Fast, accurate estimates for services and products offered are a key to the success of any construction and home building business.

Construction estimates serve as a basis for determining a project’s budget as well provide a useful tool in project management.

Even more important, profit margins are the livelihood of contractors and home builders; and the slightest miscalculations in any estimated direct and indirect project costs can greatly affect your business.

Take a good look at this checklist to determine whether you are generating efficient and accurate construction estimates:

The takeoff (a.k.a. material takeoff)

Finalizing the types and quantities of the different materials you will need to complete a project is essential to the estimating process and must be accomplished before you can bid for or start a project. The takeoff excludes assets such as tools and equipment.

Most build projects require these 4 key types of measurement for the takeoff.


This involves counting the numbers required for specific individual items (e.g., the number of I-beams required for a house build to the number of bricks needed for certain walls).


Some items are measured primarily by length (e.g., cables and pipes).

In determining measurements of this type for electrical cable, you might need to factor in extra amounts for such elements as drops for switches, receptacles, and panels.


A measurement of the surface area will be necessary for some materials. This applies in such aspects as flooring and cladding. Surface area will also help estimate the amount of paint needed.


Some materials may call for measurements of volume (e.g., the amount of concrete required for a foundation).

The 2 steps that take you in the right direction

Individual estimates for construction projects involve 2 important steps:

  1. Determining the costs
  2. Applying a markup that will yield the appropriate profit after expenses

These seemingly simple steps require a systematic process in order to yield accurate estimates on time. The closing rate and profitability of your home building projects will be directly affected by your speed and accuracy in performing these steps.

The 5 levels of accuracy in estimating construction costs

The 5 levels of accuracy in estimating construction costs

Expect less accuracy in the estimated project costs during the earlier stages and higher certainty later. The high ranges at the beginning of the project will narrow down as the project moves through its timeline.

The American Society of Professional Estimators (ASPE) classifies cost estimates in order of levels—level 1 through 5:

Level 1: Order of magnitude

This level involves an extremely rough estimate created before the project is well defined and based solely on expert judgment and previous costs of similar projects. The typical range in this level is 25%–75%.

Level 2: Intermediate estimate

This estimate is primarily used to determine feasibility from the concept of the general project. This type of estimate is developed by large-scale commercial projects that use the information to decide whether or not to continue the project.

Level 3: Preliminary estimate

This estimate consolidates unit costs using a rather detailed scope. It can be used as a basis for project financing, and sometimes, this can be a basis for authorizing a project budget. This means you have to be as accurate as possible to differentiate between alternatives.

Level 4: Substantive estimate

This is based on estimated unit costs and is created by analyzing reasonably finalized project designs, objectives, and deliverables that are established by the company. It is also used to control project expenditures to avoid going overbudget.

Level 5: Definitive estimate

This is the most accurate and reliable because it is done with known costs. All estimates are calculated by assumptions and can be susceptible to change cost updates. This estimate is used to create bids, tenders, and cost baselines.

Using a construction cost estimating software

Are you using one that works best for you? Some quality software programs come with a steep learning curve that can affect your overall estimating efficiency. Therefore use one that your team can navigate with relative ease, and therefore avoid errors.

Or you can have your CAD outsourcing company take care of your estimates in addition to your CAD projects. Don’t have one? It’s time to start exploring.

Being able to effectively anticipate the expenses of building a house, a residential complex, or a commercial structure should complement your top-quality projects. For that matter, it can influence the quality of your projects. This helps you achieve client satisfaction, and that is vital to your business growth.

Contact Purple Cow today. Let’s work together to make sure your estimates really count.