Use Your Noodle and Your Books to Develop Project Estimates

Let’s break it down.

Using your noodle means using your intelligence, brainpower, and thinking ability.

Using your books means using your recorded financial data.

Putting together your brainpower and your recorded financial data allows you to develop accurate project estimates.

We are diving into how to use the “books” part of the equation. Today, we will look at job costing and historical data analysis. In the next three posts, the emphasis will be on:

Cost analysis and budgeting

Cash flow management and risk mitigation

Taming the robots for project estimates

Project Estimates – Job Costing

The two most significant details for creating a construction project estimate are a comprehensive understanding of the project scope and accurate cost data. The project scope is external; the contract documents (including the scope of work) define your responsibilities. The cost data is internal; it includes job costing and historical data analysis, providing financial boundaries.

Here’s the scoop on job costing in developing accurate project estimates.

Job costing allows you to track expenses incurred on past projects. It shows what you’ve spent on labor, materials, equipment, and subcontractor costs. When this historical data is reviewed, you can: 

• Identify patterns and trends. 

• Assess the profitability of previous jobs. 

• Recognize areas of inefficiency or cost overruns.

  
  

The data from job costing gives you a heads-up for creating more accurate and competitive estimates for future projects.

Project Estimates – Data Analysis

Here’s the scoop on historical data analysis in developing accurate project estimates.

Having all the information provided through job costing means nothing if you don’t take the time to analyze what is shown. Suppose you notice that certain materials regularly exceed their estimated cost; then, you can make changes before providing a project estimate. For example, you can explore alternative suppliers or negotiate better pricing. 

You can identify variances by regularly comparing actual costs against the initial estimates. You can see where costs matched the estimate and where they exceeded or fell below the estimate. 

Or, seen from a different perspective, if a specific type of task consistently has cost overruns, you can adjust the estimate for future projects.

Using your noodle and your books can help you make informed decisions about resource allocation, pricing strategies, and, ultimately, project estimates.

Ambitious Construction Contractors look to The Profit Constructors to provide advocacy in dealing with:

• Clients and customers

• Employees and subcontractors

• Vendors and service providers

• Governmental entities 

Working with The Profit Constructors gives Construction Contractors the means to organize their operations in ways that help them:

• Remain informed

• Avoid hassles

• Reduce risks

• Be future-ready

Ready for action? Or want to know more? Get in touch today to schedule a complimentary discovery call. 866-629-7735