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The Importance of Accurate Estimates in Construction
Bad estimates can lead to bad occurrences. In a study, 25% of business owners, bookkeepers, accountants, estimators, and finance managers in the construction industry said two to three bad estimates could put them out of business. Eighteen percent of these people said one bad estimate could put them out of business. As you can see, accurate estimates and job costing is critical.
- One in five people in the construction industry struggles with cost estimation.
- One in three struggles to estimate labor costs. This is one of the most expensive project costs. One in five people said they rely on a fireman or manager to record employee hours to keep track of labor costs. A smaller amount said employees use mobile tracking apps to record their hours.
- One in four track project costs by paper and pen. Twenty-seven percent user paper and do project calculations by hand, 7.5 percent keep track in their head, and 46% use accounting software and a job-costing system or app.
Most people surveyed said they try to do a cost estimate for every project. Preparation is key. Seventy-three percent of these people who prepare a cost estimate for every project said their estimates were very close or exact to the final costs. Those who prepare a cost estimate for most projects are far more likely to say their profits were “usually less than expected.”
The more you do cost estimates, the likelihood you will get better at them and be more accurate.
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