Construction Cost Estimating Checklist - Guide for Accurate Budgeting

Information is crucial to any construction project. Not just general information but specific and verifiable information. In this case, the construction cost estimates. Starting a construction process without a clear idea of the costs involved is risky. Construction cost estimating helps general contractors choose the right project and structure their bids to match the project’s demands. It also helps clients estimate a budget range for the project and choose the most viable and affordable option. That’s why having a construction estimating checklist is important. 

This guide defines the construction estimate checklist and what to include in the list. After reading this guide, you’ll understand a construction cost estimating checklist and why each section is important to the overall cost estimation. But first, let’s define a cost estimate checklist.

What is a Construction Estimate Checklist?

A construction estimate checklist is a comprehensive list of costs and items needed to complete a project. It's a construction cost estimating method to help clients and contractors understand the common construction costs.

Estimators break down and categorize expenses into direct and indirect costs. They then use the list to come up with estimates that clients use to establish a suitable budget for the project.

For contractors, they use these figures to compare with their expected expenses to determine if the project is viable.

Now that we know what a detailed cost estimate checklist is, let’s see which details go into the list and why it’s important to consider them. 

What is Included in the Construction Estimate Checklist?

Although every detail we cover may not apply to all projects, they are among the most common particulars you’d find in a construction cost estimating checklist. 

Project Information

Project information generally defines the project. It includes the construction project scope, description, location, site condition, specifications, drawings, and permits.

Every physical construction project is different depending on the specific requirements to achieve the construction’s objectives. Information like the project’s scope and description helps to define the type of the project.

Is it a renovation, an extension, or a new construction?

Each of these construction projects has different requirements. For instance, a renovation would not need a foundation that an extension or new construction would require.

When handling project location, you must consider information like geography, material transportation, local labor costs or rates, and permits and fees. All these have varying costs. For instance, a mountainous region would require more excavation to level the site. Direct costs like labor rates and material prices help project owners come up with a unit price estimate that contractors use to bid for the project.

Labor rates also vary with location and weather conditions. For instance, construction workers in Alaska earn 7% more than the national average due to harsh weather conditions.

Direct Costs

In a physical construction project, direct costs are traceable expenses directly related to the project. They’re the core costs associated with managing the project to completion.  Material costs, transportation, labor, equipment purchase and rental, subcontractor costs, waste disposal fees, and permits are all direct costs of a construction project. 

Material costs involve expenses like buying concrete, steel, lumber, electrical components, and plumbing fixtures. A contractor must ensure the unit price estimate fall slightly above the market price to account for unforeseen price fluctuations.

Labor costs include wages and benefits paid to workers directly involved in the construction. It could be laborers, electricians, supervisors, carpenters, etc. Labor costs should also account for overtime compensation in case of unforeseeable delays. 

Are you buying or leasing construction equipment? If you’re purchasing, are they new or used? If you’re leasing, what’s the going rate for purchasing the equipment? You must also factor in the leasing duration. Additional equipment expenses like fuel, maintenance, and repair shouls also be here. 

Subcontractors also command different rates based on their experience and services. For instance, a heavy construction equipment supervisor earns more than a plumber due to their experience and nature of work. Subcontractor costs differ with projects and the number of subcontractors needed to complete the project.

Construction permits are necessary for any project. Inspection and building permits are common in every construction project, regardless of their size or complexity. Permit fees differ depending on the project scope. For an alteration and repair construction valued at $1 million, you’d be expected to pay a fee amount of $10,030 and 1% of the total project cost. 

Indirect Costs

Indirect costs are unseen expenses that are not directly related to the construction but keep the project running. They’re mostly administrative fees like office rent, office staff wages, accounting, legal, office supplies, and project software. Indirect costs also vary depending on the construction company's size, project size, and complexity. For instance, a patio construction project would have fewer indirect costs compared to a shopping mall construction project.

Think of them as the project overhead costs of running and maintaining the construction company’s office. Although not as visible as the direct costs, they’re equally important. 

For instance, hiring an accountant to balance the books and keep the business in the profit zone is crucial for the overall success of the construction business. Hiring legal services for contract negotiations or resolving disputes to ensure the contractor signs a better deal and remains within the legal confines when facing disputes. 

Mileage expenses fall under the indirect costs categories. These indirect costs include transportation expenses for executives and directors to meetings and other work-related appointments.

Indirect costs also include contingency, which is a buffer by the contractor to cover unforeseen expenses. A contingency helps mitigate project overruns caused by material price fluctuation, weather changes, or subcontractor delays. It’s more of a safety net to keep the project running and not exceed the predetermined construction budget. 

Other Considerations

Accounting for direct and indirect common construction costs is not enough. You must budget for other scenarios in your project cost analysis that might derail the budget or delay the project. 

The first concern is site accessibility. Can workers access the site or resources easily? Let’s take an underground construction project as an example. A contractor would be forced to use a concrete pump to pour concrete in these areas that are often poorly ventilated. By using the concrete pump, a contractor avoids placing their workers in dangerous situations. 

Weather is another potential problem that requires addressing. A sudden change in weather conditions forces contractors to change their construction approach. For instance, a contractor would be forced to use a dehumidifier during the rainy season to prevent moisture buildup. Doing so keeps the materials free from warping and preventing mold growth. 

Although price fluctuation is out of contractors’ and project owners’ control, it’s always best to plan for them. A change in material prices could impact the entire project by overruning the budget. Having a buffer to cater to these scenarios ensures the project continues as planned. Many things can contribute to price fluctuations, but the most common ones include currency inflation, demand and supply, and government policies like tax and tarrifs. 

Tips to Make Your Construction Estimate Checklist Better

Whether you’re creating a construction estimating list for a renovation or new construction, it’s crucial to cover every detail associated with costs. Here are a few tips to follow to ensure your next construction estimate checklist covers everything.

Customize your Checklist

Using a generic checklist template might save you the time you’d spend creating it from scratch, but these templates leave out many crucial details. You need to tailor your template to match your project. When creating your next construction estimate, assess your project’s scope and complexity and edit the template to account for every cost and expense related to that project. 

For instance, let’s say you want to construct an echo-friendly cabin. It would be pointless to use a construction estimating list for common home construction. The two projects require different skill sets, materials, and plans to complete. You will come up with an inaccurate construction estimate for your cabin if you use the common home construction construction estimate checklist.

Update the Checklist Regularly

Construction projects require flexibility, especially when dealing with costs. Changes in direct costs like material prices, special equipment, designs, and weather conditions affect the predetermined construction budget. That’s why you must update the checklist regularly to reflect these changes. 

Seek Professional Guidance

Doing it alone might save you money, but there are higher chances you’ll not cover everything. There’s also the question of presentation. An expert estimator handles all the 'dirty work' of comparing material prices, labor rates, and other project overhead costs related to the project. 

A project manager offers their input to refine the checklist and ensure it reflects the project’s objectives. 

Final Thoughts

Construction costs are at the core of any project planning. They influence everything, from interested contractors to winning bids, project timelines, and the final product. A construction estimate checklist helps the involved parties determine the total project cost and deliverable quality. A construction estimate checklist must include direct and indirect costs and account for unforeseeable obstacles.