Learn how to accurately estimate costs for a construction project, with a focus on specific aspects such as earthwork and subcontracting. This article breaks down the steps involved in calculating labor and material costs, and the importance of cross-verification for total costs.
Key Insights
- The estimate process begins with item numbers and descriptions, with a takeoff quantity for each derived from the takeoff sheets. These quantities are often listed in the same unit of measure, such as cubic yards, to maintain consistency.
- The labor unit cost is derived from available pricing data, multiplied by the quantity takeoff to yield the total labor cost. The same process applies to materials, equipment, and subcontracting, although these areas may not always have costs if the project is working with existing resources or hasn't received subcontractor bids.
- Accurate estimating relies on a "100% check", ensuring that the total amount for each project phase is equivalent to the sum of the individual costs. Any discrepancy here indicates a miscalculation, underscoring the importance of double-checking all figures.
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Let’s look at another estimate example. Let’s go to Earthwork in Phase 31,000. Notice again that you have phase numbers at the beginning of each item.
You have the item number, then the description. To the right side, you'll see that you have a takeoff quantity for each of those, which is typically reflected on the takeoff sheet or calculations that produce these quantities or are derived from the takeoff sheets themselves. We have our quantity column.
Notice that all of them are in cubic yards. In this case, the labor unit cost is coming from our pricing data and RSMeans or any other data that you might have at your disposal, based on the unit of measure, which is cubic yards. This gives you a total dollar amount—so your quantity takeoff multiplied by your labor unit cost equals the total labor amount.
The same would apply to your material, equipment, and subcontractor if there are any. Notice that there’s nothing identified under material or subcontractor. You might ask yourself, why isn’t there any material in this estimate for Earthwork? Well, we're working with existing conditions—existing soil.
If anything, there might be extra material when we’re done, but right now there’s no new material being brought in. Therefore, the material costs are zero, and so are the amounts. The same goes for the subcontractor. In this case, we did not receive any subcontractor bids for these items, although if we did receive one and it had a competitive price—better than our own estimate—we could replace our estimate costs with the subcontractor amount.
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So make sure whenever you add a subcontractor quote, you also remove any budget numbers that were applied to the estimate. And to finish it up, it’s always best to double-check and make sure that your total amount column or your 100% check is calculating correctly. The total Earthwork amount should match all of the row totals above it or all of the column totals to the left.
They should both equal the same dollar amount—and that’s your 100% check. So the totals from the amount columns, which is the labor amount plus the equipment amount, will equal the total amount on the right-hand side. Also note that the total unit cost would be the sum of all the unit costs you see across that same row.
