Importance of Accurate Construction Estimates in Winning Tenders

Image of papers and magnifying glass with the heading - construction estimates

What Are Construction Estimates?

Construction estimates are used for the estimations of costs of a construction project so that contractors can execute the projects with smart planning of each and every activity. With the help of construction estimates contractors can make a plan of each and every activity, can predict the overall costing of the project by accurately preparing the cost estimates everything involved in the project. One more thing which helps the contractors is that estimates helps the contractors in predicting their profit margins even before the starting of the project so that they can decide whether or not they should opt for the project.
This is one of the most important steps taken at the early stages of any construction project management process. A successful construction estimate begins in the bid estimation phase of a project. All construction-related documents, drawings, notice data, historical data and other known costs are used as a starting point for coming up with an accurate estimate. The accuracy of the construction estimate will impact the profit margin for the contractor.

Things That Are Required For The Preparation Of Construction Estimates

1) Complete Set of Detailed Drawings

In order to work out the quantities of various items of work, a complete set of detailed drawings consisting of a plan, elevation, sections, foundation details, etc. is required.

2) Specifications of Items of Works

The rate of an item depends upon the specifications of the work. Specifications provide information regarding the type of construction, quality of materials, the proportion of mixes, the manner in which the work is to be executed, etc.

3) Prevalent Rates of Items of Construction

After the quantities of various items of work involved are calculated, they are to be multiplied by the current market rates of those items.
The Government department such as Buildings and Communication, Irrigation and Power Department prepares schedule of rates for all items of work pertaining to the department for a district or area, on the basis of analysis of rates of items.
A booklet called ‘District Schedule of Rates’ (D.S.R) is available for sale in such Government Organizations.

4) Measurements of different sets of works

Measurement of various items of work, such as earthwork, foundation, flooring, windows, and doors, etc, are required for the preparation of estimates.

5) The exact location and physical condition of the work site

Apart from the above-mentioned documents and drawings a contractor should also take a very close look and should analyze the location and physical conditions of the work site. What are the raw materials that are available locally, and the rates of their transportation, rates of locally available labour. A contractor should also examine the weather conditions of the work sites, all these things impact the overall cost of your project.

Types of Construction Estimates

Picture showing a list of types of estimates with the heading - types of estimates

1) Preliminary Estimate

A preliminary estimate is the approximate cost of the project that is calculated at the conceptual stage of the project. When the project drawings and specifications are not available, a preliminary estimate is prepared. It forecasts the total budgeted cost of the specific construction project.

image of preliminary estimate. image is showing an excel sheet with different construction processes.

2) Quantity Estimate

A quantity estimate includes a list of quantities for all materials needed to complete a project. Its purpose is to give the client a complete list of all the quantities required for the project and what the cost will be for each quantity.

image of quantity estimate. image showing an excel sheet of cost estimation of construction materials

3) Revised Estimate

A revised estimate is a detailed estimate of the revised quantities and rates of items of works originally provided in the estimate. When the sanctioned amount exceeds more than 5% either due to rates being found insufficient or due to some other reasons, a revised estimate is prepared.

4) Supplementary Estimate

While work is in progress, some additional work may become necessary for the development of the project which was not included when the original estimate was prepared. For this reason, a freshly detailed estimate in addition to the original sanctioned estimate prepared to describe the additional work which we called the supplementary estimate.

5) Repair Estimate

Repairing is done for structures to keep them in perfect condition. After completion of a work, it is necessary to keep the maintenance aspect in view for its proper functioning. For example in the case of building whitewashing, oiling, painting, cement plaster repairs, repairing of floors etc.

6) Detailed Estimate

These estimates are prepared when all the specifications and conditions of the projects are available .In case of government tenders which are released by PWD, CPWD, Irrigation or any other department then they release a NIT(Notice inviting tenders), In these NITs, all the specifications of projects are mentioned which can be used for preparing detailed estimates. The accuracy of detailed estimates are very high as compared to that of preliminary estimate because these are prepared with complete information about the projects.

Image of detailed estimate. Image showing an excel sheet with work description and their numerical values.

Why Estimates are important in Tender Process

1) Bid or No-Bid

Construction cost estimating covers the project scope and feasibility, project construction costs, and allocate these costs as well as the project completion timeline for the project. For contractors, cost estimates determine whether or not they place a bid on the project.

2) Predicting Profit Margins

With a construction estimate, you can more easily predict your profit margins. To make a profit, you need to charge more than the cost of the project. An ideal construction estimate would consider all expenses, including loss of supplies and material mishaps, to ensure you can make a profit from your project.

3) Providing Accurate Bids

A construction estimate also allows you to provide customers with more accurate bids, or the estimated amount you might charge for a project. Customers typically like to have accurate bid ranges so they know how much money they’re likely to pay for the project. Using a thorough construction estimate, you can narrow your bid range and attract more customers.

4) Maintaining The Budget

Your construction estimate can help you create and maintain your budget for a project. The estimate is the basis for your budget, which likely includes various costs for different aspects of construction, like materials and permits. With an accurate estimate, you can follow your budget and understand where your money is going.


Construction estimates are a very important part of the tendering process, it helps the contractor to decide whether or not he should place the bid. Another important point regarding the preparation of estimates is that the accuracy of construction costs plays an important role in the estimation process. A contractor should always cross-check his/her calculation in order to avoid silly mistakes.

If you are a Contractor and want to track your Construction Projects from anywhere & anytime , then check out this mobile app – Onsite Construction Diary

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shikhar shukla
Articles: 72

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