Conceptual estimating is an essential part of any construction project’s early stages. Do it right and your project is more likely to come in under budget and ahead of schedule. Do it wrong and you’ll face budget overruns, re-bids, and even project cancellations.
So an accurate conceptual estimate can potentially make or break your project.
However, conceptual estimating is a tricky process because you’re expected to come up with a reasonably accurate cost projection with limited information. Don’t worry, we’re here to help.
In this 5-minute read, you’ll learn:
- What is conceptual estimating and why do you need it?
- Pros and cons of conceptual estimating
- Some PRO tips for creating accurate estimates
Let’s get started!
What Is Conceptual Estimating?
A conceptual estimate is a preliminary estimate of the total project cost. It’s created early on in the planning process, usually as part of the feasibility analysis. This type of estimate is based on the projected scope of work and design concepts rather than on finalized building plans.
What Is the Purpose of Conceptual Estimating?
Conceptual estimating gives clients a general idea of what a project will cost. This helps them make better budget decisions and decide if a project is even feasible before you spend time and money creating detailed plans.
For example, if the preliminary cost estimate is higher than the client’s budget, you can adjust the scope of work and present new design ideas that lead to a lower projected cost. Then, once the conceptual estimate is approved, you can move ahead with finalizing the plans for the project.
In the long run, this saves you loads of time and hassle.
Cost Estimation vs. Conceptual Estimation
Here are a few main differences between cost estimation and conceptual estimation:
- Conceptual estimation is done before cost estimation.
- Conceptual estimation is based on concepts and ideas while cost estimation is based on concrete factors — finalized designs, material takeoffs, labor calculations, etc.
- Cost estimation is usually more accurate than conceptual estimation.
Although there are differences, both work together during the planning process to create accurate project budgets and client expectations.
Pros and Cons of Conceptual Estimating
It’s important to understand the advantages and limitations of conceptual estimating. So here are the main pros and cons.
Pros
Provides a cost projection
Having a general idea early on in the planning process of how much a project could cost is really important. That cost projection helps your clients have a clear understanding of what to expect with the project.
Aids decision-making
The estimated cost works as a check against the budget. This helps you make better decisions as you finalize the building’s design. That’s because you’ll know how tight of a budget you have to work with. You’ll also know if you need to reduce the overall project scope or change types of materials in order to stay within the budget.
Cons
Inexact process
It’s hard to create accurate estimates even when you have a complete set of building plans and material takeoffs. Creating an estimate during the concept phase of a project is even harder since you’re working with ideas instead of concrete data.
Relies on accuracy of the project scope
The more detailed the project scope, the more accurate an estimate you can create. However, sometimes because of indecisive clients or poor communication, you may need to create a rough estimate based on incomplete details.
Key Components of Successful Conceptual Estimates
Ready to start creating conceptual estimates? Depending on the size of your project, these key components help you create accurate estimates.
BOE (basis of estimate)
The BOE clearly outlines the scope of the estimate, its purpose, and the basis for it. It is essential for helping clients get a clear picture of what’s included in the projected cost and how you arrived at that figure.
Standardized estimating procedure
By defining a standardized method for creating estimates, you’ll be able to quickly duplicate the process on future projects. This saves you time and hassle and helps improve client communication.
Pricing Database
A detailed pricing database makes it easier for you to create accurate estimates. You can use online databases and cost data books published by companies like RSMeans. You can also create your own in-house database based on the costs of past projects. Then you can use that when creating conceptual estimates for future projects.
Quality assurance
Before sending the projected estimate to a client, it’s best to run it through some quality assurance (QA) checks. On smaller projects, you might just get another member of your team to look over the estimate to see if there’s anything you missed. On larger projects, develop a QA policy that involves team members from different departments reviewing the estimate for accuracy.
Quantity checks and re-checks
While important for final cost estimates based on material lists, re-checking quantities are also important for conceptual estimating.
Let’s say you create a conceptual estimate based on an average total price per square foot. In that case, it’s important to double-check the total square footage calculations before finalizing your estimate.
*Easy-to-use design software like Cedreo makes it really easy to do that.
Clear communication
To get a clearly defined scope of work and design concept you need clear communication with all the key stakeholders — owners, clients, architects, engineers, etc. Make sure lines of communication are open so you can clear up misunderstandings and get all the info you need for an accurate estimate.
Skilled team
It takes training and experience to create accurate conceptual estimates. So it pays to build a skilled team and provide training for current team members. Offer training such as DBIA’s (Design-Build Institute of America’s) conceptual estimating courses and similar programs.
It’s also important to help your team improve their skills by reviewing past estimates and comparing them to actual project costs. See what lessons you can learn and how to implement them on future projects.
Final Thoughts
Yes, conceptual estimating can be a tricky process. But with some practice, training, and the right tools, you can use it to improve your construction business.
At Cedreo, we work with a lot of housing professionals like you. We’d love to help you to create accurate estimates for residential projects faster than ever.
Try Cedreo FREE today!
