What is construction estimating?

Construction estimating is a major element of construction management. The construction industry relies on accurate cost estimates for both simple and complex projects. 

After meeting your client and presenting yourself as a charming, trustworthy builder who has their best interests at heart, the cost estimating process is usually your next step.  

This process establishes the project scope and feasibility, the actual construction costs, and a project completion timeline.  

Construction cost estimating covers every element of the project cost, including:


You may need to hire machinery to complete elements of the project. For example, designs that include elevation may require scaffolding and EWPs.  Equipment costs include fuel, generators, transport of machinery and other direct costs. 


Construction estimating will always take the unexpected into account. If the project stops for any reason, cost overruns occur. The construction project can drag on for a range of reasons such as freight disruptions, labor shortages (or too many sick days), equipment difficulties or problems particular to the project in terms of land, design, or issues with the project owners.

Administrative costs

Any construction project will require a range of administrative costs that include permits from local councils plus a range of fees and payments. Custom home builders will have to include legal fees in their estimates.

Labor costs

Your construction cost estimates will determine how many tradespeople and workers you will need for each part of the job. You will need to calculate either costs per hour or per contract, superannuation contributions, payroll tax and other indirect costs that may incur. The job scope will determine the kind of workers needed and whether specific trades or tickets are required. Custom home builders should also consider supervision costs. 


Your construction firm may have a regular materials supplier. If so, unit costs for materials will be the same for each job. However, unique material costs rise for some more complex projects. Construction industry owners will usually wish to get cost estimates from several suppliers for these requirements.


The profit margin is of prime importance to the builder, particularly the small construction firm. If the profit is insufficient, the builder may decide against taking the job, and the client will have to start with a new company. Estimating calculates direct and indirect costs, including office lease, vehicle running costs, capital costs and other general expenses.


Builders complete the takeoff during the pre-construction phase. Guided by the architectural drawings, builders itemize measurements and materials and input them to the construction estimation software, such as Buildxact, to ensure highly accurate results. The builder links the items to their pre-recorded unit prices. They then calculate cost estimates according to set formulas for each area of the build. The takeoff calculations also incorporate labor hire and staffing costs plus equipment expenses for all machinery and operators required for project completion.


Specialist subcontractors may include tilers, electricians and plumbers. Securing the services of sub-contractors adds to the complexities of any construction project timeline and schedule. Each subcontractor needs to be fitted in at the appropriate stage of the construction, often working around other projects. Fitting in subcontractors around each other and the construction stages can add many days to the project.


Most estimations will include a buffer in the calculations that takes unexpected events into account. Subcontractor delays, equipment breakdown or unavailability, storms or excessive heat, regulatory hold-ups and staff absenteeism or shortages can all impact project costs. A buffer will prevent you from losing money over disruptions outside your control. The estimator must take all these elements into account when creating construction cost estimates. 

Construction estimating software is an efficient and reliable tool that ensures the task is completed with high accuracy and speed, helping the builder and the client get the project underway without unnecessary hindrances. 

The construction estimator – the resident expert

A construction estimator is an individual who holds a certificate IV or a Diploma in Building and Construction (Estimating). Their acquired knowledge allows them to conduct complete and thorough cost estimates of the construction project’s cost overall. Their detailed estimate can then be translated into an accurate quote for the customer or used by the construction company to decide whether the job is worth undertaking. 

The construction estimator’s experience and expertise ensure that the project will be accurately costed. Cost estimators make use of software such as Buildxact, which calculates the figures automatically. The software package is a time saver and provides the opportunity for construction cost estimators to complete a job more quickly and take on more jobs in less time.

Why is cost estimating so important?

The builder undertakes the cost estimating process to avoid either party losing money. The client wants accurate cost estimates for their construction project to know they can afford the work, and the builder wants to complete a job that will make him money and enhance his reputation. 

Your cost estimation will establish the price for the client and determine whether it will be financially viable for you to offer a bid estimate towards it. There are many elements to take into account before commencing a construction project for a client. The cost estimation process includes not just the takeoff but a reasonable cost estimate of the materials, equipment and other capital costs of the overall design requirements. Assessing each step helps a building company decide whether the job is within their company capabilities.  

The estimate can fairly accurately determine the project’s costs and how long it should take to complete. Builders rely on the construction cost estimate to determine whether the construction project is financially feasible and meets scope requirements and, therefore, worth offering a bid estimate.

Though some clients will choose the cheapest cost estimation, many will also look for quality and reliability. A professionally presented quote that the builder has accurately scoped, itemized and priced will go a long way to winning the contract. Construction estimating software, Buildxact, allows builders to create good quality, well-designed quotes emailed directly to the client from the software package. 

The cost estimation process, step-by-step

Reviewing Construction Specifications

The first step in the construction cost estimation process is to go over the construction documents and review the general specifications. An estimator will check the management team’s qualifications and professional tickets, as well as payment terms, bonding and insurance. The specifications will cover material grade, methodologies for installation and who is responsible for which costs.

Construction documents

The next stage is to review the architectural drawings, plans and other construction documents. The design will determine working from heights equipment, skilled labor costs, construction costs around elevations and infill requirements.

Performing a construction takeoff

This is the nitty-gritty of construction estimating. The construction takeoff involves undertaking detailed measurements of each part of the build.  Builders use construction estimating software to make this process seamless, streamlined and accurate. Using a software program also ensures you include all items and avoid missing vital elements of the job.

The construction estimate

Once quantities have been established, itemized pricing is the next step. Materials and labor costs for each task are calculated and then multiplied by quantity. This total is added to the costs for sub-contractors and hire equipment.

Determining overhead and profit  

Builders add overhead costs and their profit margin to the estimate. Overhead costs cover the requirements of running your business such as office rent and staff, software and computer costs, utility bills. They can also include project management, deliveries or other external costs. The total creates the construction cost estimate and forms the basis for your customer’s quote. Construction estimating software will convert the estimate into a quote and send it directly to your client.

Automated software for construction estimations

How does automation software improve the construction cost estimation process? 

Construction estimation software removes the need for multiple spreadsheets and lengthy calculations. Buildxact offers builders every conceivable variable customizable to your requirements. Templates can store historical cost data for future jobs, with the option of adding or removing elements as required. 

Install the software on any device for cloud-based operation at any location. You can create your estimation directly at the construction site, wherever you have an internet connection, including your data plan. Measurements can be input into the system as you go, on any tablet or even your phone.

Construction estimators select the items from a comprehensive list and add measurements. The software will automatically link to unit prices and calculate costs according to the applicable formula. Once the builder has factored in all material costs, the estimator can itemize other elements such as labor hours, subcontractor requirements, overheads and other indirect costs.

Your construction software can assist with obtaining quotes for materials or equipment that are unique to the job by sending automated requests to suppliers. 

Once the builder has made all calculations, they can convert the cost estimates into a professionally designed and presented quote that the builder can instantly email to your client.

What can automation software do to help construction estimation efficiencies? 

Automation construction software allows faster takeoffs, saving up to 80% of the time in completion. Measurements can be stored and re-used for estimating other items as you proceed with your cost estimates.  Takeoffs can be measured in any unit and will adjust accordingly. Count items and automatically link takeoffs to item costs. Your accuracy will increase to near perfection. With all processes linked, builders save many hours by not cross-checking and adding screeds of data. The construction industry also saves money on numerous software packages, relying on the one package to produce quotes, keep track of actual, produce reliable cost estimates, schedule in your project hours, and integrate all accounting.

What advantages can automation software have for your construction estimation business? 

A professional, accurate and timely quote will win contracts over your competitors. Construction estimating automation software lets you get on with the job you are there for, saving hours on paperwork and providing reliably accurate cost estimates for your customers.  

Construction estimating eats into a large part of your working day. The steps between you and your customer agreeing on the job and the time it takes to calculate cost estimates send out quotes is essentially dead time as far as your paycheck is concerned. But without an accurate and professionally presented quote, you are less likely to get the job, and then the paycheck doesn’t materialize at all. That is why many building companies, including residential builders across the United States, opt to use an Automated software package like Buildxact. Builders and trade specialists across the spectrum can benefit from the seamless process of construction estimation Buildxact offers.

Benefits of using estimating software

Utilizing the Buildxact estimating software guarantees both the builder and the client that estimations and quotes will be highly accurate and that the project will be budgeted correctly. By avoiding issues of over or undersupply of either materials, equipment or staff, you are ensuring that you can finish the job without becoming out of pocket and will more likely complete the project within the agreed-upon time frame. 

After completing the estimation on your Buildxact software, the program can produce a professionally presented quote that will accurately reflect the price on completion. Advanced features allow all tradesmen, including builders, to customize the software to suit their particular project requirements. 

Ready to try an estimating software that’s right for you?

Get your 14-day free trial or book a demo and see how we can help save your business time and money. We are the construction management and estimating software experts helping builders, contractors, and remodelers create accurate estimates efficiently.