Accurate Construction Cost Estimating is Crucial
Creating an accurate cost estimate is critical to winning civil construction projects and growing your business.
Unfortunately, estimating costs accurately is a big challenge in civil construction. McKinsey & Co. says large projects are up to 80% over budget, while a global construction survey conducted by KPMG found that less than one-third of owners had projects come within 10% of the planned budget. Of projects in the public sector, only 10% were within 90% of the original budget.
Add in the continuing rise in construction costs, and precise budget estimation becomes even more critical.
That’s why Trimble is launching Quest, a new cloud-based, software-as-a-service (Saas) construction cost estimating software. Designed for those in heavy civil construction, Quest addresses the following major challenges civil contractors run into when creating bids and developing and managing their budgets.
Challenge: Inaccurate cost estimates based on historic prices
One method of creating estimates is to use historic or average prices to populate unit rates of a bid, instead of creating the unit rate from the bottom up using the input costs for material, labor, equipment, etc. The problem with this approach is that it’s difficult to make accurate, site-specific adjustments to those estimates, especially if the assumptions used to develop the original rates are unclear.
Create estimates from first principles. This approach requires a detailed study of site-specific conditions and resource requirements for the project, including labor, equipment, materials, and subcontractor quotes.
Not only does Quest use first principle estimating to help you create a bid based on real-world costs, but it also allows you to build and reuse costing libraries, so you can standardize your unit rate estimating assumptions and quickly update project-specific input costs and variables like production rates. This workflow allows you to rapidly create detailed cost estimates to hit pressing deadlines.
Challenge: Cost overruns
Cost overruns can happen for multiple reasons. According to Sierra Transportation Engineers Inc., they’re generally due to difficulties in developing a complete scope, identifying variability and uncertainty, evaluating the quality and completeness of cost estimates, and tracking costs at various stages.
While better and more accurate cost estimates are key to avoiding overruns, you can also prevent them by continuously tracking your project’s progress and monitoring your allowed expenditure at each point in the project. That’s why Quest also comes with budget management tooling that allows for real-time updates between the construction site and the office. With this online construction cost estimating software, you can capture on-site progress of your projects, continuously report on resource utilization quantities, and produce live budget reports at any point in the project to compare to your actual spending as captured in your ERP software. This allows you to identify cost overruns as they happen and keep your project as profitable as possible.
Challenge: Cash shortages from poor forecasting
A sustainable civil construction business depends on its ability to fund long-term growth. As business lender National Funding points out, the industry’s “feast-and-famine” cycle makes the need for accurate budget forecasts even more critical for long-term success. If you don’t know your predicted revenues and overhead costs, you may find yourself with a cash shortage.
A heavy civil construction estimating software that includes sophisticated forecasting tools can help you actively manage risk while steering your projects and company to success. With Quest, you can predict revenue, link cost estimates to project plans and schedules, and forecast resource and cash flow requirements to ensure your company stays in the black. Dynamic reporting also helps you improve business intelligence and construction project performance.
Challenge: Lagging updates and disconnect in communication
It’s not uncommon for construction data to lag between different locations, especially between the field and office. And when you’re dealing with multiple stakeholders in separate areas, that disconnect becomes an even greater liability to the efficiency and productivity of your project. When key personnel don't have access to real-time updates, you’re at risk of making poor decisions based on outdated data, or having your project fall behind schedule as you wait for the latest information to come through.
When construction cost estimating software is cloud-based, all stakeholders can access the same data and stay up-to-date on the latest information. That’s why Quest allows contractors, estimators and project managers the ability to communicate changes, track and record on-site progress quantities, produce claim certificates and report on individual resource utilization throughout the project lifecycle. From bid creation to project execution, Quest makes it possible to incorporate and connect data between all parties for effective collaboration.
Connecting All Parts of the Construction Process
With Trimble, civil contractors can go beyond cost estimation and connect all parts of their project process with a common data environment to keep their operations streamlined, optimized, and ultimately, more profitable. Our integrated software solutions are designed to work together so each step, role and stakeholder is connected from design and concept to on-site execution. For more information on how you can seamlessly connect your construction process, check out Trimble Connected Construction.Read more...