Unit Cost Estimating

A popular article on our website titled Construction Estimating: The Basics describes the basics of estimating. While I think it clearly explains stick estimating, it’s not very clear on how unit cost estimating works.

My father taught me unit costing as the best way to do estimates. He owned one of the largest electrical and mechanical contracting businesses in the Midwest for many years, working in several states. He constructed power and telephone lines, installed street lighting in entire towns, rewired air force bases and erected buildings, and he estimated all those projects using unit costing. His actual job costs came in amazingly close to his estimates. He considered unit costing the only way to consistently acquire accurate estimates.

Unit cost estimating is breaking down a project to simple assemblies. For example, tearing out one square foot of a 4” concrete slab. Framing one square foot of a 2” x 10” floor joist system. Installing one square foot of cedar siding on a second story. Unit costing is an average of your cost (labor, materials, and other) to do the work on that one unit, or assembly.

Let me give you an example of the unit cost to frame, sheath and insulate one lineal foot of an 8-foot exterior load bearing wall. The labor rates and material costs in this example won’t match yours, so adjust accordingly.

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The average labor to frame, sheath and insulate one lineal foot of an 8-foot exterior load bearing wall, looking at several different labor tables, is .375 hours using a 2-person framing crew. If the combined fully burdened labor rate for that crew is $62/hour, then the labor cost for one lineal foot of that assembly is calculated by multiplying the time (.375) by the rate ($62.00), and you’ll get $23.25 per lineal foot.

If you’re not sure about the labor time, there are a number of labor tables available. I use these from Craftsman Books, and temper them with my own judgment from having done the actual work. I try not to make many changes; these labor tables have been assembled over several years and many many jobs to get the best average.

Calculating the average material cost for this assembly isn’t as easy. You’ll need:

• One 2” x 4” S&B fir, 8 feet long. Cost: $8.32
• 3 feet of a 2” x 4” S&B fir 12-foot board. A 12-foot board costs $14.97, so three feet is $3.74
• 3.6 inches of a 4” x 8” S&B fir 8-foot beam. That’s the header used for doors and windows; on average, you’ll use 3.6 inches of header for every lineal foot of an exterior load bearing wall. An 8-foot beam costs $29.98, so 3.6 inches (.3 feet) is $1.12
• 8 square feet of ½” x 4’ x 8’ plywood, CDX. The board is $28.97 for 32 square feet, so 8 square feet are $7.24
• 8 square feet of R-13 batt insulation. A 40 square foot roll costs $23.98, so 8 square feet are $4.796
• Nails. You can assume five cents per lineal foot or calculate if you want to be more exact.

The total material cost is $25.27, so the total estimated labor and material cost to frame, sheath and insulate one lineal foot of an 8-foot exterior load bearing wall is $48.52. ($23.25 for labor, $25.27 for materials.)

With that information, are you adding a 10’ x 10’ addition to a home with three exterior load bearing walls? That’s 30 lineal feet at $48.52/foot, so your total cost to frame, sheath and insulate the outside walls of that addition is $1,455.60.

Specialty work can also be broken down into unit costs, either by the specialty contractor or by the general contractor. A plumber will calculate the average per fixture cost, whether rough-in or installed. They’ll give the general contractor their average cost, such as $975 per water closet or $1,375 for a colored C.I. 21” x 32” kitchen sink.

Once developed, unit costs will work on almost every job regardless of the size and shape. Can you imagine how much more time it would take to estimate each job with stick estimating?

You don’t need to develop and calculate these assemblies yourself. There are many construction estimating software programs available that have already done the work, you only need to keep the material costs and labor rates current. Our Fast Track Estimating software has assemblies specifically for remodeling, and it’s easy to add or edit any assembly to meet your needs.

With unit costing, you can get the estimate done, have faith in your numbers, and get back to selling your services.

You’re in business to provide a service and make a profit doing it. You’re not in business to do estimates. Spend your time selling, not wrestling with numbers.

“It is not enough to be busy. So are the ants. The question is: What are we busy about?” — Henry David Thoreau

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Related articles:
Construction Estimating: The Basics
Estimating Errors Cost Money
Profitable Estimating Training

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