Sep 1, 2017

Construction Bid VS. Estimate: Know the Difference

The terms ‘bid’ and ‘estimate’ are two very familiar words in the field of construction. Customers, however, often use them interchangeably, as if they mean the same thing. To contractors, they mean two different things. Read on to know the difference between construction bids and estimates.

What is a Construction Bid?
A construction bid is a document that offers to perform a specific job for a customer or client. It includes the price for the specific construction, and the timeline and date of completion that the contractor can commit to. A contractor can only give a bid once he has met with the client and has discussed the project in detail. If the bid is successful, the contractor is expected to be faithful to the price and the committed timeline stated in the bid.

In the bid, the contractor is expected to take into account all possible costs for the duration of the project. The main costs that must be included are material costs, labor costs, and subcontractor’s fees and wages. The bid must also take into account any government fees, taxes, and other incidental costs.

Ideally, the total cost of the project should not exceed the total cost quoted in the submitted bid.

What is a Construction Estimate?
An estimate is the information that a contractor gives to a client who wants to know how much a project will cost. In short, estimates are all about costs. The contractor will assess the specifications of a project and identify the raw materials, labor, and services that will be needed to complete the project. An estimate is not necessarily a commitment between the two to proceed with the project.

Since it is a rough approximation, expect some deviation from the actual costs of the project. It is meant to give the client an idea how much his construction will cost, whether it is within his budget or beyond. However, it is expected to be fairly accurate, coming from a reputable and competent contractor.

There are four levels of accuracy when it comes to estimates. These are:

     Preliminary Estimate
This is also known as ballpark estimate. It helps the client assess the feasibility of a construction project.

     Square-foot Estimate
Once a project is deemed feasible, this is the next stage of estimate. An industry standard unit costs per square foot is used, multiplied by the number of square feet.

     Assembly Estimate
This estimate refines initial calculations by considering each component of the project. This could include foundation, roofing, flooring, and sanitation.

     Final Estimate
This is the most detailed and most accurate of the four. It can be used as the basis for the bid that a contractor makes for the construction project.

Both construction bids and construction estimates give the client information on his project. Ask estimates and bids only from reputable construction companies and contractors, to get accurate and detailed information. 

Written by Hubert Builders, a full service commercial construction company in Columbia, MO


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