No matter what kind of renovation project you’re working on or what kind of client you’re serving, estimating the renovation cost is a big part of the initial communication of any job. Before you start — and throughout the process of completing your renovation project — accurately estimating the project’s cost dictates what quote you’ll communicate to your clients and how the costs will lay out for your business.
Learn more: A Contractor’s Guide to the Estimating Process
While one poor estimate might not be detrimental to your business, many poor estimates could throw you under. Understanding how to make the most accurate estimates can improve your financial security and client communication.
While there are plenty of ways to calculate an estimate for your construction project, one of the most important things to be mindful of is what not to do when making your estimates. Some issues can sneak up on you, but you can prepare to avoid the most common problems with estimates so you can deliver better service for your clients, get paid for your work, and keep your business in the best shape possible.
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8 Renovation Estimating Mistakes
If you’re curious about the most common estimate problems on renovation projects, here are a few to keep in mind.
1. Going too low
Sometimes, it can be tempting to swing low regarding your estimates to stay optimistic, look good for a client, or even just try things out. However, this can often come back to bite you later. The figures might look nice at first when you go with the lowest estimate, but there are many wild cards and things that could go wrong.
Leaving a bit of stretch — even just for you — is necessary. Even if things do turn out on the low end, you’ll be happy to have a bit of extra space for what you need.
2. Leaving it to software
A lot of estimations now are done through construction estimation software, which can be both an asset and a drawback. While using software to assist your estimation process can help you make the estimation smoother, easier and more accurate than before, it isn’t always smart to leave your calculations completely up to the software.
There are many high-quality software platforms out there, and they can definitely assist your process, but they can’t account for changes, human errors and other wild cards that can impact the process from time to time. It’s best to work with the software — not let the software do all the work for you.
3. Communicating poorly with the client
This one is a lot more common than you might think. Contractor-client relationships are based on solid communication, and when miscommunication occurs between clients and contractors, it can throw off the cost estimation.
Factors like how much budget stretch is available, what timeline alterations might be needed, and other details commonly involved in renovations need to be clearly expressed. That way, each party knows what liberties they can take and what they can expect from the other side.
4. Failing to adjust for risks
While it might not be the most fun thing to think about, any building or renovation project comes with risks. Some risks are bigger than others. To get a true picture, completing a risk assessment and factoring that into your budget can save you in case something goes wrong. If you end up with a bit leftover in your budget, that’s wonderful, but not building in this stretch can sometimes be detrimental.
If you make a habit of factoring in risks, it will likely pay off for you in the long run if you do need extra room in the budget — especially if you’ve historically saved money when the risks didn’t cost you in previous projects.
5. Using the wrong estimation method
When it comes to the methods used in estimating the cost of a renovation project, there are a few that work well with different kinds of projects and project stages. While using the wrong method might not send your project awry, it can lead to inaccurate estimates and budget fluctuations that could have been easily avoided.
For example, using the unit cost method for a residential space with a various number of materials that differ from room to room probably wouldn’t be a smart choice. Similarly, the approximate quantities method might be a bit more effort than it’s worth when designing an office space. It’s all about tailoring your estimate to the project itself.
6. Failing to account for subcontractor costs
When drawing up an estimate for any renovation project, assuming rates for subcontractors can sometimes be a game of chance. This is especially true if they’re not a regular of yours or the service isn’t one you regularly use. It’s always best to ask and get quotes so your estimate can be as accurate as possible.
7. Not considering unpredictable labor costs
While the cost of labor can be a wild card, it is sometimes easier to adjust for. Projects often require more hours and hands than originally meets the eye for various reasons, and that can be especially true if your team falls behind schedule due to unforeseen circumstances. Predicting a bit of a higher cost for labor can help you if more hours are needed to complete any project.
8. Not double checking your estimate
Contractors are fond of saying “Measure twice, cut once.” The same is true for the estimating process. While it can be tempting — especially for seasoned professionals — to simply assume you did it right and go with the very first estimate, everyone makes mistakes. It can happen to even the very best construction professionals. Checking over everything is one of the best ways to ensure an accurate estimate. It’s simple, but also highly important.
An accurate estimate is key, but successful renovation doesn’t end there
While mistakes, risks and fluctuations are often unavoidable, you can at least prepare in case they come into play on any project you’re working on. Estimating is an important part of the communication process on all points of a renovation project, from the clients to the subcontractors. The cleaner that process is, the smoother each project can go.
Building an accurate picture of your expected costs is a necessary start. But a solid estimate is irrelevant if you can’t get paid for your work and materials. Before you begin the renovation, it’s important to understand how the client is going to pay for the work. Do they have financing in place? Are they using savings, or relying on a HELOC?
If the renovation estimate is close to their budget cap, starting the project could spell trouble down the road. Home renovations in particular are notoriously challenging, since it is likely the biggest construction project the homeowner has been involved with. If specs change and financing evaporates, the client may not have the funds necessary to follow through.
Avoiding these issues when possible can help you protect your business and craft smoother renovation projects. Make sure you check your work, communicate well, and choose a method that works for you. And, at the end of the day, make sure you get paid for the work you do.