The ability to generate accurate cost estimates is a serious priority in the construction industry. With increasing competition and optimization for construction profit margins, conceptual estimating becomes a more critical part of that priority as well. As the industry grows and evolves, being able to utilize historical project costs and data to prepare conceptual or budgetary estimates is a key workflow.
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Conceptual estimating is the first predesign effort made to determine a project’s cost and is usually a part of the feasibility analysis of a project. It tells the owner the anticipated costs before contemplating a project’s feasibility and further development.
Therefore, a cost estimator prepares a conceptual estimate with limited information on scope and limited detailed design engineering data. To develop appropriate estimates using conceptual estimating, an estimator needs considerable skills, experience, and judgment.
Like any other estimation process, conceptual estimating has its advantages and disadvantages, as we will discuss below.
Working with conceptual estimates saves you a lot of time and energy when creating estimates. Conceptual estimating acts as a cost control by acting as the first preliminary check on cost. Below are some of the pros of conceptual estimating.
Conceptual estimating combines cost estimating with cost history, and this enables users to develop quick and accurate estimates. Normalizing a project cost database with inflation and location makes an old project relevant again as you can compare the related costs on labor, equipment, and materials.
The primary basis of conceptual estimating is giving a general picture of how much the project costs. It, therefore, acts as the first check against the budget.
As a check against the budget, conceptual estimating allows you to make crucial decisions that impact your building. An estimator looks at all the factors that influence costs, and as a builder, you can refine your budget to fit the requisite needs.
The first recognized disadvantage of conceptual estimating, like other estimating methods, is the inexactness of the process.
With the absence of data, there is no other way to evaluate the process other than using opinion.
Below are some of the cons associated with conceptual estimating.
Conceptual estimating is a resource-restricted activity. The primary resources are time, cost, and information. As conceptual estimating is performed early in the project, the information is restricted in detail and precision. Therefore, as much as the estimate is essential, it can’t be accorded much time and resources.
The accuracy and validity of the estimates are dependent on the information provided by the project scope. A clearly defined scope is crucial in the formulation of a reliable cost estimate.
The future of conceptual estimating involves the ability to thoroughly analyze all data points from past projects, combined with the limited scope available during the early stages, to develop an accurate proposal. The integration of AI and machine learning will be essential to this process. However, to begin, access to comprehensive data is necessary—this includes risk, safety, quality, cost, and productivity data. Currently, these data points are dispersed across multiple products; therefore, consolidating them into a platform-type architecture will be crucial to achieving this advanced state.
Below are answers to some of the frequently asked questions concerning conceptual estimation
The most common methods used in conceptual estimation are order of magnitude, top-down and analogous estimation methods. The accuracy of a conceptual estimate, however, can only be determined after project completion.
Conceptual estimating relies majorly on the scope of work. The clearer the scope of work is, the better a conceptual estimate will be.
Conceptual estimation is critical for big projects as it determines a project’s feasibility early in the project’s stages. As the estimates are compiled with little knowledge available on the scope, it is essential to use experienced estimators that will leverage their industry expertise and knowledge.
Ready to start estimating better? Learn more about how to create accurate construction estimates with Autodesk Construction Cloud.
