How to Create Accurate Project Estimates

When looking to create accurate project estimates, it’s important to look at the multiple factors that add up for each individual project. Equipment, material, labor costs and scope can often vary, but if you create a plan with accuracy from the get-go, you can ensure your success and manage expectations for your team more precisely. Here are our top tips to creating accurate project estimates for your team: 

Be Specific

You can be most accurate in your project estimates when you have exact costs for labor and materials, along with any specific variations you might need to present. Showing the specific variations on cost and time can also help a client choose the materials for each project to the best of their ability, so show the particular costs (including acquisition or shipping) for each variation. This specificity will help clarify the needs of the client and scope of the project. Also ensure that you are building in your profit margins and any vendor costs, and that each item is priced accordingly. This will help you present the finalized selling price with little effort and ensure that you are not losing money due to unclarified specifics. 

Build In a Buffer

One way in which contractors don’t provide accurate estimates is that they don’t build in buffers, or potential extra costs. Remember to include waste factors and other unique variables (permit application costs and wait periods, extra labor or overtime pay, etc.), so you can show your clients a complete costing estimate. Using your experience from past projects, show your potential client the percentage of “wiggle room” necessary to create a solid plan. While using your specifics to show actual cost, you can also build in an accurate buffer to more precisely show what the end cost result might be. Of course, ending below this buffer will make your client very happy with your project! 

Use a Template

When you’re managing several projects, at various stages from pitch to iteration to close, it’s advantageous to have a template-based system for easier automation. Pop in figures for each of your projects easily, while already having formulas for adding up costs. You can also add your company name, contact information and website links as well as any pertinent contract information. This way, when you update one piece of information, it is accurately reported to all parties. This is especially helpful if you use the same materials on multiple projects and already have the item number and cost entered. Easily change the amount and have the new invoice update the estimate. Templatizing your systems will enable complete and effortless takeoffs between your department leaders, as well. 

Make It Customizable

For every project, you might have to show cost breakdowns to a variety of audiences and stakeholders. When building your estimate, it’s best to make a series of estimate versions to show to these various parties. With an all-in-one piece of software, you could customize each of these versions for items, groups and presentations with the information you need to present. Whether you are presenting on a static or parametric basis, or an array of products with modifiable default sizes, finishes and costs, this will make it easier to customize for each situation. If you do not use a piece of software like this, create different versions manually with a series of Excel files or Google Sheets. Various customizations might be labor costs only, material costs only or versions for clients, buyers or vendors. Utilize these customized reports to explain everything from cost details to bid summaries to ready-to-send proposals.

There are a variety of ways to present estimated costs to your team, but what’s most important is that it is accurate. Utilize the above steps to ensure your project estimates are precise and that your team can finish the project on target. This will save you time and effort later in the project, build trust amongst your client and your team members and show you as an authority in your space. But, most importantly, it will ensure that your budgets and timelines align with all parties and set you up to be a highly trustworthy, effective and successful project manager.