Construction Cost Estimating Services

A Detailed Guide to CCIS or “Construction Cost Information System” ERP


There are many terms which are trending in the present market and which are allied to software solutions related to cost management. Some of these terms are P2P, Procure to Pay, Cost management software and solutions and e-Procurement. Due to the crisis that the pandemic has created, these terms are searched more and more. These searches are trending in the search engines but they don’t represent the correct sentiments of the market. However, these terms indicate that there is more and more need of the advanced software and solutions which can help in the Cost Containment and Cost Control process.

There are businesses which are using legacy software as well as paper based solutions for Cost Control but most of them are unsatisfied with the performance of these systems and are looking for newer solutions which are more advanced and robust. With the present legacy software solutions they are not able to achieve good results and the reason for this is that these solutions were made a long time ago and they do not cater to the needs of the present times. The aim of this write-up is to provide you an in-depth understanding of cost management and how the cost management technology can help you in making huge cost savings. It will transform the way your business spend money as well as will help you in saving time and cost.

Spend Management

What is Spend management and Spend under management?

Spend management refers to all the tools and processes, which are used to control the money spending done by any business. This term not only covers the end to end procurement but also includes different aspects related to the cost of procurement. Purchase order creation, invoicing as well as data reporting are all included in this. All purchasing processes and vendor / supplier management is also involved. Spend management can be considered as an ongoing process which involves optimization of the ways the company or business is spending money.

• Collecting data related to the identification and classification of the different types of expenditure.

• This expends on, auditing and verifying, analysing, building and tracking the data within a single repository.

• Implement methods aimed at improving and achieving these activities

• The Spend management system aims to digitise these processes and integrate them into user-friendly processes.

• Ensuring the corporate practises and procedures are complied with efficient reports.

• An efficient approach for spending management includes acquisition, procurement and cost management.

• Automation of the reports and analyses of the expenditures on a single platform.

• Multiple systems need to be deployed in your company as the solution for spend management.

• Centralized feedback and platform for data collection

Spend under management refers to the condition that spends are not managed efficiently. All the processes which are used to manage the spending come in spend management but spend under management is a measurement or metric. It determines the portion of total expanses that is overseen by the business.

Spend management comparisons

Spend management v/s expense management

There are some key differences between the spend management and expanse management. Some of the key points are as follows:

1) A holistic picture of the payments is captured by the spend management, whereas the expanse management is related to managing the expanses on employees only.

2) The expanse management includes the payment made by the personnel for expanses to carry out the company’s business.

Spend management software V/S Paper-based systems

The purpose of spend management software is to digitise the management process on a single, centralised, cloud-based platform. However, many organisations may still have hybrid manual and traditional models or paper systems in place. Moving to a cloud-based software solution can seem daunting, but the advantages of this digital transformation and the risks that your processes will not migrate are important to consider.

Disadvantages of paper-based systems

The need to store physically

Paper-based systems collect a large number of documents to be stored somewhere. Older documents may need to be archived and stored while existing documents need to be kept in places in which procurement, accounting and finance teams can easily access them. For this physical storage necessity, larger office spaces are often required.

Vulnerabilities to security

If the facts are on paper, documentation is easy to forge or modify. It’s risky to rely on paper-based systems without further security measures.

Risk of loss or damage

Fires, floods or mishaps can damage paper documents. Documenting may also be misplaced — intentionally or by accident — and without the originals this data can be difficult to replace or recreate.

Issues of transport

It is not only when archived data files are moved to storehouses that transport comes into play.In general while creating a document it is important to take it to different part of the Bureau to have the document signed by different approvers and subsequently transfer it to the procuring division for submission.

Editing problems

Written or printed documents can only be effort-fully corrected or amended, and a person will normally need to re-create the content from scratch to make changes.

Higher costs

Paper systems are expensive not just for added salary of staff required to keep the data on paper but for actual materials – paper, printers, photocopying machines, storage cabinets, and other office supplies. Paper-based systems are costly.

Reduced opportunities for communication and collaboration

Version control in a paper-based system is very challenging, and there are cases when multiple employees work simultaneously on different versions that are not communicated for changes to mix. Moreover, these multiple copies which are distributed among several collaborative stakeholders may be forgotten while lying on someone’s desk in a stack of papers that defeat the purpose of collaboration.

Environmental damage

We have come to the point where organisations must be held accountable for their carbon footprint, in depleting our planet’s natural resources. Many companies have “greened” and digitalized a lot of their data to make them greener. But if you still print documents and use hard copies in files, not only does your company increase deforestation, but also provides great distances to your physical locations with the carbon emissions is required to transport paper based office.

Risks and inconveniences of legacy systems

There are also five main risks a business is facing when operating legacy technology.

Higher operating costs and additional downtimes

Legacy systems are more cost-intensive in operating and maintaining and are known for crashing and inactivity. In fact, a 2011 survey carried out by senior IT managers in US federal agencies found 47 percent of Federal government IT applications based on legacy technology.

In addition to the maintenance of these legacy systems, almost half of the federal annual IT budget was allocated. When cloud-based spend management systems are used, the operating costs are much lower than the downtime of the hosting applications on site.

Outdated technology is vulnerable to attacks by cyber criminals as legacy systems are often not supported by their original versions. In 2019, the average cost of data violations was up to US$ 3.92 million per institution, according to IBM Security.

Inconsistency with newer systems

External heritage technology is generally incompatible with newer systems. This leads to numerous problems when trying to add modules to existing software or create APIs in our digital age.

Less support experts

Many developers and IT professionals who first developed and supported a certain legacy system may be retired. This decreasing skill pool may not allow certain types of legacy software to be supported by the new generation of software and infrastructure experts.

Cannot maintain competitor compliance

The digital transformation of our world is witnessed by all. We want to get information quickly and simply, at any given time, through a range of devices. Companies that understand this have adapted and supplied products and solutions for safe and remote access to apps and tools. Probably your competitors are moving to cloud services, which will leave you unfavourable when your company can not keep up with time.

More cyber-attacks are likely

The management software is designed to mitigate and even eradicate the disadvantages faced by legacy paper-based systems and quick investment returns. Any company migrating to a cloud-based expense management software system has several additional advantages.

Why you should go for a Cost / Spend Management Software like CCIS?

Accountability, decision-making responsibility and expenditure adjustments

A recent paper on the Chase banking news page said that, if the culture of a company is that of careful spending, it is a healthy company. One of its major benefits is that organisations that adopt it will see a substantial improvement in their spending behaviour and lead to confident decision-making and budget planning. The powerful trailing abilities and visibility of their spending habits are important.

Quick ROI

The deployment of software for spending management ensures fast returns on investment by reducing your time to value by automating a number of processes. The initial investment cost of a spending management software solution is rapidly recovered due to the increase in responsibility and visibility over all expenditures, to money saved in the daily business process.

The Aberdeen Group determined that 75% of best-in – class organisations, in the form of a spending assessment system, have put in place technological solutions compared to 43% of laggard companies.

Moreover, 88% of the top-of-the-range companies employed procurement-to-pay technology, compared with only 54% in other categories.

Benefits of CCIS or Cost / spend management software

Mobility, remote work activation and central control

Mobile compatibility and remote work is provided with a cost management solution, especially a cloud based solution. The user can access the software at any time from any device and from all over the world, thanks to its centralised functionality through a web-based browser application. These attributes are more important than ever in today’s uncertain times.

Quick and remote use

In the same way that users have access to spending management software from anywhere, this software is also quick to deploy and can even be done remotely.

An implementing team is not necessary to visit your facility because spending management software can be deployed via the cloud on a remote basis. User training can also be conducted via robust self-study articles, as well as video conferencing tools for training the trainer.

Enhanced visibility

The advantages of using software for spend management are digital technologies and capabilities, for instance advanced analytics, visualisation and cooperation nets, all of which are related to the visibility of procurement data.

A spending Management Solution provides visibility to enhance user visualisation of spending data to reach transparent agreements with suppliers, view and monitor transactions and optimise risk mitigation strategies.

The Aberdeen Group assessed companies and rated their performance as ‘best in the class,’ ‘average,’ or ‘laggard,’ in a competitive assessment. They found 71 per cent of the best class organisations, while only 33 per cent of laggard enterprises had the same visibility in every spending across categories.

Easy to use interface

Spend management technology allows users to easily navigate the actions they have at their disposal and enhance usability and successful adoption. V-Comply, the risk management and governance company, lists ten features that all technologies should have for user friendly use and should allow new technology to be adopted easily. All aspects of the software, from installation and updates to browsing, bug handling and IT support in a simple and easy way.


Concept, an application development, strategy and design firm, defines the ability to maintain performance without re-design or reconfiguration despite increased workload.

Continue to optimise your business processes by increasing your company, from a small team of ten users, to a global team of thousands of employees — without compromising the performance of the application.

Auditability and compliance

A spend management software solution provides trailers through transparent transaction history views, both ensuring compliance with the company’s policies and providing clarity for companies performing regular spending audits.

Management of risks

Deloitte pointed to the widespread opportunity both internal and external stakeholders have to commit fraud throughout the procurement life cycle, in their 2014 paper on how to prevent procurement fraud. Possible risks identified as red flags are insufficient record keeping, without the right authority for transactions and without the necessary consent.

The software for expenditure management can reduce the risk of fraud, collusion and misery or spending by preventing any such discrepancies. This applies in particular when the three-way matching is a technology feature that does not overpay or pay for goods not received.

Management of the Vendors

An integrated approach to vendor or provider management leads to better provider relationships and thus to better value for providers. The central management of suppliers through software for spending management allows companies to leverage supplier capacity to benefit from the fact that data is leveraged to negotiate more convenient terms. This results in longer-term profits.

Management of documents

A spend management solution provides a centralised place for input or uploading and downloading and viewing of data via different dashboards. Instead of printing documents which must be signed, approved and filed, the ability to manage documents electronically enables electrical signatures and approval and a streamlined, automated procurement to pay experience.

Document management and the management of knowledge in general has led to the use of expenditure management technology developing from the laborious and manual documenting and storage procedure to a dynamic business process that can create, analyse and act on a strategic basis.

Efficiency of the process because of less effort

Process efficiency is defined as the “consuming effort to achieve a business result” by Integrify, a company that supports organisations to be productive and efficient. Expenditure management software allows you to manage your expenses effectively with less effort, thus enhancing performance and achieving results.

Cost Check

Spending management software enables you without losing financial control to empower your staff. The Business Spend Management Benchmark Report for Coupa 2020 focused on three KPIs that assessed the maturity of an enterprise’s expenditure optimisation, especially with regard to savings and spending optimism. They found cost control particularly important in (i) contract spending by non-duty service providers (ii) accountable for 80% of invoices in an entire firm. In other words, reducing the management of long-term vendors’ tags), and (iii) structured spending (the proportion of spending that was responsible for 80% of the company’s total invoices).

Savings in time and costs

In 1748, the original version of the phrase “time is money” was coined by Benjamin Franklin. This adage can be overused today, but for most companies it is definitely true. The cost of order cycle cuts through expenditure management technology. If you decrease the cost of each purchase order — create and approve other activities like updates — your purchasing process is also simplified

Deloitte’s Globally Chief Procurement Officer (CPO) survey found last year, with 70% of the 481 CPOs from across 38 countries saying cost reductions were a “strong priority,” the top priority for CPO’s business strategy in2020 was cost reduction. If users can use an automated system to submit purchase requests, approvers are automatically notified, and are able to approve purchase orders from anywhere in the world, with minimum effort and no time or resources are required for end-to – end cost management. You can reduce your procurement and financial departments both in terms of staffing and office supply and your profits.


“60% of corporation strategists refer to sluggish strategy implementation as their main challenge for 2019”as was stated in the 2019 Gartner Strategy Agenda Poll. Spending management technology allows your company to be agile and implement strategy quickly, openly and quickly when adjustments are needed. In this way, corporate leaders can re-establish priorities, speed up decision making and reduce the cost of change in order to carry out key projects.

Any solution for spending management should offer most of the following features and features. The one-size approach for adopting spending management technology simply cannot be used by organisations. A good cost-management solution has an independent core platform with an end-to – end procure-to-pay solution that includes multiple modules, which can be added when needed — for example, paying for modules that are not used by you, such as an internal catalogue service, will not save costs. Instead, when your company develops and expands, you should be able to add modules.

Mobile and remote capabilities

We access information daily through several devices and several locations in this age of digital transformation. A solution for expenditure management should be mobile and allow users to access it remotely.

Roles and responsibilities in particular

There is a clear requirement for distinguishing between different roles. Spend management technology should ensure higher distinctions, for example in the CFO, Procurement and Accounting departments. Administrators, auditors, finance administrators or supply managers as well as process roles (e.g., Buyer, Cash Manager, Financial Assistant, Financial Administrator and receiver) should also assume administrative roles.

Key features of CCIS or Spend / Cost Management Software

Management of staff

Once an expenditure management solution has been initially implemented, the administrator of an organisation should be able, if needed, to additionally or remove its staff from the users list and adjust its roles and permissions as needed.

Classification of the expenditure classifications between different requests and claims

No expenditure can be lumped into ‘expenses’ in an organization. Actually, the differences between cost and expenditure are clear. A solution for spending management should clearly differentiate between different types of requests, claims and additional documents.

For example, purchase requests for office supply requests will be made and will lead to an order for the purchase. For example, travel requests may require an offer and lead to a route being sent to the provider of travel services. For capital costs under a register of assets, such as vehicles, property or furniture, Capex requests should be available. Costs for which out of pocket claims are made for corporate expenses by the employees should also be an additional category.

Moreover, each application type or document should make it possible to classify certain items within that category. Travel requests should, for example, be divided into lodging costs, flights, airport transfers and travel distances. For example, purchase requests should be subdivided into goods and services that may be received in quantities or costs.

Punch Out

A solution for spending management should be capable of boosting — buying from a spending management solution directly in real time from a supplier’s website. The items should be available immediately after checking from the online catalogue of the supplier in the purchase application.

Catalogue of products

Internal catalogues should be also part of expenditure technology to allow organisations to negotiate with a supplier prices and contracts and to add items often purchased in the spend management solution to the internal catalogue.

Notifications and alerts

Automated alerts and notifications should be provided by spending management technology.

The expenditure management solution should also have the alarm policies available for configuration, not only should approvers receive action alerts and emails notifying them of requests to approve it. These policies should allow you to set up different types of alerts, such as a budget alert when an invoice amount exceeds the current budget for the financial year or a variance alert if the quantity of the invoice is larger than the quantity bought.

Proxies, helpers and assignments

Sometimes a CFO is too busy creating the purchase demand and requires an assistant to do so. Sometimes the customer is not in charge. Dispensing management technology should have the functionality to assign a user to a proxy or an aid, so that the process can be completed immediately.

Clear processes for approval

In a spend management application the user should be able to choose a specific approval workflow or one should be configured automatically. Moreover, multiple approvers should have the option to increase approvals based on value thresholds.

Compliance Audit Trails

Relevant stakeholders should be able to see the full history of a transaction. These audit trails provide accountability and follow-up on all transactions within a company within a spending management solution.

Functionality of quotation

Many organisations, especially with expenses such as the various types of travel, require quoting requests. Spend management technology should enable the user to send a quote request (RFQ) before funds are allocated via a purchase or travel orders for a particular request.

Management of seller / supplier

The spending management technology should provide the centralised management function of the vendor or supplier. Companies can thus supply the best service and suppliers at the best prices. The ability to streamline vendor or provider management in this way leads to better vendor relations and greater trust, while eliminating wasteful expenditure.

Orders to buy

In order to become fully visible in procurement, expenditure management technology should not only serve as a tool for streamlining the submission of electronic procurement orders and attachments in digital form, it should also enable users to monitor the status of orders and their requests on the Internet using a dashboard.

Facts and invoices for proforma

The automation of the paying accounts is essential in a software solution for spending management, because it allows firms to process invoices and proforma invoices quickly and accurately.

Matching three-way

Invoice matching refers to the possibility of connecting an invoice to a buying item. The goal is to minimise the risk of over-spending and ensure coherence throughout the workflow for expenditure management. A solution for expense management should be compulsory to match the invoice and should be capable of activating three-way matching for a specific purchased order, if an invoice item is matched to one particular receipt.

Workflows flexibility

The technology of expenditure management should make workflow flexible. For example, if your company has a policy on an application that passes a quotation step prior to approval, this workflow configuration should be provided.

Tools to analyse and report

As part of its software for spend management, organisations need complete budget insight and risk analysis visibility. These business intelligence tools provide a thorough analysis of end-to – end transactions and allow access to real-time data and expenditure analysis on a granular basis.

Seamless ERP integration

Your spending management software should integrate with an existing accounting system or ERP seamlessly, enabling accurate data flows through imports and exports between both, always updating your organisation’s daily expenditure.

Training and assistance

Use of a number of aftercare facilities, including an ability to communicate with a specific spending management support team and the access to a comprehensive base of knowledge about reference material should be supported following initial implementation and user training.

This technology is only helpful for your company because of the impressive number of features and functions that a solution for spending management software can offer. You will be able to remain competitive, classify the costs of your organisation and maintain visibility and control over where costs are incurred by means of the ability to digitally transform your business. When you consider and weigh against your basic health, the disadvantages of maintaining a paper-based or legacy software solution show management technology as the ideal alternative for running a cost-conscious business that protects working capital and improves cash flow.

Expenditure management technology enables your organisation to efficiently manage spending and increase operations to strategic functions.


Do you want more efficient business processes? Do you want to cut the effort, time and high costs caused by your enterprise by a paper based or legacy system? Would you like to remain competitive and technologically advanced? CCIS can help you achieve these and more objectives. Suvarna Consultancy can offer a complete spending management solution with more than 20 years of experience in the space management sector, with solutions for both on-site and cloud spending management from scratch to meet the demands of various market sectors. The features of our solution include purchasing, strategic procurement, expenditure management, expenditure analysis and the whole array.

The CCIS or Construction Cost Information System is a truly cloud based solution with a modern, easy-to-use and intuitive interface. It is fully scalable to achieve cost efficiency while addressing complex challenges in procurement.

You can access our web application from any device, anywhere, anytime. The software of Suvarna Consultancy can be used as an independent spending management solution, or integrated fully with your ERP or accounting solution.

You can talk to us about your requirements for expenditure management.

Cost Estimation Service

Cost Estimation in Construction Projects

Suvarna Consultancy is a top notch consultancy in the domain of Project Management of Construction projects. It renders different services to its clients and Cost Estimation is one among them. Here we will have a detailed look at the Cost Estimation Services and different aspects allied to it.

Cost Estimation in Construction Projects

Cost estimation is an integral part of the construction project, and to run a successful construction project, the benefits of cost estimation cannot be denied. The estimate forms the baseline for cost control. Hence it is essential to do the estimation carefully.

In this article, we will study more about cost estimating and will understand some related terminologies.

Let’s understand the basics first:

What is cost estimation?

What do we mean by estimation in simple terms? Estimation refers to educated guessing. Similarly, cost estimation in construction projects refers to approximating the expenses well in advance so that the cost planning can be done.

Let’s consider a simple scenario; you are planning to get your house painted, so you need to approximate the amount that is going to be spent. You need to know this amount even before planning for your expenses and arranging for the funds. Similarly, you need to estimate the amount spent on your construction project well in advance to do the cost planning properly. This amount is referred to as the estimation in the construction project.

Types of estimates in construction projects:

Preliminary estimates: establish a higher level of accuracy and helps in initial budgets; however, the reliabi9lity of the numbers are not always precise, and hence this estimation method is not so commonly employed. If you want to follow the preliminary expenses, your user does that under an expert’s supervision. Square foot method is a common estimation technique. The preliminary estimation procedure is time consuming, as well.

Detailed estimates: As implied by the name, the detailed estimate involves checking all the nitty-gritty and calculating based on that.

Design estimates: These are the estimates that run parallel with the planning and design. This can be further subdivided into screening estimates, engineer’s estimates, etc. The design estimates portray the progress of the design. This information is beneficial to the project managers.

Bid estimates: The bid estimate comprises the direct construction cost. It can include field supervision, overhead, profits, etc. The bid estimate is essential in getting a new client. In many clients, the .lowest bidder is given the responsibility if new projects.

Control estimates: Control estimate aids in budget estimate, cost calculation, etc.

Process of estimation in the construction projects:

Let’s have a look into the estimation process in the construction projects:

In simple terms, the estimation process in the construction projects aims in answering the below questions:

How many: This refers to the quantities

How much: This refers to the pricing that is going to be involved

How long: this refers to the amount of time that everything in the production process will be con summed. For instance, ‘how long’ can refer to the productivity of the employees involved in the construction projects.

Hence once you have all the answers to the above questions, you can consider that your estimation was correctly done.

You can do the below things which will help you I the cost estimation process:

Reviewing the plans and specs is essential to understand the big picture before talking about the nitty-gritty. Check for the particular condition clauses etc. that could affect the cost. Check for the future prospects of the project as well. For instance, if you notice that a mall will be constructed near your construction site, then it is likely that the selling price o0f the project will augment in the future, and hence the pricing plan needs to be determined accordingly.

Some red flag items or ether things that demand immediate attention must be highlighted to the estimator well in advance, much before the cost estimation. The budgeting process is being carried out.

Developing the list of questions and clarifications:

Developing a list of questions and the answers can also be helpful. You need to have all the details handy before the pre-bid meeting.

The pre-meeting:

The pre-bidding meeting is an important step, and the cost estimator must prepare for this meeting well. Generally, these meetings occur at the project site and if any red flag issues need to be highlighted in the pre-bid meeting. The estimator can take part in the meeting himself, or he can send any of his representation. Suppose any representative is attending the meeting on behalf of the estimator; in that case, it is the representative’s responsibility to communicate all the essential information so that there are no gaps.

Site visit:

Site visits is an essential step in cost estimation. The cost estimation process cannot be carried out effectively without visiting the site. When you walk around the site, you get relevant information like measuring the land, the water facilities, etc. Also, you come to know if there are any shortcomings. It is the estimator’s responsibility to find out the problematic zones and highlight that in advance. The estimator should note the below things which will help him in the estimation process:

Distance from the corporate offices:

This is an essential factor to consider and cannot be ignored. The estimator should notice the distance of the site from the co9rporate offices. If the project is located far away from the corporate offices, then it is more likely that the cost will be stagnated and it will have a lower population of the people who work in the corporate offices.

Site conditions: The site conditions cannot be necessary before the estimation of the cost.

Soil data: Soil data is also an important part and it must be taken into consideration before the cost estimation. If the soil is more fertile you can expect the cost of your project to increase in future.

Location merits: Is your project located near a movie theatre or a shopping mall? If yes the project price will likely increase in the near future. So while bidding you need to consider this.

Parking: Does your construction site have places for parking? If the answer is yes then the prices will likely increase.

Safety of the area: Safety of the area must also be considered before doing the cost estimation and before the bidding happens.

What all is required for a correct cost estimation: An accurate cost estimation required the below things:

Historical cost data: The cost estimate can be prepared based on the historical data on the construction costs. The project manager must examine the part records of the project and do a attend analysis. Hence when you are involved in the cost estimation and cost control process of the construction projects, you must maintain the records properly to be analysed in the future. By checking the historical data, you know the features and specifications of vendors’ data in the past. You can also get hold of the commercial cost reference manuals for doing estimation. The historical data must be used carefully. The cost associated may increase over a period of time. Hence the cost estimator must consider the cost increase of the associated items before determining the cost estimation based on past reports.

Detailed step for building an estimate:

The estimation process is not straightforward and may require you to pour your blood, sweat, and tears.

1. Visit your site: Site visiting forms the primary step of building an estimate. It would help if you watched all the things minutely before commencing the estimation process.

2. Determine the WBS: The Work building structure is an essential aspect of cost estimation. It is imperative to be familiar with the construction materials and methods for determining the WBS. The contractor needs to quantify and do the pricing of each work step. It would help if you did not overlook anything while calculating the estimation. The WBS will portray the project as a series of interrelated elements. This facilitates the cost control process to a significant extent. The performance and schedule can also be tracked with the help of WBS.WBS helps in the assignment of responsibilities for all the work elements of the project. The breakdown forms the skeleton of cost control and cost estimation in the construction projects.

3. Quantifying: You need to quantify the materials, labour, and general conditions before pricing any work. How many is vital to be calculated before how much. It is imperative to read and interpret the plans involved in construction projects and know the basic estimation calculation before quantifying. You will need to utilize algebra for measuring the ratio and proportion and geometry for cubic measurements. Quantifying of material is more comfortable as compared to the other estimating activities.

4. Consider the taxes: The tax consideration forms an essential part of cost estimation. Mainly two types of taxes are considered which sales tax is, and the other one is payroll tax. Payroll tax is also referred to as the labor burden and must be added in the labor column. The payroll tax may consist of an employer’s portion of the social security tax, worker compensation, unemployment tax, employee benefits like health insurance, life insurance, vacation, teethe sales tax needs rot to be added in the material column.

5. Obtain bids from subcontractor and vendor: The subcontractor and vendor bids form an essential part of the cost estimation process. When your estimation team estimates the self-performed work prices, they must also gather the prices from the vendors and subcontractors. A failure to obtain the bids from subcontractors and vendors can result in a significant cost estimation gap. Ideally, you should so0licit the bids, receive the bids, analyse the bids, and then choose the bids.

6. Reporting is an integral part of cost estimation, and the reports can be prepared daily, weekly, or monthly. It will help have job logs, diaries, daily field reports, time cards, and the subcontractor billing estimates in the cost estimation process.

Basic approaches to cost estimation:

The cost estimator uses one or the combination of the below approaches to do the estimation process:

Production Function: Production function is the relationship between construction volume and production factor.

Empirical cost reference: Empirical estimation refers to statistical techniques that include the construction cost or facility operation. The empirical cost estimate aims to determine the best parameter values or constants in the estimated cost function. Usually, regression analysis techniques are employed to find the empirical cost reference.

Unit Cost: A cost associated with each of the facility components is referred to as the unit cost. Unit cost determination is a straight forward process. For this, the process needs to be segregated into several tasks. Each of the referred tasks is important for the construction of the facility. The hourly rate needs to be accurately calculated for specialty labor. Once you have determined the overall rate, you need to determine the rate for individual crew members.For bidding estimation, the unit cost is utilized even though the contractor decomposes the project into different levels of the below-mentioned hierarchies:

Subcontractor quotation: Subcontractor quotation is an integral part of cost estimation; however, the accuracy of the estimation also depends on the genuineness of the quotations.

Construction Procedures: If this is practiced, then the project can be split into labor, material, and equipment to perform various tasks in the project.

Various formulas are utilized for cost estimation. Simple Unit cost formula factored estimate formula, and formula based on labor material and equipment are essential for cost estimation.

Allocation cost or joint cost: The essential cost involved in the allocation process is the joint cost. In construction projects, the necessary costs may imply the labor cost, the material costs, the construction equipment cost, construction supervision, and general office overhead.

Other factors to keep in mind for cost estimation:

1. Allowance for contingencies: In most of the construction projects, you can find an allowance for contingencies. This implies unexpected costs during construction. The contingency amount is determined by the historical experience and the difficulties of the task associated with a construction project. If the contingent amount is unutilized throughout the project, it is released at the end of the construction project. This amount can be saved and can be utilized in your next project. A good project manager will make fair use of the contingency allowance and try to save the next project.

2. Computer-aided cost estimation: You can find much software for cost estimation. These tools are sometimes better than manual estimation as it gives more accurate reports and saves time. These tools help you get faster bids so that you can set a good impression on your clients. Another significant benefit of using the cost estimation tools is that you can be up-to-date with all the changes. The cost of the estimating tools may vary depending on several factors. For instance, if you own a big company and many employees need to use the cost estimation tool, you need to pay more for the same. Most of the cost estimation software are cloud-based, and some of them are on-premises software. For apparent reason s the cloud-based software are more popular. The popular tools for cost estimation in construction projects include pro contractor estimation and Plan swift. These tools facilitate the cost estimation process and help you to create bids and track your expenditures.

3. Factor estimating It is also used by many project managers for cost estimation. When No MTO or schedule is present, then this methodology is utilized.

4. Check cost centres: It is also imperative to view the project by cost centres. You need to check every aspect to prevent overruns in case of a mishap.


Thus the above article will guide you in cost estimation. Cost estimation can act as a two-way sword. Once you give very high bidding, you may lose the bid, and your project may go to some other contractor. On the other hand, if your bidding is low, you will fail to achieve the desired ROI. If the cost estimation is done carefully, then it can result in long term profits.

You can take help of some esteemed project management company like Suvarna Consultancy to get support in the Cost estimation process. They also have an ERP named CCIS or Construction Cost Information System that can help you in doing cost estimation efficiently and effectively.