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  • Writer's picturePekaj Group Pty Ltd.

Introduction to Estimating

Updated: Jan 20


Estimating is the process of determining the cost of a contract for building work. It provides you with an estimate of the amount of money required to complete a project based on its scope, which is usually determined by an architect, engineer or quantity surveyor. Estimating is essential when preparing budgets and tenders, as it gives you a clear idea of how much money will be required to complete your project. This article will describe what estimating is, why it's important and how you can use it in your own business.

The Importance of Estimating

Estimating is a key part of the process. The estimate determines how much it will cost to complete a given project and is used to determine whether or not you can afford to move forward with it. If you are working on your own, this may be done simply by taking an educated guess based on previous experience with similar tasks; if you're employed by another company, they will have their own methodologies for estimating their projects and determining whether or not they can afford them.

However, estimating is far more complicated than simply guessing. There are many variables that can affect the price of a project, and they vary depending on the size and scope of what you're doing. For example, if you're building a new house from scratch with all new materials, it will be much cheaper than trying to renovate an existing structure that already has walls and fixtures in place.

Identifying the Scope of Works

Establishing the scope of works is a critical step in the estimating process. It allows you to properly define what has to be done, how much it will cost and how long it will take. This can be difficult for some contractors as there are many ways to approach this task.

The following steps are recommended as a good starting point:

  • Identify all project activities and associated costs.

  • Establish cost benefit relationships between each activity.

  • Develop an overall work breakdown structure that reflects these relationships.

  • Determine whether any additional requirements exist outside of those identified above (e.g., regulatory compliance).

The next step is to create a detailed schedule and cost estimate. This will allow you to identify any potential problems that might exist with your proposal. If there are any issues, now is the time to address them before going forward with the work.

Once you have a detailed schedule and cost estimate, it is time to prepare your proposal. This should include all of the information required by the customer in order for them to make an informed decision about whether or not to proceed with this project.

Pricing and Costing

Pricing and costing are two terms used to describe the same process. Pricing is the process of estimating the cost of a project, or the price that a client will pay for a project. Costing is the process of calculating the costs of a project.

It is important to understand the difference between pricing and costing. The two terms are often used interchangeably, but they represent different processes. Pricing can be determined by using a cost-plus model or by adding a profit margin on top of costs. Costing involves calculating actual costs, including materials and labour costs.

Review and Finalise Estimates

Once you have created an estimate, it is important to review and finalise it. This can be approached in two ways:

  • Reviewing the estimate at each stage of the process

  • Finalising the estimate once all details are known.

The first step is to review the estimate at each stage of the process. This will help you make sure that all relevant details are included and that any changes can be reflected in the final estimate. If there are changes to your requirements, this will also allow you to adjust the estimates accordingly.


Estimating is a critical element in the construction industry. It is important that you understand the process, because it will help you to make better decisions about your projects, reduces the risk of unexpected expenses, provides accurate budgets and enabling you to make informed decisions about the viability of a project.


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