How to Solve these 4 Common Cost Estimator Problems



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Need help solving common cost estimator problems? Cost estimating is the process of predicting the expenses of a construction project, whether it’d be a large-scale hospital, mall, hotel, or warehouse. It is a vital part of the construction process and will affect the project’s overall profitability and success. 

As estimators, your job is to estimate costs accurately and efficiently to ensure that projects stay within budget and on time. Unfortunately, you may encounter challenges that can make the cost-estimating process difficult and affect the estimate's accuracy.

These challenges may include:

  • Lack of experience, especially if you’re a newbie estimator
  • Inaccurate data collection
  • Laborious takeoff process
  • Inaccurate cost estimation
  • The struggle to meet deadlines 

Don't worry, we've got you covered. In this guide, we'll explore these common problems that can occur while doing a takeoff and cost estimation

We’ll also give you practical solutions to overcome them, such as leveraging AI estimating software to streamline the takeoff process. We'll show you how to deal with incomplete data, manage unexpected changes, and more. We'll give you valuable insights and strategies to make your cost-estimating process easier and more effective.

Whether you're a seasoned estimator or a beginner, this post will equip you with the knowledge and tools you need to solve common cost estimator problems and excel in your role. Let's get started!

4 Common Cost Estimator Problems

Here are some of the common cost estimator problems that you need to be aware of. 

  1. Lack of Knowledge and Experience

As estimators, you need to forecast the cost of completing a project with a defined scope. This is the main component of project cost management, which involves planning, monitoring, and controlling the project’s monetary costs. 

To do this effectively, you need to:

  • Have knowledge and experience in cost estimating. 
  • Understand the project scope, resources, risks, and quality.
  • Apply standard estimation techniques, tools, and best practices. 

Having knowledge and experience in cost estimating can help you keep your budget under control. You can also avoid overspending by detecting and managing potential cost factors and uncertainties.

You can increase your profit margins by finishing the project within budget and meeting profitability goals. Consequently, you’ll be able to improve stakeholder satisfaction and increase the credibility of your construction company. 

What Happens When You Lack Knowledge and Experience? 

Lacking knowledge and experience in cost estimating can lead to inaccurate, incomplete, or unrealistic cost estimates for your projects. This can endanger the success of your projects. 

Some of the consequences of poor cost estimating are: 

  • Schedule delays resulting from not having enough resources.
  • Facing unexpected changes, or doing rework.
  • Quality issues occur when you lower the standards, specifications, or performance of your commercial projects.
  • Stakeholder dissatisfaction arises when you fail to meet their expectations, communicate poorly, or have disputes.
  • Cost overruns, which happen when you underestimate the project scope, duration, complexity, or risks.  For large-scale projects, such as luxury hotels, this could mean losing millions. An example of a project that suffered cost overruns includes the Sydney Opera House which went 95 million AUD over budget.
Sydney Opera House
Source: Sydney Opera House, from house digest

How to Overcome this Problem

To overcome the problem of lacking knowledge and experience in cost estimating, project managers can:

  • Enroll in reputable training and certification programs in cost estimating, e.g.  AACE International or ICEAA.
  • Seek advice from senior cost estimators in your company who have the necessary skills and expertise
  • Refer to reliable and updated cost data sources, such as historical records, industry benchmarks, or market surveys.
  • Choose and apply suitable and consistent cost-estimating methods, such as parametric, analogous, or bottom-up.
  • Document and justify all assumptions and calculations clearly and transparently.

        2. Inaccurate Data Collection and Analysis

Project cost consists of two main components: material cost and labor cost. Material cost is the cost of obtaining, transporting, storing, and using the materials required for the project. Labor cost is the cost of employing, training, managing, and paying the workers who participate in the project.

The Risks of Inaccurate Data Collection and Analysis

Inaccurate pricing for material costs and labor costs can have negative impacts on large-scale commercial projects, such as:

  • Cost deviation, which can compromise the project’s viability and profitability.
  • Risk exposure, which can occur due to unexpected changes in construction costs or material availability.
  • Loss of reputation and credibility, which can harm your relationship with suppliers, contractors, and clients.
  • Delays, disputes, or conflicts, which can result from material shortages, claims, or disagreements over cost allocation.

Therefore, it is essential to find accurate prices for material cost and labor cost and to manage the effects of material price fluctuations on construction projects.

How to Overcome this Problem

 To mitigate these problems, you can follow some of these tips:

  • Consider direct and indirect labor costs, e.g. wages, taxes, benefits, and dues.
  • Use AI takeoff software Togal.AI to automatically process drawings and perform takeoffs in just under a minute with up to 98% accuracy.
  • Leverage historical data or expert opinions to plan and estimate construction costs realistically and reliably.
  • Set project scope clearly and handle changes effectively to prevent scope creep.
  • Develop a risk management plan that enumerates possible risks and solutions for material price fluctuations.
  • Track and control your project costs throughout the project life cycle and revise your estimate as needed.

To find material pricing and labor cost pricing, you can use various sources, such as:

  • Historical records of similar projects or industry benchmarks.
  • Market surveys or online databases that offer current prices of materials and labor.
  • Experimental research or testing that can help you find the best quantity and quality of materials and labor.

        3. Laborious Takeoff Process 

A takeoff is a process that lists the materials a project needs, along with their estimated quantities and unit costs. There are two main types of takeoff processes: manual and digital.

Manual Takeoff

It involves paper plans and a scale ruler to measure the dimensions of each material and determine the quantities required.

Digital Takeoff 

Digital takeoffs eliminate the need for physical plans and scale rulers. It uses software applications that let estimators import digital plans and perform measurements and calculations on a computer screen.

Factors that Impact the Speed of Takeoffs

Takeoffs can take a lot of time to complete, especially for projects that are complex or large-scale and involve many materials and details. Because of this, it can be difficult to meet the deadlines while still submitting competitive bids.

The duration of a takeoff depends on several factors, such as:

  • The size and scope of the project
  • The number and type of materials involved
  • The level of detail and accuracy required
  • The availability and quality of the plans
  • The type of takeoff process (manual or digital) used
  • The skill and experience of the estimator
  • The use of machine learning and AI-powered takeoff software, such as Togal.AI.

How to Overcome this Problem

Laborious and time-consuming takeoffs can impact the productivity of estimators, delay the delivery of cost estimates, and limit the number of bids or opportunities a construction company can pursue. One way to overcome this problem is through the use of AI estimating software, Togal.AI. 

With Togal.AI, you can streamline the takeoff process by:

  • Complete takeoffs in just under a minute, instead of weeks, with up to 98% accuracy.
  • Analyze any drawing no matter the file type.
  • Automatically detecting and measuring elements such as doors, walls windows, rooms, symbols, and more from PDF or CAD drawings without manual clicking or tracing.
  • Automatically labeling and classifying the detected elements based on their geometry or textual description, saving time and reducing human-errors.
  • Leverage cloud-based collaboration to simultaneously work with multiple team members on any device, anytime and anywhere, as long as there’s internet access.
  • Integrate with other software applications such as Excel or ProEst
  • Automatically name drawings

By equipping your team of estimators with AI-powered takeoff software, Togal.AI, you can save time and effort in performing takeoffs, improve the accuracy of your takeoffs, and focus on value engineering. 

To learn more about how much time and money you can save with Togal.AI, use our ROI calculator.

ROI Calculator


        4. Inaccurate Cost Estimation

When a cost estimate deviates significantly from the actual cost, especially for large-scale projects, such as a mall or a luxury hotel, it could mean months of project delays, legal disputes, and even millions of dollars.

Faulty cost estimates can also lead to a compromise on standards, the use of poor-quality materials and equipment, and errors. Consequently, the quality of the building suffers, resulting in a need for rework. 

Often times, inaccurate estimations are due to:

  • Errors in measurement
  • Errors in material and labor pricing
  • Lack of experience
  • Unrealistic assumptions and market volatility
  • Inflation
  • Intentional manipulation

Ways to Prevent Inaccurate Cost Estimates

Aside from using AI estimating software, Togal.AI, to process takeoffs with up to 98% accuracy, other ways to ensure accurate cost estimates include:

Streamline the Cost Estimation Process with Togal.AI

Cost estimation is a crucial process that forecasts the viability and profitability of construction projects. Unfortunately, cost estimators face various challenges that can impact the accuracy and speed of completion of their cost estimates, such as lack of experience, inaccurate data, and laborious takeoff process. 

To overcome these challenges, cost estimators must assess potential risks surrounding the project, ensure accurate material and labor pricing, and leverage software like Togal.AI. 

With Togal.AI, estimators can automatically name drawings, detect and measure elements such as walls and doors, and collaborate with multiple team members on any device as long as there’s internet. 

Want to streamline your cost estimation process? Explore how Togal.AI can streamline the takeoff construction process. Try Togal, book a custom demo, or get Togal.AI today.