Wouldn’t it be nice if we all had a handy construction calculator in our pockets?
This calculator could help us quickly estimate the cost of small construction projects. We could just plug in variables, and it would spit out how much the project would cost us.
We could adjust for the cost of the materials, the labor hours and manpower we’d need, and the markup to ensure we profited from the project. And we could use this construction calculator for any small construction project, such as remodeling a room, fixing a deck, or putting on a new roof.
Maybe you can’t have a magic calculator, but that doesn’t mean construction business owners will have trouble calculating how much projects would cost.
This post will help you understand how to calculate construction costs easily!
Construction Cost Estimator: How to calculate construction costs?
When you’re trying to calculate the costs of a small construction project, you need to factor in all of the costs you will incur to complete the project. You also need to factor in the markup to ensure you make a profit on the job.
Here are the things you should take into consideration to estimate the price of the construction project:
1. Costs of previous jobs
A good starting point is by looking at past jobs similar to the one you’re about to start. This will help give you a general idea of what the overall cost of the job was.
Looking at previous jobs also helps you stay consistent in your pricing. And it also allows you to make adjustments if you initially estimated too low (or too high) a price for your customers.
2. Materials you’ll need
The materials needed for the job are hard costs. You’ll have to pay for these materials out of your pocket, and they will be static costs. In other words, you don’t have a lot of power over what these costs are.
You should factor in every material you’ll need to use. This could include wiring, nails and screws, drywall, paint, wood, and stains. Every single piece of material you need for the job should be included here.
3. Time spent on research
If you’re going to be advising your client on different materials and/or layout options, you could factor in the time you spend researching as a cost. Whether you do this or not really comes down to your preferences.
Many small construction companies include estimates and options into their offering for free. They treat it as a value-added service that they bring to their clients.
4. Labor hours
For this part of the construction calculator, you’ll need to estimate how many total labor hours it will take to complete the job. If you are doing all of the work yourself, the labor hours will be factored into the next section (markup). If you are hiring other workers to do parts of the job, you’ll factor in their rate.
Let’s assume you’ll be hiring workers to handle most (or all) of the job. The first step, then, is estimating how many total hours the job will take. For the purposes of this example, let’s assume it’s 80 total labor hours.
Then, you need to factor in the client’s timeline for completing the job. If they are OK with the job being finished in one week, then you could hire two people to work eight hours each over that week.
If the client needs the job done in one day, however, you’ll need 10 workers to each work eight hours in that one day.
Will this affect your costs?
It might. You may need to pay a premium for those 10 workers to work just that one day. Here’s what it could look like.
- 2 workers each making $15/hour
- Working 40 hours each in the one week
- Each worker would be paid $600 (40 x $15)
- Total labor cost would be $1,200 ($600 x 2)
- 10 workers each making $20/hour
- Working 8 hours each in one day
- Each worker would be paid $160 (8 x $20)
- Total labor cost would be $1,600 ($160 x 10)
This is how the client’s timeline could affect your labor costs.
The markup is how much you will charge your clients in addition to the actual costs you will incur to do the project. This is essential because it is what will be your profit. Your markup will also cover your overhead costs, such as your office expenses, monthly insurances, and vehicle costs, and maintenance, for example.
You could do this one of two ways.
- you could either charge a flat markup rate based on the job
- you could charge a percentage markup
The percentage is the safer route, as it would apply a consistent rate to every job.
The markup is the final step in the construction calculator. First, total up all other costs from Steps 1-4. For this example, let’s assume that the total is $10,000. Then, you apply your markup.
An acceptable markup percentage is 35%. For this example, your markup would be $3,500, calculated this way:
- $10,000 x 0.35 = Markup of $3,500
In essence, the job would cost $13,500—before taxes.
Using the percentage markup method would allow you to scale what you charge based on the size of the job while giving you a consistent profit margin.
BONUS: Take into consideration your client’s budget!
One of the most important things a construction company owner needs to consider is the client’s budget. If a client only has a budget of $5,000, you can’t quote them $10,000 and expect them to hire you.
Their budget might be unrealistic for the job, of course, but it’s your job to come up with ways for how they can save money. Offer them suggestions on reducing costs by stretching the job timeline out, sacrificing the quality of some materials, or limiting the scope of the project.
Know that you can always help your clients by making suggestions to make the project run more efficiently and cost-effective.
Construction Cost Estimator: Average construction project costs
A good thing to do is compare your project estimate to that of the average costs of common construction jobs. This table will show you a good comparison of costs. All these costs are based on basic materials quality for a remodel project that includes full demolition.
The costs are all national averages.
|Project||Cost per square foot||Average cost|
|Full house remodel||$10-$150||$15,000 – $200,000|
|Bathroom||$125||$2,500 – $25,000|
|Living Room and Bedroom||$10-$150||$1,500-$5,500|
|Vinyl Windows||12 windows||$4,644|
Construction cost Estimator: How many workers do you need?
Deciding on the total workers you need to complete the job will depend on the timeline for completing the job. The longer the timeline, the fewer total workers you’ll need. The shorter the timeline, the more workers you’ll need. The same can be said for the scope of the project.
What you’ll need to do first is figure out how many hours on average it takes to complete the job. Then, you’ll need to figure out how many employees you’ll need to do that (by also taking into consideration the scope and the timeline).
Keep in mind that every worker will have downtime figured in. In other words, if a job takes eight hours to complete, you won’t just need one employee working eight hours. That employee will need breaks and time to eat lunch. That employee also won’t be completely productive for all the time they work.
In other words, your eight-hour job may actually take 12 hours to complete.
This is important in the construction calculator for when you’re figuring out your real labor costs.
You’ll also need to factor in the average wages for your laborers. The national average wage for construction laborers is $15.60 per hour. This will vary by location, of course, and it’ll also vary by type of job.
Here are the hourly mean wages for different type of laborers:
- Specialty trade contractors: $19.24
- Residential building construction: $18.22
- Nonresidential building construction: $20.83
- Utility system construction: $20.13
Time to win that client!
Conducting an accurate construction calculator for each project is key to ensuring you are a profitable company. By factoring in all the costs you will incur, both from materials and labor, you can arrive at a final cost that also includes a profit margin for you.
Keep reading our article so you can create the best quote for your client:
As a construction business owner, you have to shoulder many costs yourself before you get paid. You may need to purchase materials for the job ahead of time. You also have operational costs.
Do you need a small business loan? At Camino Financial, we work to live up to our motto of “No Business Left Behind” every day by financially supporting our customers’ dreams and educating them on ways to do business better.