Estimating software aids budgeting

Software designed to help construction companies produce concise, specific cost projections is making bugeting easier and more efficient for city and county governments.

City officials can access more detail, spend money more wisely and have greater confidence in capital improvement projects with estimating software.

Although many municipalities use spreadsheet software for analyzing costs for construction projects, most of their budgets are still based on rough historical costs and generalized appraisal books. Knowledge-based estimating software can re-engineer the entire process of evaluating municipal services and the expenses necessary to implement them.

Much of effective city planning hinges on a clear, concise perception of expenses for various services beneficial to residents. For example, governments must seek approval of bond issues and utilities must set rates based upon forecast project needs.

When estimates are inaccurate in either sector, taxpayers and customers will bear the burden in the form of unnecessary interest payments and project allocations. Planning errors can reflect poorly on not only construction firms, but on city governments needing taxpayer dollars to finance public works. Using software to help formulate proposals and budgets can help elimate situations in which expenditures are over- or underestimated.

Specialized estimating software has been used for years by contractors to prepare budget estimates. While a 15 to 20 percent variance was once considered acceptable, contractors using such software today have reduced this error margin to as little as 1.5 percent.

Knowledge-based estimating systems incorporate the actual methodologies used in preparing conceptual estimates, and integrate them with calculations and selections of cost items into a usable computer format. The benefits are more than operational — they are the organizational benefits of standardization, control, better management, and more predictable performance.

One of the keys to successful implementation of such a system is the quality and depth of the beginning knowledge base. It should already contain methodologies for price development in basic areas such as building construction, sewer and water line construction, electrical transmission and others. A pricing database that contains lists of raw materials and other implements that can be updated with current prices should also be included.

Process streamlining is the primary benefit of estimating software — time saved in takeoff can be used to fine tune pricing, check estimates on subcontracted procedures or simply to propose or bid additional projects.

Estimating software differs from generic spreadsheet software in a number of significant ways. A good estimating software package can significantly reduce omission errors, as the system prompts the user to include various elements required for the job.

The language and graphics of the software are oriented specifically towards the building industry. Instead of working with spreadsheet cells, the estimator sees formats that are specific to the industry — unit prices, production rates, quantities and units of measure.

The different functions performed by the software also correspond with each other. Quantities are automatically transferred and compared to the pricing database. Priced items are then automatically refigured and totaled. Report formats are already built into the software.

Additionally, software manufacturers can be a key resource for assistance as most offer 24-hour help lines.