Sometimes jobs are sub-contracted and these costs need to be tracked as well. All these expenses can be calculated either on paper or construction accounting software can be used and each estimate is used for a different process. There is the preliminary estimate, the approximate estimate, etc. People often confuse costing and tendering or contracting. A construction contract is often a large job. Often costs can get out of hand during a job and it may be too late when the contractor finds out. But how do they calculate the costs involved and the amount of capital they will need? They use a process called costing and estimation.
There are many estimates for any particular job. Tendering is the process of contracting out the job. Companies often employ software to help them track all the costs and expenses of a construction contract. In the tendering process a lump sum is added to the estimated price of the project as profit.
Labor, material and plant costs are the major elements of the cost. They are different. Costing or estimation is the process of calculating the total cost of a job. The agreement of the estimated cost with the actual cost will depend on accurate use of estimating methods and correct visualization of the work, as it will be done.
The customer wants to know the price of the job. There are many factors that need to be tracked and monitored. The process of estimation can be difficult if the person does not have any previous experience. The difference between the price you present to the customer (a price estimate) and your expenses (a costing estimate) will be your overall profit.
Other costs include water for the works, site offices, tools and machinery, the maintenance and servicing of machinery, construction of temporary roads, security and lighting of the site, the contract bond, etc. The accounting software helps keep track of the expenses and can predict the total expense of the project by using algorithms. The estimated cost of a work is a close approximation of its actual cost. The total of these probable expenses to be incurred on the work is known as estimated cost of the work. As a contractor, you first need to know what expenses you will incur in doing the job—for example, your costs of materials and labor. Construction accounting software can help prevent this.
An estimate is a calculation of the quantities of various items of work, and the expenses likely to be incurred thereon. RBH Engineering and Contractor Services can help you out, kindly contact us for more details.