Conceptual estimates are critical to owners in determining if a project is feasible. However, given the time involved and the lack of guarantees, many general contractors may be tempted to pass on early-stage projects. Based on experience and tools of the trade, estimators are expected to predict labor, materials and time requirements to piece together a complete picture of what it will take to complete a project. This is tricky enough with detailed plans, but in the conceptual phase, it’s even harder. Estimating based on a loose project scope is notoriously time consuming, prone to errors and there is no guarantee of winning the job – or even that the job will come to fruition.

With all of these challenges, early-stage projects can feel heavy on risk and light on reward. However, opting out of providing a conceptual estimate may result in not getting invited to bid on future projects from the owner. Fortunately, with the right approach, conceptual estimates don’t have to be a burden. 

Delivering Conceptual Estimates with Confidence

One could argue that construction cost averages are a widely available form of historical cost data, but this also means that competitors are likely using those same readily obtained sources for their cost data. These generic costs likely add more gaps to estimates than they fill. It’s impossible to create a precise estimate that relies on cost data without actual context or additional details behind the numbers. This is risky when a project’s future is hinging on the accuracy of the estimate.

While it can be hard to know where to begin, using historical data and as-built costs from similar projects is a great starting point. By creating target cost models based on projects of similar scope, scale, type and owner preference, estimators can quickly form a much clearer picture of what a project will entail. That project data can be the secret to quick and accurate conceptual estimates. 

Accelerating the Estimating Process 

When estimators lack the details and information needed to make informed decisions, they also lack the confidence to work quickly. They could easily spin their wheels for hours, revising and second-guessing their work. Because they started without adequate information, no amount of iterating will help them feel confident about the accuracy of their estimates. Every hour they spend on conceptual estimates takes away from their other work. In addition, bouncing between projects makes it difficult for them to work efficiently. 

Fortunately, data-backed conceptual estimating and cost modeling solutions can help estimators fill in the details of new conceptual estimates in a fraction of the time. When estimators can access actual cost data from other projects to build feasibility budgets, they can quickly form a much clearer picture of what the project will entail. This also helps them better account for variables that influence cost and ensure the accuracy and reliability of their estimates.

Mining data from project estimates and as-built, actual costs, with prices normalized to the time and location of the current opportunity, leads to fast and accurate early phase cost models, all while reducing risk and removing a lot of guesswork. 

Closing the Loop

This data can be further leveraged with a closed loop integration that enables estimators to continually refine the accuracy of their estimates. This can be done by moving the conceptual estimate into a cost estimate solution and then preparing a detailed estimate based on the owner’s specifications. If the project is accepted, this can then become the basis for a project management budget. Once the project is complete, the final actual cost data can be added to a database where it can be referenced again to create future conceptual estimates. With this approach, everything comes full circle and future estimates can be delivered with even more confidence.

While conceptual estimating for early-stage projects may seem like a risk, with the right data and methodologies in place, general contractors can be assured that their budgets are realistic and that they are better positioned to win more projects in the future.