Cost Estimation Techniques In Construction

Ian Mutuli
Updated on
Ian Mutuli

Ian Mutuli

Founder and Managing Editor of Archute. He is also a graduate architect from The University of Nairobi, Kenya.
Get Smarter On Architecture and Design

Get the 3-minute weekly newsletter keeping 5K+ designers in the loop.

Enter your Email to Sign up


Construction businesses should be able to estimate a pretty accurate cost for any projects they are working on or will be doing in the future. The estimation cost includes two types of expenses, direct and indirect: Direct expenses include the equipment, labor, machinery, and the indirect expenses include the security, the utility, etc. There are various cost estimating companies that help you with the estimation of material quantities and their associated costs. All this and the other expenses give the construction company an approximated cost that will come out of a particular project. The estimated amount helps the company to decide how to go about things. It helps the business determine what amount to put in which department of the project and keep things under budget. 

Following are the different techniques for cost estimation that the construction businesses can use to find out an accurate estimated cost:

  1. Top-down estimating: It is also called Analogous estimating. It is one of the techniques in which the construction businesses turn to the older projects that are similar to get an estimated amount. The older projects help in summing the expense for the upcoming project.

  2. Analytical estimating: Analytical estimating, also known as bottom-up estimating, is one of the most used techniques in construction. The project is divided into a series of parts or tasks. Depending on the series of parts or the components of the projects, the estimation is made. The project's estimated amount is said to be taken out after each task is done, and the estimated amount is added from all the parts of the project getting an approximate amount. This particular technique is effective in construction businesses but is very time-consuming.
  3. Parametric estimation:  Parametric estimation:  Parametric estimation is one of the most used estimation techniques in the construction business. This method helps the construction business team divide the project into its units and determine its estimated cost. By multiplying the units by their cost, one can get an estimated amount. This technique is used by many construction businesses where they determine the estimated amount of a house by dividing it into its square per unit meter. Since Parametric estimation is efficiently used for repetitive tasks, it is said to be one of the leading techniques in the construction business.

  4. Empirical costing method: One of the most used and the most convenient estimation techniques has been empirical estimation. In this method, the construction teams or businesses give an estimated amount of a new project based on the previous cost that the company built. This technique requires old tasks and projects that the company has already built. The presence of the previously built projects estimates the new projects extremely quickly and conveniently. Hence, empirical estimation is one of the most used techniques in the construction business.   

  5. Expert judgment: This method is not as commonly used as others since this requires an expert's judgments, as the name suggests. For this technique, the company should use the opinions of someone who has excellent experience and vast knowledge about construction and projects. This technique requires the expert to compare the previously built project to the new one so the experienced expert can give an estimation cost.

  6. This technique may not be as reliable as others since it does not give you an exact figure but an opinioned estimated amount. The expert judgment technique is not as reliable as others, but it works well if one has an excellent expert who has accurate knowledge about the construction field. You can do drywall estimates and take-offs using expert judgement if it’s a small project.

  1. Lang method: It is the estimation method for calculating relative to the equipment. Equipment used at the construction site, including all the technical machinery and equipment, is compared to the total cost of the current project to give you an estimated amount or cost. Lang method is relatively a detailed and extensive method and is not as much used because of this.

  2. Three-point estimate method: No Three-point estimate method is a technique in which the project leader or manager estimates the cost in three ways. First is an optimistic estimate the company's funds have invested in the project are spent efficiently. The second is a pessimistic estimate where the funds are not efficiently spent on the current project. The third amount is the balance between the first and the second cost. This method gives an estimated cost after it clarifies the extent of uncertainty.


In the construction business, one should use one of the most effective techniques to calculate the estimates of the project. The above-listed techniques would help the construction companies to do so. Like this article, we will bring you more informative articles to help your construction business grow, so stay tuned.

Image source:

Ian Mutuli

About the author

Ian Mutuli

Founder and Managing Editor of Archute. He is also a graduate architect from The University of Nairobi, Kenya.

Leave a Comment

This site uses Akismet to reduce spam. Learn how your comment data is processed.