Estimating in Construction – Part 1 (Introduction)
Minimum Bottom Line Profit Should Average 9.4%!
For Trades & Subcontractors, at Least 11%
After Income Taxes Are Paid!
The best internal control tool to maximize profit in construction is an estimate. Estimates act similar to a dashboard of critical information necessary to evaluate overall performance. In insolation, they serve the purpose of determining the minimum core price to charge the customer in order to deliver enough contribution margin to offset that project’s share of indirect and overhead costs. Any value in excess of this core price adds to the company’s bottom line. If properly set up, administered, monitored and evaluated upon completion; estimates are a critical element of the accounting feedback loop. This one internal control tool delivers more value to owners and management in construction than any other control device.
This article introduces estimating in construction. It is the first in a series of lessons about estimating in construction.
In order to appreciate the value estimates provide to the contractor, this introductory lesson focuses on the important role estimates play with
© 2020 – 2022, David J Hoare MSA. All rights reserved.