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Estimating & Bidding

Estimate

In Plain English

A professional calculation of how much a construction project will likely cost.

Definition

An estimate is a professional assessment of the probable cost, time, or resources required to complete a defined scope of construction work. Estimates are developed at various stages of a project's life cycle with increasing accuracy as more information becomes available. The estimating process is fundamental to project planning, budgeting, and bidding.

Why It Matters in Bidding

The estimate is the foundation of every bid, setting the price a contractor commits to and determining whether the project is won and whether it earns a profit. Because estimates progress from rough order-of-magnitude figures early in design to detailed quantity-based pricing at bid time, understanding which level of accuracy a number represents is critical; treating a conceptual budget estimate as a firm bid is a leading cause of overruns and disputes.

Example

Early in design the owner relied on a square-foot conceptual estimate of $18 million, but the team waited for the detailed quantity-takeoff estimate before locking in the guaranteed price at bid time.

Related Terms

Cost EstimateEstimatorBudget EstimateDetailed Estimate

Frequently Asked Questions

Estimates range from conceptual or order-of-magnitude figures, built early from cost per square foot or historical data, to detailed estimates derived from quantity takeoffs and current vendor pricing. Frameworks like the AACE classification describe this progression, where the expected accuracy range tightens steadily from wide early bands to a narrow band at a bid-ready definitive estimate.
An estimate is the contractor's internal calculation of probable cost. A bid is the price formally offered to an owner, typically the estimate plus markup, overhead, and contingency. A supplier quote is a firm price for specified materials or equipment. Confusing an internal estimate with a binding bid can commit a contractor to an inadequate price.
A professional estimator prepares it, performing quantity takeoffs from drawings and specifications, then applying labor productivity rates, material pricing, equipment costs, and subcontractor quotes before adding overhead, profit, and contingency. Many use estimating software or cost databases such as RSMeans to benchmark unit prices and keep pricing consistent across projects.

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