How Do you Estimate a Commercial Construction Project?

Commercial constrution project
Male architect designer is sitting at his work table. Apartment renovation design services concept

So you’ve landed a new Commercial Estimating services project. It’s now time to get down to business as well as calculate how much this job will actually cost. Estimating a commercial construction project accurately is critical to ensuring it’s completed on time and within budget. Where do you even begin? You can simply we’ve got your back. In this article, we’ll walk you through the five key steps to confidently estimating any commercial construction project. By the end, you’ll have a solid estimate in hand and be ready to draft a winning bid. Let’s dive in.

Review the Project Plans and Specs

The first step to estimating any Commercial Estimating services project is to thoroughly review the plans and specifications. So, these are the blueprints that show how the building will be laid out and constructed.

Carefully examine the drawings to understand the scope and complexity of the work. Look for details on the building materials, Security system mechanical and electrical systems, and any site work required. So, the more you understand upfront, the better your estimate will be.

Talk to the architects or owners to clarify any uncertainties. Determine their priorities as well as expectations. Find out if there are any challenges with the site or permits that could impact costs. You wish to prevent any unpleasant surprises down the road.

Estimate the Material Costs

To estimate the material costs, you’ll need to determine how much of everything you’ll require for the project. This includes:

  • Raw materials like concrete, steel, wood, drywall, etc. Figure out the dimensions and specifications of the materials needed for the major structural components. Then get price estimates from local suppliers for those materials for storm recovery.
  • Finishes such as flooring, paint, tile, cabinets, countertops, fixtures, and so on. Decide on the types of finishes for each area. Then determine how much of each finish will be needed based on the square footage of walls, floors, counters, and so on. Get quotes from finish suppliers in your area.
  • Mechanical, electrical, and plumbing components. Work with your MEP engineers to specify the HVAC equipment, lighting fixtures, piping, wiring, and other necessities. So, get estimates for the cost of purchasing and installing each of these components.

Estimate the Labor Costs

To estimate the labor costs for a commercial construction project, you’ll need to determine how many hours of work will be required for each task. This involves breaking down the overall project into specific phases and the work required in each phase.

Calculate Hours for Each Task

For each task in the project, determine the number of hours required. This will be determined by the task’s size and complexity. So, talk to contractors and look at industry standards to estimate hours for:

  • Site preparation (clearing, excavating, etc.)
  • Foundation and concrete work
  • Framing and roofing
  • Electrical, plumbing, and HVAC installation
  • Drywall, flooring, painting, and finishes

Determine Hourly Rates

You’ll need to know the hourly rates for different types of labor. Rates will vary greatly depending on the level of skills and expertise required for each function. Check with local unions and job sites to determine average rates for:

  • General contractors and project managers
  • Skilled tradesmen like electricians, plumbers, and carpenters
  • Cleanup, hauling, etc., need untrained workers.

Calculate Total Labor Costs

Multiply each task’s estimated hours by its hourly rate. Add together all of the charges to determine the overall labor cost for the project. This figure will likely account for 30–50% of the total project cost, so accuracy here is essential.

Moreover, underestimating the labor required for a commercial construction project can lead to costly delays, change orders, and budget overruns. So, carefully evaluating each task and using industry knowledge will help you develop an accurate labor cost estimate.

Estimate the Equipment and Tool Costs

Estimating the equipment and tools needed for quantity surveyor services and commercial construction projects requires considering both direct and indirect costs. The direct costs are the actual rental or purchase prices of the heavy machinery, tools, and other equipment. The indirect costs include fuel, maintenance, transportation, and operator wages.

Heavy Equipment

The big-ticket equipment like cranes, bulldozers, excavators, and loaders can be either rented or purchased depending on the scope and timeline of your project. If renting, get multiple quotes from equipment rental companies to compare rates. Make sure to factor in delivery and pickup fees, as well as the cost of an operator if you need one.

Power and Hand Tools

Everything from concrete mixers to nail guns to wrenches will be needed. Determine what tools your crews will require based on the details of the job. Some may already be owned, but budget for replacements and any special tools that must be purchased. Personal protective equipment such as hard hats, protective glasses, steel-toe boots, & high-visibility vests should not be overlooked.

Fuel and Maintenance

The equipment and vehicles on site will require fuel, oil, and regular maintenance to keep things running. However, track the estimated hours of operation for each piece of equipment to determine fuel costs. So, budget for routine maintenance like oil changes, tune-ups, tire rotations, and any unexpected repairs.

Determine an Appropriate Profit Margin 

Once you’ve determined your direct and indirect costs, it’s time to calculate your profit margin and establish a final bid price with our price intelligence service. This is an important stage since you must guarantee that the cost is both competitive as well as allows you to make a healthy profit.

Determine a Target Profit Margin

In general, a profit margin of 15-20% of total project cost is normal in commercial construction. However, this can vary depending on factors like:

  • The complexity and risks of the project. More complex jobs may require a higher profit margin to account for unexpected costs.
  • Expertise and experience. High-experienced people may be able to offer lower profit margins.
  • The current market. In a busy market with lots of construction work available, you can likely aim for a higher profit margin. So, in a slower market, you may need to tighten your margin to win the bid.


So there you have it, the 5 key steps to estimating any Commercial Estimating services project. While it may appear difficult at first, if you take it step by step as well as don’t get bogged down by the minutiae, you’ll be crunching numbers like the pros in no time. Remember, start big picture, determine your costs, plan your timeline, evaluate risks, and put it all together. With some practice, these steps will become second nature and you’ll be providing accurate estimates to your clients and winning more bids. Now get out there and start estimating the only way to get better at it is through experience. You’ve got this.

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