Estimating Construction Cost: Issues to be Aware of
A construction project entails different aspects, one of which is estimating the construction cost. During this phase, you must take into consideration certain factors that could greatly impact the cost, and eventually impact the project.
Before a single pile of soil is moved in a construction project, a detailed estimate on its total cost must first be determined. This is a crucial phase in any construction proposal or project as it will be the basis for the computation of the actual cost, whether it is within or is already going beyond its planned budget. Performing construction cost estimates is not done by simply looking at the plan or visiting the site and immediately coming up with an amount. There are various issues that need to be looked into as these could have a great impact on the actual costs. What are these?
Proposed Construction Site Condition
Site conditions can severely impact the actual cost of construction. For instance, you may have a planned budget of $5 million for the actual construction phase but this can double if you encounter serious issues like poor soil conditions, the presence of underground cables and pipes, electricity transmission lines directly above your site, ancient burial sites, and many more. In fact, before you put a price tag on your construction project, it becomes necessary to first resolve issues such as those mentioned above to minimize the risk of going over your budget.
Economic Factors
In doing a construction estimate, another major consideration that should be carefully studied is the cost of construction materials and the possibility of an increase in prices in the coming year. Naturally, you must also include taxes and other charges like shipment fees. Since construction projects can’t happen overnight and may take months or even years to complete, you might also want to include the inflation factor in your estimate. Bloomberg News correctly points out that rising or taming inflation can have a deep impact on your construction costs, so it is important that you don’t leave this one out.
Insurance
Another important issue that should be seriously considered is your insurance requirements and its attendant costs. The report published by the Occupational Safety & Health Administration underscored the importance of securing insurance for construction workers. This is to ensure construction companies will not bear the brunt of massive costs resulting from work-related injuries of its workers.
There are many other issues that must be resolved first before putting a price tag on a construction project. It is very important that construction companies factor all these into their final cost estimate. Failure to do so may affect the entire project and could even lead to the downfall of a construction company.
