For a construction estimate to be reliable, all items must be accounted for. That’s a lot of line items costs and some that might not be immediately obvious. We’ve compiled a brief rundown of common construction costs and created a construction cost estimating checklist you can use for your next project.
Types of Construction Estimating Costs
All costs included in a unit price estimate fall into one of two categories: direct costs and indirect costs. Direct costs (also known as project overhead costs) are those directly linked to the physical construction of a project. Material, labor and equipment prices are all direct costs, as are subcontractor costs. They are also sometimes called “bare” or “unburdened” costs.
Examples of direct costs include all on-site personnel, even those without direct responsibility for structure being built, like security guards. Permit costs and surety bonds also fall into the direct cost category as well. If you plan to have telephone service or use a copy machine on-site, you can file those under direct costs. A good rule of thumb is if a line item is used for a specific task at the job site, it’s a direct cost.
Indirect costs are incurred while completing the project but are not applicable to any specific task. There are two types of indirect costs: main office overhead and job site overhead. Estimator and engineer salaries are considered main office overhead as are any costs associated with the office like rent, furniture and power. Legal services, insurance and mileage expenses fall under this category, too. These costs are typically calculated as a percentage of the total project cost and added at the end of an estimate.
Trailers and other temporary job site facilities are a curious case. Since they are not used to complete a specific construction task, temporary facilities are, by definition, indirect costs. However, these facilities support all tasks on the site. Nothing could get done without them. This is what’s known as job site overhead. Even though job site overhead technically includes indirect costs, calculating them directly and not as a percentage of the total project cost will result in a more accurate construction estimate.
Localized, Accurate and Complete Construction Cost Data
Both direct and indirect costs are necessary for a construction estimate because both direct and indirect tasks are necessary to complete a project. But where do you find pricing? RSMeans Data from Gordian contains more than 85,000 unit line items you can use to complete your next estimate or validate supplier and subcontractor quotes.
Download this construction cost estimating checklist to double-check your next construction estimate.
