a detailed or final estimate, which is based on detailed designs and specifications, a preliminary estimate relies on general information and rough calculations. It’s based on factors such as square footage, materials, labor costs, and industry standards.

The purpose of a preliminary estimate is to give you an idea of the project's overall cost, allowing you to secure funding, obtain client approval, and make adjustments before committing to a more detailed estimate later on.

Step-by-Step Guide to Creating a Preliminary Estimate

Creating a preliminary estimate involves several steps, and it’s important to follow them in order to ensure that your estimate is as accurate as possible. Here's a simple guide to get you started:

Step 1: Gather Initial Project Information

Before you can make any calculations, you need to gather as much information as possible about the project. This will include:

·         Scope of work: Understand the overall goals and specifications of the project. This includes knowing whether you are building from scratch, renovating an existing structure, or making repairs.

·         Plans or sketches: Any initial sketches or conceptual drawings can help provide context for your estimate. If these aren’t available, try to get a rough idea of the size and layout of the project.

·         Timeline: A basic understanding of the project timeline helps estimate labor and overhead costs.

·         Materials: Although detailed material lists won’t be available yet, identifying the general materials you’ll likely use will give you a good starting point.

Having this information on hand will ensure that your estimate reflects the project's requirements accurately.

Step 2: Calculate the Project’s Scope

Once you’ve gathered the initial details, it’s time to calculate the overall scope of the project. This involves figuring out the size of the area you’ll be working with and any specific systems or features you’ll need to include. For instance:

·         Area measurement: Measure the total square footage (or cubic footage, if you're working on something with volume, like plumbing or HVAC).

·         Rooms or sections: Break down the project into individual rooms or sections to make the cost more manageable.

·         Systems or special elements: Identify any special systems that might increase costs, such as plumbing, electrical, or HVAC systems.

At this stage, focus on rough measurements, since you won’t have full blueprints yet.

Step 3: Estimate Labor Costs

Labor is often one of the most significant expenses in any construction project. To calculate labor costs, take these factors into account:

·         Labor rates: Research the typical hourly rates for the tradespeople you’ll need (e.g., carpenters, electricians, plumbers). You can use industry averages or local rates to make a rough estimate.

·         Labor hours: Estimate how many hours it will take to complete each phase of the project. You can break it down by individual trades or groups of workers.

·         Project timeline: The longer the project lasts, the more labor costs will accumulate. Make sure your time estimate is as accurate as possible.

While your labor estimate doesn’t need to be precise at this stage, it should be within a reasonable range based on your knowledge of the job and industry norms.

Step 4: Estimate Material Costs

Material costs can vary depending on the type of project, the quality of materials, and local pricing. To estimate materials, follow these steps:

·         Type of materials: Identify the basic materials required (e.g., concrete, wood, drywall). Focus on high-level categories instead of specific brands or styles.

·         Material quantity: Estimate the quantity of each material based on your scope of work (e.g., how many square feet of drywall, how many feet of piping, etc.).

·         Unit prices: Research the typical cost per unit (e.g., cost per square foot of drywall, cost per linear foot of plumbing). Many suppliers or manufacturers will have pricing information available online or through catalogs.

For preliminary estimates, you don’t need to be too specific—just use average costs and quantities for the materials you expect to use.

Step 5: Add Overhead and Contingencies

Every project comes with unforeseen costs. Adding overhead and contingencies to your preliminary estimate ensures that you're prepared for unexpected expenses. These include:

·         Overhead costs: This covers your company’s operating expenses, such as office staff, equipment, insurance, etc. Typically, overhead is a percentage of the total labor and material costs.

·         Contingency: A contingency fund is typically added to account for unforeseen issues, such as design changes or unexpected site conditions. Generally, a contingency of 5-10% is added to the total estimate.

Step 6: Review and Finalize the Estimate

Once you’ve calculated all the major costs, take the time to review your preliminary estimate. Ensure you haven’t missed any critical components and that your estimates are reasonable. This is where your experience and knowledge of similar projects will come into play.

Step 7: Present the Preliminary Estimate

Finally, once everything has been calculated, present the preliminary estimate to your client or stakeholders. Be transparent about the rough nature of the estimate, but provide a clear outline of the potential costs and any assumptions you've made. This will help set the right expectations and ensure that everyone is on the same page before moving forward with more detailed planning.

Practical Tips for Creating Accurate Preliminary Estimates

·         Use software: Estimating software like Precision Estimator can help streamline the process and improve accuracy by providing templates and cost databases.

·         Learn from past projects: Refer to similar projects you've worked on in the past to get a ballpark figure for labor and material costs.

·         Consult with experts: If you’re unsure about certain aspects of the project, consult with subcontractors, suppliers, or other professionals to get more accurate estimates.

·         Stay realistic: Remember, the goal of a preliminary estimate is to provide a rough, high-level cost. Don’t overcomplicate it—just make sure it’s as accurate as it can be with the available information.

Conclusion:

Creating a preliminary estimate is an essential step in any project, and with the right approach, it doesn’t have to be overwhelming. By following the simple steps we’ve outlined and using the right tools and resources, you’ll be able to develop a reliable estimate that sets the foundation for a successful project.

Now that you have the knowledge, it’s time to put it into action! Whether you're preparing for your next big construction job or refining your estimating process, Precision Estimator is here to help you make more accurate, informed decisions. Ready to get started? Sign up for Precision Estimator today and take your estimating to the next level!