If you’re just starting out in estimating, welcome! You’re stepping into a vital role that helps shape the success of projects from day one. Whether you’re estimating construction, manufacturing, or any project, mastering the preliminary estimate is your first big step. It’s like laying the foundation for a house—get it right, and everything that follows has a solid base.

In this post, I’ll walk you through the essential steps to create a solid preliminary estimate with confidence. I’ll share practical tips and insights to make the process clearer and less intimidating. Let’s dive in!

What Is a Preliminary Estimate and Why It Matters

Before we get into the how, let’s quickly cover the what and why. A preliminary estimate is an early calculation of the expected costs of a project. It’s usually done before detailed plans or specs are available, so it’s not as detailed as a final estimate but still crucial for:

• Setting the initial budget
• Helping stakeholders make decisions
• Guiding project feasibility
• Supporting bid proposals

A good preliminary estimate saves time and money later by avoiding surprises. It’s your chance to show you understand the project and can foresee costs accurately—even with limited information.

Step-by-Step Guide to a Solid Preliminary Estimate

Step 1: Understand the Project Scope

Start by gathering all the available information about the project. This can include:

• Project descriptions
• Sketches or rough drawings
• Client goals and expectations
• Site location and conditions

Even if details are sparse, ask questions! Clarify the main deliverables, timelines, and any special requirements. Understanding the scope is the foundation for any estimate.

Tip: Write down what you know and what’s missing. This helps you identify risks and assumptions you’ll mention in your estimate.

Step 2: Break the Project into Major Components

Don’t try to estimate the entire project as one big number. Break it down into major parts like:

• Materials
• Labor
• Equipment
• Subcontractors
• Permits and fees

Breaking it down helps you focus on each piece and makes your estimate more accurate and easier to review.

Tip: Use a checklist or template if you have one—it keeps things organized and ensures you don’t miss anything important.

Step 3: Research and Gather Cost Data

Now, gather as much cost data as you can. This might mean:

• Checking recent quotes or bids for similar materials
• Calling suppliers for price lists
• Consulting labor rate guides or union wage schedules
• Reviewing past project costs

If you don’t have exact numbers, use industry averages or historical data. The key is to be realistic and transparent about your sources.

Tip: Keep a cost database or spreadsheet for future reference. It’s a valuable tool that gets better over time.

Step 4: Calculate Quantities or Workload Estimates

Estimate how much material, labor hours, and equipment time the project will require. This might involve:

• Counting units like square feet, cubic yards, or number of fixtures
• Estimating crew sizes and hours based on project scope
• Considering waste, overage, or contingencies

Don’t forget to include indirect costs like transportation, storage, or site preparation.

Tip: When in doubt, round up slightly to cover unknowns—but avoid being overly generous, which can price you out of competition.

Step 5: Factor in Contingencies and Risks

Every project has unknowns. That’s why your preliminary estimate should include a contingency—a percentage added to cover unexpected costs. Typical ranges are 5% to 15%, depending on project complexity and available information.

Also, list any assumptions or risks explicitly. For example:

• “Cost assumes materials sourced locally.”
• “Estimate excludes unforeseen site conditions.”

This transparency builds trust with clients and protects you if costs change.

Tip: Be honest and clear about what’s included and excluded in your estimate. It prevents misunderstandings later.

Step 6: Compile the Estimate and Review

Put all your numbers together into a clean, easy-to-understand format. Your estimate should include:

• A summary page with total estimated cost
• Detailed breakdowns by category
• Notes on assumptions and contingencies
• Any exclusions or special conditions

Once compiled, review your estimate carefully:

• Check calculations for accuracy
• Confirm all components are included
• Make sure your estimate aligns with the project scope

If possible, have a colleague or mentor review your work. A fresh set of eyes can catch mistakes and offer suggestions.

Tip: Use estimating software or spreadsheets to organize and automate calculations. It saves time and reduces errors.

Step 7: Present Your Preliminary Estimate Professionally

How you present your estimate matters! Make it clear, concise, and professional. Include a brief cover letter or email that explains:

• The purpose of the estimate
• Key assumptions and exclusions
• Next steps or recommendations

Invite questions and be open to feedback. Remember, a preliminary estimate is a starting point for discussion, not a final price.

Tip: Tailor your presentation to your audience. For clients, keep it simple; for internal teams, provide more detail.

Practical Tips for Beginner Estimators

• Ask Questions: Don’t be afraid to seek clarification from clients or project managers. The more you understand, the better your estimate.
• Document Everything: Keep detailed notes on how you arrived at your numbers. This helps with revisions and future estimates.
• Use Templates: Starting with a reliable template saves time and keeps your work consistent.
• Learn from Experience: Review completed projects and compare actual costs to your estimates. Use these lessons to improve.
• Stay Organized: Keep your cost data, notes, and estimates well-organized for quick reference.
• Be Realistic: Avoid underestimating just to win a job; it can backfire and hurt your reputation.

Conclusion:

Creating a solid preliminary estimate might seem challenging at first, but it’s a skill you can develop with practice and patience. Remember, every great estimator started where you are today—learning, asking questions, and refining their process.

By following these steps—understanding the project, breaking it down, gathering data, calculating quantities, factoring in risks, reviewing carefully, and presenting professionally—you’ll build estimates that inspire confidence and set your projects up for success.