Is Construction Management Estimating and Construction Estimating the same?

by Perry on October 12, 2010

Well that questions sounds very similar but it really has different meanings to different people in a construction management organization. So let’s first break down a few clarifications to help organize a few schools of thought.

1) Assume at this point we are speaking about general construction.

2) Corporate philosophy regarding internal processes on how to price jobs.

3) Company sales volume does dictate how a company operates in terms of overhead staffing

4) Estimating projects to bid versus estimating change orders.

Without hesitation, it is critical for anyone starting a new company as an owner to first determine how the construction estimating process will be conducted to produce bids or quotes (hard or negotiated) or even change orders.  Therefore, it will be crucial to watch & listen to any of the free 12 construction estimating processes videos on www.AskTheEstimator.com .   That way you can move forward with clear policies on how to bid work efficiently , consistently, & profitably.

So let’s take a look at company size as measured by annual sales volume.  Often times, general contracting construction firms with annual sales between $4 million and $25 million, usually have their construction estimators perform the detailed estimates that become bids. If the bid is successful, there is less confusion on passing the estimate detail to a project manager.  But the main reason is overhead; most firms of this size can not afford having separate construction estimators from construction project managers.  Estimators in this type of company have to wear BOTH hats, and very often have the ability to perform construction project management.  However and  unfortunately, many project managers do not have the same ability to perform detailed estimating.  For firms with annual sales greater than approximately $25 million, you will often find that there is a clean break between the construction estimating department and the construction management / project management departments.

Often times when a company performs construction estimating, they are taking off the quantity of construction materials and labor whether self performed of subcontracted out to specialty contractors. Then they apply construction costs to the quantities to determine the construction estimate. After that, various overheads and profit are applied to develop a retail construction bid or quote. However, when a project manager estimates change orders, he or she often think of the various tasks of construction changes and which subcontractor will need to price the change. Project Managers are used to managing the jobs which entails managing subcontractors which are so often thought of as tasks or activities that usually figure into a construction schedule.  So as you can see here, there really is somewhat of a disconnect between an construction estimating department and the construction management / project management department.

Today in construction, so many general contractors contract out the labor if not a complete turnkey solution. There is usually a philosophical difference on how a company is to proceed with the construction estimating function, especially if most everything is contracted out.  That’s why it bears repeating: it is CRUCIAL to watch & listen to any of the free 12 construction estimating processes videos on www.AskTheEstimator.com .   That way you can move forward with clear policies on how to bid work efficiently , consistently, & most importantly, Profitably.

Thanks for visiting AskTheEstimator.com

Here is a response from an Estimator named Nick:

“Your points are very good ones especially for the small to medium sized contractors. Just because of limitations in resources they have to have their estimators do the entire job, including project management.
Obviously, in the smaller companies the estimator/project manager is the owner of the company.”

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