How can I improve my estimating?
Time and experience often lead to more accurate estimating. However, there are some steps you can take to improve your construction estimates now.
Use a Cost Database
A cost database, or costbook, is a list of your standard itemized costs. These costs are used to quickly create and update estimates. This speeds up the estimating process and keeps all of your estimates consistent.
Use a Consistent Naming Structure
Naming your line items with a consistent process makes it easier to find and track costs. It also makes it easier to update costs if you are using a cost database.
Cost codes are often used as a standard naming structure. Typically, cost codes are standard across the industry, such as the CSI MasterFormat. Consider using cost codes to name your cost database items.
Clearly Define your Allowances
Home selections frequently require allowances, although there are other situations. Be sure to properly communicate to the client the reason for the allowances. Explain if their options will fall within the allowance or if they will owe overages. Proper setup and management of allowances will increase a client’s trust and streamline your cash flow.
Choose a Consistent Profit Structure
Markup and margin are the primary methods for building profit into your job. However, the two are different, and are often used separately. Choosing the correct method for your business will ensure you truly receive the profits you estimate.
How can I better manage my project finances?
Creating accurate estimates is one major step to maximizing profit for a construction business. However, project financial management does not end with a signed contract. Financial management throughout a project’s life-cycle generates and maintains profit.
Financial management is executed through several means. Two primary means are change order management and financial reporting.
Most projects will encounter unexpected costs along the way. Thus, effective change order management is necessary for generating job profit. Change order software, especially one with a client portal, makes change management simple.
A financial reporting system is another great tool for managing project finances. Tracking a project’s finances throughout the project lifecycle leads to better budget management. It also leads to more accurate future budgets. You can check out our tips for financial reporting to learn how to best manage your construction estimate.
What other financial tools does ConstructionOnline offer?
Accurate estimates and finances are crucial to project success. To maximize contractor ROI, we have developed a suite of financial tools as part of our construction management software. Standard tools include estimating software, change orders, home selections and allowances, custom proposals and quote templates, and cost databases. QuickBooks integrations and our Redline Takeoff platform are available for total project management.
