Construction Estimating for Beginners: How to Build Your First Estimate

The short version of the ideas to follow to make an estimate for a construction job are: (1) Define the job scope in the drawings and specs, (2) Do a quantity takeoff of all the items, (3) Get the current quotes for all the materials, (4) convert the quantities into labor hours and multiply by the burdened wage rates, (5) Add equipment and subcontractor costs to the estimate, (6) Add general conditions, overhead, profit and contingencies, and (7) Check the estimate before you send it. The following worked example walks a particular slab through all the steps.

The methods for constructing an estimate for a new patio and a new hospital are no different. They all follow the same process: Measure the work, cost the work, and calculate the costs of doing the work. This introduction explains each step, in layman’s terms, and illustrates all the calculations with a scenario that shows you how to use the rules of thumb for estimating. It is actually one of our full construction cost estimation guide.

Construction Estimating Basics: The Four Things Every Estimate Prices

On top of these direct costs sit general conditions (supervision, temporary facilities, cleanup, permits), overhead (your company’s office costs), profit and contingency. Beginners most often forget these, which is how a job that “should have” made money ends up losing it. Our guide to what a construction estimate should include has the full checklist.

How to Make an Estimate for Construction: Step by Step

Step 1: Review the Drawings, Specs and Scope

Read the whole set before you measure anything: the sheet index, general notes, every discipline’s drawings, the specifications, addenda and the bid form. Write a scope list of what is included and what is not. If something is unclear, send a question (an RFI) before bid day instead of guessing. Our guide to types of construction drawings explains how a drawing set is organized.

Step 2: Visit the Site

The drawings and walkthroughs reveal what the plans do not show: truck access, space for material storage, slopes, existing utilities, and any elements that need to be demolished or preserved. Be sure to note all of these, as they affect labor and equipment costs.

Step 3- Do the Quantity Takeoff

A quantity takeoff measures every item of work in its pricing unit: cubic yards of concrete, linear feet of footing, square feet of drywall, number of doors. Organize it by CSI division and by area or floor so it is easy to check. Add a waste factor per material, and keep your takeoff marked up on the drawings so someone else can follow it.

Step 4- Price the Materials

Get current quotes from suppliers for the main materials and date every price. Published cost data, such as RSMeans, is useful for budgets and as a cross-check, but local supplier pricing is what you will actually pay. Include delivery, sales tax and any minimum-order or short-load charges.

Step 5: Estimate Labor Hours and Cost

Labor is the hardest cost to get right. Divide each quantity by a production rate (for example, square feet of forms set per hour) to get hours, then multiply by a burdened labor rate: the wage plus payroll taxes, workers’ comp, insurance and benefits. Burden often adds 25% to 50% on top of the base wage. Your own past jobs are the best source of production rates.

Step 6: Add Equipment and Subcontractors

Create a list of every rental item and its duration. For the trade you are fully outsourcing, send the scope of work to at least two or three subcontractors and “level” the quotes—organize them according to a consistent scope so that you are comparing “like for like,” rather than a lower figure that might omit half the required work.

Step 7: Add General Conditions, Overhead, Profit and Contingency

Standard pricing based on the schedule. Consider weekly site supervision, dumpsters, portable toilets, temporary power, permits, and cleanup. Then, apply your overhead and profit markup, and include a contingency allowance—tailored to the level of detail in the completed drawings. (see types of construction cost estimates for typical ranges by stage). Small contractors commonly mark up somewhere in the 10% to 20% range combined for overhead and profit, but your number should come from your actual company costs.

Step 8- Review the Estimate and Submit

Quickly check the total cost on a per-square-foot basis, look for any missing line items, verify the calculations, and ask someone else to review it. Then, draft a proposal that includes the costs, allowances, and the validity period for the quoted price.

Worked Example: Estimating a 30 x 40 ft Concrete Slab

A 1,200 sq ft slab on grade, 4″ thick, on a 4″ gravel base, with a 10-mil vapor barrier and #4 rebar at 18″ on center each way. The prices below are illustrative; use your own local quotes and labor rates.

Takeoff

• Concrete: 40 ft x 30 ft x 0.333 ft = 400 cu ft / 27 = 14.8 cy. Add 5% waste = 15.6 cy, so order 16 cy.
• Rebar: 21 bars x 40 ft + 28 bars x 30 ft = 1,680 lf. Add 10% for laps and waste = 1,848 lf, or 93 bars at 20 ft (about 1,230 lb). Our rebar size chart lists weights per foot.
• Gravel base: 1,200 sq ft x 0.333 ft = 14.8 cy, at about 1.4 tons per cy = 21 tons.
• Vapor barrier: 1,200 sq ft plus laps = 1,300 sq ft.
• Edge forms: perimeter 2 x (40 + 30) = 140 lf.

Materials

Labor and Equipment

Estimate Summary

The check at the end matters: about $10 per sq ft is in the normal range for a simple reinforced slab on grade. If your number were $4 or $25 per sq ft, you would know to look for an error before sending the price. For a full building, the same process repeats for every division. Our general contractor estimate examples show what that looks like across a whole project.

Rules of Thumb for Construction Cost Estimating

Rules of thumb do not replace a takeoff, but they are the fastest way to catch a mistake:

Use these as checks, not as the estimate.

Estimating Construction Materials Accurately

• Measure in the unit you buy. Convert square feet of wall to sheets of drywall, cubic yards to truckloads, linear feet to stock lengths.
• Count the small stuff. Fasteners, adhesives, sealants, blocking and accessories add up.
• Watch for specified products. A spec that names one manufacturer can cost much more than a generic equal.
• Confirm lead times. Long-lead items such as switchgear, windows and elevators can affect both price and schedule.
• Use a materials checklist by division so nothing is skipped. Our building materials estimator guide covers this in more detail.

How to Estimate Construction Projects as a General Contractor

A general contractor’s estimate is typically a bundle of trade estimates. The GC estimates the value of the work being done by the GC’s own employees (usually concrete, carpentry or general labor), solicits bids from subcontractors for others, and adds general conditions and mark up. The GC’s actual responsibility on the day of a bid is scope coverage – to ensure that no items in the drawings and specs are overlooked or double booked. The most useful tool a GC Estimator has on bid day is a spreadsheet containing a list of all divisions and the subs bidding them as well as what each quote contains. Bid-Day Strategy is part of our Construction Bid Estimating Guide.

Common Beginner Estimating Mistakes

• Pricing from the plans without reading the specifications.
• Forgetting waste, delivery, tax and small materials.
• Using optimistic production rates for labor.
• Leaving out general conditions or treating them as a guess.
• Comparing subcontractor quotes that do not cover the same scope.
• Sending the estimate without a second check or a square foot sanity test.

How to Get a Construction Cost Estimate Done for You

If you are bidding more work than you can take off, or you want a second check on a large bid, an estimating service can prepare the takeoff and estimate for you. Design Estimation delivers quantity takeoffs and detailed estimates by CSI division for contractors across the US, usually within 24 to 48 hours. See our estimating services or send your plans for a quote.

For the full overview of estimate types, methods, costs and common mistakes, see our construction cost estimation guide.