Conceptual estimates in construction explained

Team Arcol

What is a conceptual estimate?

A conceptual estimate is the first cost model the owner will remember. A $/sf is a placeholder not a conceptual estimate. Firms that can defend and update the model win work they can still look the owner in the eye on.

Why are conceptual estimates becoming more important?

The first number used to be a starting point that could be replaced at bid or later. However as owner demands increase the expectation is becoming earlier and more accurate estimates.

The conceptual estimate becomes the owner’s budget and introduces constraints for the entire project. Making that in isolation sets design and build teams up for failure.

Cost has to be a part of decision making from day one because teams are designing against that number whether they intend to or not.

The challenge of early stage estimates

Designers often feel constrained by being tied to early stage estimates. There can be a feeling of freedom in designing without numbers but it’s not a strategy for successful projects.

On the flip side estimators are often juggling dozens of pursuits. A stock $/sf is sometimes simply what fits the clock and when the plan changes (and it will) you can’t update a single rate. You can only walk it back.

Why is being good at conceptual estimating a competitive advantage?

The firms that can show the details of an estimate will win work. Firms that can pull apart their numbers dynamically look like a partner in construction and develop trust. Firms that rely on $/sq foot are interchangeable. The real advantage in conceptual estimating is creating a better owner experience, putting you in a position to win future work.