Estimating Errors: A Contractor's Worst Enemy
Does this sound familiar? You win a bid on a new project and you're feeling pretty good about your budget. But as work gets going, costs start climbing. Material prices shift, labor takes longer than expected, and unexpected changes throw off your numbers. Before you know it, your profit is shrinking, and you’re scrambling to make up the difference. Inaccurate estimating isn’t just a small mistake—it can cost you big.
Whether you work in residential or commercial construction, bad estimates can lead to blown budgets, delays, and unhappy clients. Worse, if it keeps happening, it can hurt your reputation and cost you future jobs. In this blog, we’ll go over the real cost of inaccurate estimating, look at real-world examples, and explain why full-house estimating services—including full-house takeoffs—are the best way to keep your projects on track and your business profitable.
One Bad Project Estimate Can Lead to a Domino Effect of Costs
As you may have seen firsthand, just one inaccurate estimate can cause a chain reaction of problems on any given project, including:
- Budget Overruns: Underestimating costs can push projects over budget, forcing you to scramble for extra funds or cut corners.
- Project Delays: When money runs out, projects can stall while teams reassess budgets, secure more funding, or adjust plans.
- Strained Relationships: Clients, contractors, and subcontractors can become frustrated when expectations aren’t met, leading to tension or even legal disputes.
Real-World Examples of Cost Overruns
This isn't a problem that's unique to the residential or commercial construction industry. Some major landmark and infrastructure projects have suffered from inaccurate estimates:
- Sydney Opera House: Estimated at $7 million, it was completed in 1973 at $102 million—14 times the original budget.
- Boston's Big Dig: This highway project ended up costing 190% more than planned after inflation adjustments.
- Berlin Brandenburg Airport: Planned for 2011, it finally opened in 2020, with costs soaring from €2.83 billion to nearly €10 billion.
The Hidden Costs of Bad Estimates
Beyond money lost on overruns, bad estimates can also cause less obvious costs for construction companies, like:
- Reputational Damage: Going over budget again and again can hurt your company’s image and make it harder to win bids.
- Inefficiencies: Poor estimates can lead to wasted resources and lower productivity.
- Lost Opportunities: Money tied up in over-budget projects can’t be used for other growth opportunities.
Why Do Estimates Go Wrong?
There are plenty of reasons why your estimates might be missing the mark, but some of the most common causes are:
- Optimism Bias: Thinking everything will go smoothly and underestimating potential problems.
- Scope Creep: Changes and additions mid-project that increase costs beyond the original plan.
- Lack of Experience: Less experienced estimators may overlook key details, leading to inaccurate numbers.
The Case for Full-House Estimating Services
Using a specialized estimating firm that offers full-house estimating services can prevent these costly mistakes. Here’s why:
- Expertise: Professional estimators know market rates and common pitfalls.
- Unbiased Accuracy: Outside estimators provide objective assessments without internal pressures.
- Efficiency: Advanced tools and expertise mean faster, more precise estimates.
- Cost Savings: Accurate estimates help keep projects on budget, saving money in the long run.
Conclusion
In construction, estimating isn’t just about math—it’s about keeping projects profitable and clients happy. By recognizing the risks of bad estimates and using full-house estimating services, you can protect your business and build a stronger reputation.
At TSARSI, we understand the challenges of construction estimating. Our expert team provides accurate, reliable, and timely full-house estimating services to help you stay on budget and ahead of the competition. Don’t let bad estimates eat into your profits—partner with TSARSI and build with confidence.
For more information on how we can support your next project, contact us today!
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