Whether you are a property owner or a contractor, you want to have a clear and accurate forecast of how much a building project will cost and how long it will take before you begin. Construction cost estimating is the process of forecasting the cost of building a physical structure. Of course, builders and clients both worry about the financial impact of cost overruns and failing to complete a project. That’s why they devote time and effort to estimating how much a project will cost before deciding to move forward with it. Clients considering large projects often seek multiple cost estimates, including those prepared by contractors and those calculated by independent estimators.
Project owners use cost estimates to determine a project’s scope and feasibility and to allocate budgets. Contractors use them when deciding whether to bid on a project. You usually prepare estimates with the input of architects and engineers to ensure that a project meets financial feasibility and scope requirements. A good cost estimate prevents the builder from losing money and helps the customer avoid overpaying. It’s a core component of earned value management, a project management technique that tracks a project’s performance against the total time and cost estimate.