How to Estimate a Construction Project (Step by Step)
Part of Cost & Estimating
Quick answer
Estimate a construction project in five steps: (1) define the scope, (2) take off material quantities from the plans, (3) price materials and labor for each item, (4) add overhead and profit, and (5) add a contingency (typically 5–15%). For a fast ballpark, multiply the floor area by a cost-per-square-foot rate instead.
There are two ways to estimate a project: a top-down square-foot estimate for a quick budget, and a bottom-up takeoff for a real bid. Use the square-foot method early, then refine with a detailed takeoff once you have plans.
The five steps (bottom-up)
- Define scope: exactly what's being built and to what finish level.
- Quantity takeoff: measure and count every material from the drawings (concrete, lumber, drywall, etc.).
- Price materials + labor: apply unit costs and crew hours to each quantity.
- Add overhead and profit: a contractor's markup, typically 10–20%.
- Add contingency: 5–15% for change orders, surprises and price drift.
Quick square-foot method
For a fast budget, multiply the floor area by a typical cost per square foot for the project type and quality. It's less precise than a takeoff but right for early planning and for sanity-checking a bid.
Tools that help
- Square footage and cubic yard calculators for the takeoff quantities.
- Material calculators (concrete, drywall, gravel, lumber) to convert dimensions into order quantities.
- The construction cost estimator for the top-down square-foot budget and materials/labor split.
FAQs
What contingency should I add to a construction estimate?
Add 5–10% on a well-defined project with complete plans, and 10–15% (or more) on a remodel or anything with unknowns behind the walls. The contingency covers change orders and conditions you can't see when estimating.
What's the difference between an estimate and a bid?
An estimate is your projected cost to build. A bid is the price a contractor offers to do the work, which includes their overhead and profit on top of their estimate. Compare bids against your own estimate to spot ones that are too high or suspiciously low.