The Evolution of Cost Estimating

The construction industry is quickly enhancing the science of construction project estimating – a concept as old as the ancient Egyptian pyramids – through new technology. These new tools have been instrumental in helping realize cost savings of time and money for the owner and developers as they bring projects to market.

According to a 1994 study conducted by the National Institute of Standards and Technology (NIST), the U.S. capital facilities industry was losing an estimated $15.8 billion per year in efficiency losses because of inadequate interoperability among computer-aided design, estimating, facility management and other siloed processes and systems. Since that time, advancements in focused development and technology have reduced losses, especially in the area of cost estimation.

Estimates vary in depth, specificity and accuracy, ranging from the most cursory “order of magnitude” level to the most accurate “bid documents” level. The goal of building-construction estimating is to arrive at a well-informed and accurate construction cost at predetermined stages of the preconstruction of a project.

For several decades, paper construction documents served as an industry commonplace. Initially, the old-fashioned estimating take-off process required manually created two-dimensional drawings with pencil, paper and architectural scales, and hand-written spreadsheets. This process took months to complete.

Today, smart technology systems automatically generate take-offs from building information models (BIM) and produce savings of up to 45 percent in cost planning and construction cost estimating. This process is the byproduct of enhanced interoperability, team collaboration and powerful new technology. The result is accurate quantity take-offs and estimates that can be produced in minutes or hours instead of weeks.

This technology-driven process has evolved exponentially, resulting in a more value-oriented process. Additionally, the design/build delivery method – based on the designer and the constructor working side-by-side throughout the entire process – is becoming the norm.

Architects and general contractors use this collaborative method in conjunction with the new software so viewers can digitally quantify and price materials. The practice reduces the cost and cycle time of estimating, and has delivered a more integrated design.

Ready for Take-off

Of all the elements involved in the estimating process, the take-off process itself is most affected by digital technology advancements. In a two-step process, take-offs build a digital picture of the project, taking into consideration a multitude of factors related to each structural component such as material types and quantities. In the second step, estimators apply costs to the quantities to arrive at an estimate conclusion. Customized Excel spreadsheets have become the leading software for automating the estimating process. In fact, it is likely that more estimators use proprietary versions of Excel than all other take-off and estimating applications combined.

Another well-known process that is widely used to calculate areas, perimeters and counts is digitizing technology. Digitizing technology enables estimators to convert paper dimensions into digital formats with the simple use of a handheld stylus.

The adoption of onscreen electronic plans and takeoff capabilities eliminates almost all need for paper blueprints. Cost estimators can transfer quantities and dimensions directly from two-dimension electronic AutoCad drawings for immediate use in their estimates. Many firms use these onscreen take-offs to save time, improve efficiency and generate more accurate quantity takeoffs.

The latest advancement in the cost-estimating environment is the incorporation of BIM, which utilizes three-dimensional models. It has proven to provide an enhanced degree of certainty in that it exposes costly errors and omissions made visible by the BIM model. The BIM platform serves as a central location for both the construction and design teams to streamline their activity and provide more insightful and accurate reports.

The next generation of BIM can access design and construction models through a broad range of cloud-based systems that provide mobility, accessibility and virtually infinite computing power. Multidiscipline design and construction teams can improve project outcomes by moving computation-intensive tasks to the cloud, enabling more rapid simulation and visualization and optimized collaboration with access to intelligent, data-rich models. This will have a great impact on construction cost estimating.

To increase profitability in a market that operates on the "time is money" philosophy and remain competitive, today’s successful construction professionals use technology tools to improve communication and accuracy.

With the adaptation of new estimating tools in collaborative team settings increasing, the industry will be more able to provide rapid cost feedback to initial designs, make changes to attain target value and deliver the best  value to the owner.

While not yet produced at the push of a button, cost estimating has made quantum leaps in the last few years.

Hendrik Degenaar is director of preconstruction services for Gafcon Inc. He has more than 30 years of experience in the construction industry managing large, complex projects, including fast-track construction. For more information, visit

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