Most Common Construction Estimating Mistakes (and How to Fix Them)

Estimators play a crucial role in the construction industry, determining project costs that can make or break a contractor’s profitability.

According to the National Cooperative Highway Research Program, construction estimating errors cost U.S. construction companies an estimated $273 billion annually. It’s a major drain, accounting for up to 20% of total project costs and causing as much as 52% of project delays.

Even the most experienced commercial estimators can fall into common traps that lead to costly mistakes.

In an industry where precise construction bidding is essential to winning contracts, avoiding inaccurate material takeoffs and overlooking labor rates, is more important than ever.

Unfortunately, many estimators rely on generic software like spreadsheets or basic accounting programs not designed for the complexities of construction estimating.

While these tools may seem convenient, they lack the specialized features needed to handle trade-specific calculations, accurate cost tracking and seamless integration between takeoffs and proposals.

In contrast, using construction estimating software designed specifically for the industry can help estimators avoid common errors, streamline workflows and increase accuracy.

In this article, we’ll explore the most common construction estimating mistakes and how takeoff and estimating solutions can help estimators overcome them.

Key Takeaways for Commercial Construction Estimators:

• Avoid costly errors by using takeoff software for precise, real-time material calculations directly from blueprints and ensure integrated supplier pricing for current market rates.
• Utilize trade-specific estimating software with automatic labor calculations, incorporating up-to-date wage rates, crew productivity and regional labor rates.
• Streamline change order processes with cloud-based estimating software that allows for quick estimate adjustments and seamless integration with accounting, ensuring accurate financial tracking.
• Employ estimating software that provides detailed breakdowns of both direct and indirect costs, including equipment rentals, insurance and administrative expenses, to prevent underbidding and maintain healthy profit margins.

Mistake #1: Inaccurate Material Quantities

One of the most common mistakes in construction cost estimating is inaccurate material construction takeoffs. This occurs when estimators either overestimate or underestimate the quantity of materials needed for a project.

The consequences can be costly — ordering too much results in wasted resources, while ordering too little leads to project delays and increased costs.

Electrical, plumbing and mechanical estimators are particularly susceptible to this issue due to the complexity and variety of components required for each project.

For instance, an electrical estimator who miscalculates the amount of conduit or wiring needed risks costly delays or budget overruns.

Solution: Takeoff Software for the Construction Industry

Using generic tools for takeoffs often leads to inaccuracies because they are not built to handle complex blueprints or specialized materials.

Construction takeoff software is designed to eliminate this issue by providing precise, real-time material calculations.

Using construction estimating software allows estimators to perform digital takeoffs directly from blueprints, ensuring that every component is accounted for accurately.

Additionally, integrated supplier pricing ensures that estimates reflect current material costs, minimizing the risk of cost discrepancies.

Mistake #2: Misjudging Labor Costs

Labor costs are often the most significant expense on a construction project. However, misjudging crew sizes, productivity rates or labor hours can lead to significant budget issues.

Inaccurate labor estimates also pose a risk when managing multiple projects simultaneously.

Without real-time visibility into crew availability and labor costs, contractors may over-allocate resources or fall behind on deadlines.

Solution: Software With Automatic Labor Calculations 

Using trade-specific estimating software integrates labor cost calculations with up-to-date wage rates from a tailored database.

By factoring in crew productivity rates and regional labor rates, the software ensures accurate labor cost forecasting.

Additionally, synching accounting and construction estimating allows contractors to track actual labor expenses against estimated costs, enabling better financial control throughout the project lifecycle.

Mistake #3: Inadequate Change Order Management

Change orders are inevitable in construction projects.

Whether due to design modifications, client requests or unforeseen site conditions, change orders significantly impact project budgets.

Unfortunately, many contractors struggle to track and price these changes accurately, leading to profit erosion.

Large electrical construction jobs and mechanical projects in particular face frequent scope changes as designs are refined or as installation challenges arise.

If these changes are not accounted for promptly and accurately, contractors risk underbidding and losing profitability.

Solution: Comprehensive Change Order Tracking With Estimating Software

Cloud-based estimating software streamlines the construction change order management process by enabling estimators to quickly adjust estimates.

With seamless integration between estimating and accounting systems, change orders are automatically reflected in job costing, ensuring accurate financial tracking and invoicing.

Mistake #4: Ignoring Indirect Costs

Many estimators focus heavily on direct costs, such as materials and labor, but overlook indirect costs like equipment rentals, insurance, permits or administrative expenses.

This oversight can lead to underestimating the total project cost, resulting in reduced profit margins.

For example, a plumbing contractor may accurately calculate material and labor costs but forget to include equipment rental fees for trenching machines or site-specific safety measures.

Solution: Software Equipped With Precision Reporting

Generic estimating tools may not have the capability to capture all indirect costs, leading to incomplete estimates.

Takeoff and estimating software designed for the construction industry includes estimate summaries for a detailed breakdown of indirect and direct costs.

Estimators can easily add overhead costs and other miscellaneous expenses, ensuring that every aspect of the project is accounted for.

This holistic approach prevents underbidding and helps contractors maintain healthy profit margins.

Mistake #5: Inconsistent Proposals

Despite advancements in technology, many estimators still rely on spreadsheets or manual calculations for construction estimating.

This approach is not only time-consuming but also prone to human error.

Manually transferring data between spreadsheets increases the risk of data entry mistakes, version control issues and calculation errors.

Manual estimating can also limit collaboration between estimating, project management and accounting teams, leading to communication gaps and operational inefficiencies.

Solution: Construction Estimating Software

Takeoff and estimating software eliminates the need for manual calculations to help you develop a winning takeoff and estimating process.

From takeoffs to proposal generation, the software simplifies your estimating for accurate construction bidding, reducing the likelihood of errors.

One of the biggest advantages of construction estimating software is its ability to digitally and automatically transfer data from bids to proposals.

This ensures consistency and accurate estimates, as all project details — from material quantities to cost breakdowns — are seamlessly carried over.

With this, estimators can easily generate branded, professional proposals that accurately reflect project scope and pricing, reducing the risk of miscommunication or discrepancies.

Additionally, the ability to save and reuse common conditions or effective layouts ensures uniformity across all documents, maintaining a professional, branded look.

See How McCormick Helps You Avoid Costly Estimating Mistakes

Inaccurate estimates can lead to lost bids, cost overruns and reduced profitability.

By addressing the most common construction estimating mistakes, estimators can improve your construction bids, streamline workflows and enhance project outcomes.

McCormick’s takeoff and estimating software is designed specifically for mechanical, electrical and plumbing trades, offering trade-specific tools to increase accuracy and efficiency.

From precise takeoffs to real-time cost tracking, McCormick ensures that every estimate is accurate and comprehensive.

Talk to a McCormick specialist today to learn more!