Are you tired of spending hours on manual takeoffs or struggling to create accurate bids? You’re not alone. GCs, subs, and suppliers are increasingly turning to estimating software to save time, reduce errors, and stay competitive. But what exactly does this software do, and how can it help you? Let’s break it down—step by step.

All you need to know about construction estimating

Construction estimating is the process of determining the total cost of a project. It covers materials, labor, equipment, and other expenses. When you prepare an estimate - you create a clear, detailed roadmap of what’s needed to bring the project to life while staying on budget.

What is construction estimating software?

Construction estimating software helps you calculate the costs of a project quickly and accurately. Instead of manually crunching numbers or using spreadsheets, the software digitizes tasks like takeoffs and bid preparation to quickly create detailed cost breakdowns for materials, labor, equipment, and other project expenses.

Here’s how it works: you upload project plans and specifications, and the software analyzes the data to generate detailed cost estimates, including quantities, pricing, and labor hours. 

Some tools also allow you to adjust inputs or export results in formats like PDFs or Excel for easy collaboration. For instance, many contractors prefer automating their takeoffs with automated takeoff software and plugging in the Excel outputs in their estimating software to further prep estimates. 

Steps involved in construction estimating

Understanding the bid package and preparing your estimate

The bid package is the starting point for crafting accurate and competitive proposals. It outlines the project’s scope, requirements, and specifications, serving as the foundation for your estimate. By thoroughly analyzing the bid package, you ensure your proposal aligns with the project’s expectations and adheres to the necessary standards.

Here’s what you’ll typically find in a bid package:

• Project Scope and Requirements: A detailed understanding of the scope is critical. What are the project’s deliverables? Are there specific standards or unique design features that require extra attention? Clarifying these details early ensures a solid framework for the estimate.
• Architectural and Engineering Drawings: These drawings provide the project’s blueprint—literally. They reveal dimensions, layouts, and design nuances, helping you identify potential challenges, like tight spaces or material constraints, before construction begins.
• Bill of Quantities: This document lists the materials and labor required for the project. It provides clarity on the expected scope of work and ensures all bidders are on the same page regarding what’s needed.

Throughout the estimating process, the bid documents remain your point of reference. Regularly revisiting them helps verify that your estimate stays aligned with the project’s requirements and specifications, leaving no gaps or overlooked details.

Assessing the Site

Site visits are essential for understanding the real-world conditions that could impact your costs. Drawings and photos are helpful, but they can’t capture everything. Visiting the site lets you account for factors like:

• Challenging Terrain: Steep slopes or uneven ground might require additional grading or stabilization, driving up costs.
• Extreme Weather Conditions: Heavy rain, strong winds, or extreme temperatures may delay progress or require specialized construction methods.
• Hazardous Materials: Sites with pollution or debris might need cleanup or remediation before work begins, adding unplanned costs.

Factoring in these risks upfront allows you to create more accurate estimates and reduce surprises during construction.

Performing Material Takeoffs

Material takeoffs are at the heart of your estimate, determining the exact quantities of materials needed for the project. While the process varies by scope, it typically involves:

• Reviewing documents: Examine blueprints and specifications to identify the materials required.
• Listing materials: Create a detailed inventory of everything needed for the project.
• Counting quantities: Go through the drawings methodically to calculate exact amounts for each material.

While manual takeoffs were once the standard, most professionals now use digital tools or construction estimating software to streamline the process. These tools speed up calculations while reducing human error, though it’s always wise to double-check for accuracy.

For instance, Beam AI uses AI to do takeoffs for you. Estimators save 90% of their time using AI takeoff software. 

Getting a quote from suppliers 

At this point in the estimating process, contractors or estimators will have the initial figures in order to arrive at the total project cost. If you’re a contractor, think beyond just getting quotes, focus on building long-term relationships with suppliers who offer more than just competitive prices. Look for suppliers who provide flexibility, quick delivery times, or better payment terms. If possible, negotiate bulk orders for multiple projects to lock in pricing.

Stay in regular contact with your suppliers to anticipate shortages or price increases. Strong relationships give you the advantage of getting early access to new materials or special deals before they become widely available. Strategic supplier partnerships are just as important as cost savings; they give you leverage when things don’t go as planned.

Estimating direct costs

Direct costs include 3 things namely: labour, material and equipment costs. 

Labor Costs
Labor costs cover everything from hours worked to wages, taxes, insurance, and union dues. You also need to consider productivity. A skilled crew might cost more per hour, but they’ll get the job done faster. A less experienced team might take longer, increasing your overall costs.

The key is finding a balance, paying a bit more for a faster crew can save you money in the long run by finishing the job quicker.

Material Costs
Materials are another big cost in construction, but it’s not just about the quantity. You also need to think about waste, storage, and price changes due to market conditions.

To keep costs in check, consider locking in bulk deals early or negotiating long-term contracts with suppliers, especially for large projects. Stay informed about market trends to avoid unexpected price hikes.

Equipment Costs
Equipment costs include fuel, maintenance, and sometimes special operators. When estimating these costs, think about whether renting or buying is more cost-effective for your project.

For short-term jobs, renting is usually cheaper. But for longer projects, buying might be the better option. Run the numbers based on how long you’ll need the equipment, and remember to account for any downtime or repairs.

Estimating indirect costs 

In addition to the direct costs of a project, estimators must also account for indirect field costs and overhead costs necessary for running a construction business.

Indirect field costs may include:

• Permits
• Trailers or temporary offices
• Site cleaning
• Professional services
• Software

Although these costs may not be explicitly listed in the bid, they are essential for completing the project. Estimators need to calculate the rate for each item and how long they’ll be needed (e.g., a temporary site office).

Overhead costs (also known as general and administrative expenses) are the everyday costs of running a business. These are necessary to keep the business functioning, regardless of whether there are ongoing projects.

To ensure the business remains operational, contractors must factor these overhead costs into their estimates by spreading them across all projects throughout the year.

Some common overhead expenses include:

• Office rent
• Administrative salaries
• Software subscriptions
• Utilities
• Taxes
• Depreciation
• Insurance

Adding a profit and accounting for contingency 

After calculating all the costs for a construction project, the estimator adds two important factors: profit margin and contingency.

The profit margin is the contractor's fee for taking on the project, and this money helps grow the business. The contingency is a portion of the contract reserved for unexpected costs or mistakes, which are common in construction. Typically, construction companies add 5-10% of the contract price to cover these potential overruns.

Building and validating estimates

Once you have all the necessary information, the next step is to put everything together into a detailed estimate. This is where you calculate the total cost of the project. The goal is to add up all the numbers and make sure they reflect an accurate picture of what the project will cost.

Before finalizing the estimate, it’s important to double-check all the details. Review things like labor rates, material amounts, equipment needs, and other costs to make sure everything is correct.

At this point, you can also ask colleagues or stakeholders to look over the estimate to spot any mistakes. A well-checked estimate helps prevent surprise costs later on, keeping the project on budget and running smoothly.

Choosing the best construction estimating software

Choosing the best construction estimating software can be broken down into 5 simple steps: 

Ease of Use

 When selecting construction estimating software, ease of use should be a top priority. Choosing software that is overly complex may hinder your ability to secure jobs, as you might struggle to navigate the system effectively. The integration period is a great opportunity to evaluate usability; the longer it takes to implement the software into your workflow, the greater the risk of low adoption.

Opt for a cloud-based solution

When selecting construction estimating software, prioritize cloud-based platforms. These solutions allow you to access essential tools and information from anywhere, using multiple devices, freeing you from being tied to a specific location.

Cloud-based systems also enhance collaboration and productivity by providing teams with real-time access to up-to-date information, ensuring everyone stays aligned. 

Ensure compatibility with your project management and accounting practices

Your estimating software should seamlessly integrate with your current workflows. Prefer the metric system over imperial? Use custom project classifications? Whatever your preferences, ensure the solution supports your specific needs. Additionally, if you rely on other tools alongside the estimating software, choose a platform that integrates well with your existing applications. For example, if you frequently use Excel, opt for software with built-in export functionality for smooth compatibility.

Requesting a demo 

 You can ask for a free trial or demo version and test it on a sample or real project. This will help you see how well the software works, if it meets your needs, and if there are any problems like bugs or glitches. You can also get feedback from your team, clients, or anyone else who will use the software. Testing it out ensures that it will meet your expectations and requirements.

Affordability

Choose estimating software with a pricing structure that suits your business size and requirements. Compare different plans, taking into account both initial costs and recurring expenses such as licensing or subscription fees.

What do you need to know about beam AI

Accurate material takeoffs are the backbone of creating reliable estimates. But let’s face it—this step can eat up a ton of time, leaving you with less bandwidth for other important tasks, like fine-tuning estimates through value engineering or coordinating with clients.

Back in the day, estimators had to measure quantities manually from printed plans—a process that was not only slow but also prone to mistakes. Digital takeoff software made things easier by letting users draw polygons and select quantities on a screen, but it still required a lot of manual effort.

Enter AI tools like Beam AI, which are game-changers for the industry. Beam AI automates material quantity extraction, saving you hours of tedious work. So no more clicking and drawing endlessly on the screen. With this time freed up, you can focus on high-value tasks. AI-based solutions like Beam AI are helping estimators reclaim time from a traditionally time-intensive process.

 Curious how it works? It’s a simple 3-step process:-

1. Upload Site Plans: Simply upload the plan set. 
2. Enter scope of work: Type in the scope of work.
3. AI-Powered Takeoff: AI automatically reads and analyzes the uploaded documents, annotates the drawings, and performs material takeoff based on the plans and specifications.

Ready to dive in? Try Beam AI for free or Book a demo.