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How to Read a Construction Estimate Line by Line
How do I read a construction estimate line by line and tell whether its total is complete?
Learn how to read a construction estimate, check quantities and unit rates, and spot missing scope before you trust the total. We work through a duplex example in OpenConstructionERP, from individual line items to overhead, profit and contingency.
You will produce
A checked duplex estimate: each line read as quantity times unit rate, markups traced to the total, cost per square foot held against a 2024 benchmark, and the missing scope listed.
Transcript
0:00 Why it matters
This estimate says you can build a duplex for just under $192,000. More than half of what that house really costs isn't in it, and I'll show you where it went. If you're about to build, or you price jobs and want a second pair of eyes on a number, this one's for you. We'll go through it one line at a time. Then I'll give you three quick checks you can run on any price somebody hands you. An estimate is a written forecast of what a building will cost, put together before anybody breaks ground. It reads like a shopping list for the house. Every item, how much of it you need, and what one of them costs. Without one, you find out the price after the money's gone.
0:43 Read the estimate line by line
Here's the job, the Maple Street Duplex in Denver. Two homes under one roof, 2,400 square feet between them. It's priced in OpenConstructionERP, which is free and open source. The app calls the estimate a Bid Schedule. Most estimators just say BOQ, short for bill of quantities. It lists every piece of work, how much of it there is, and what it costs. Every line works the same way. Take the footings, the concrete strips the whole house sits on. The quantity is 42 cubic yards. The unit rate, what one cubic yard costs, is 385 dollars. 42 times 385 is 16,170 dollars. If the quantity's off, the line is wrong, and a good rate won't save it. Check the unit, too. Concrete's sold by the cubic yard, a box three feet on every side. The footings need 42 of those. Mix up cubic yards and cubic feet, and you'd order 27 times too little. That's the kind of mistake you find out about on pour day. Rates come from two places. The footings price is a quote, typed in straight from a concrete sub. Most of the other lines come out of a cost database, a big price list of work items. This one has 55,719 items for the United States, and each item shows the materials, labor and equipment behind its rate. If you guess a rate instead, every line built on it is a guess too. Open one of those items, and you see what's inside its rate. Here it's toilets. The fixture, the small parts, the crew hours, the machine time, each one a quantity times a price. Pull the item into your estimate, and that whole list comes with it. The lines add up to the unit rate. Just set the prices to what you actually pay where you build. Now watch the estimate grow, one trade at a time. Footings first, then the foundation wall, then the framing. The roof's the biggest single line in this one. Then the finishes, drywall, paint and floors. And last, plumbing and electrical. Add it all up, and you've got the direct cost, about $153,500. Direct cost is the work itself, the materials, labor and equipment. If a whole trade's missing here, nothing you add on top later is going to fix it. Now look at the share column. Finishes take 37 percent of the direct cost, and the roof takes 30. Footings 11, framing 10. Plumbing and electrical together, only 4 percent. Remember that 4. When a trade looks way smaller than you'd expect, that's the first line I'd go and question.
3:24 Markups and the total
Direct cost still isn't the price. On top come three markups, each one a percentage of the direct cost. First, overhead, at 12 percent. That's the office, the insurance, the trucks, everything that keeps a builder running off site. Here it's 18,419 dollars. Skip it, and you're paying those bills yourself. Second, profit, at 8 percent, or 12,279 dollars. That's what the builder earns for doing the work and carrying the risk. For a sense of scale, in the US, a National Association of Home Builders study found builders kept about 8.7 percent of their revenue as net profit in 2023. Our 8 percent is on the direct cost, so it's about 6 percent of the total. That's on the lean side. Third, contingency, at 5 percent, which is 7,674 dollars. That's money for what nobody can see yet, like bad soil, or a jump in lumber prices. Without it, one surprise eats your profit. And early estimates tend to come in low. In one large study of 258 transport projects in 20 countries, about 9 in 10 went over budget. UK Treasury guidance says to add up to 24 percent to an early estimate for a standard building. Next to that, 5 percent is thin. Add the three markups to the direct cost, and you get the grand total, 191,869 dollars and 48 cents. That total only covers what somebody wrote down. Anything that never made it onto a line shows up here as zero, and on site it'll cost real money.
5:09 Is the estimate complete?
To check the total against real buildings, open Cost Benchmarks in the sidebar. Set the building type to multi-family and the region to the United States. Then, under Compare a project, pick the Maple Street Duplex, and the app pulls in its total. It divides the total by the floor area and gives you the cost per square foot. For us, that's 80 dollars a square foot. That's the number that lets you compare buildings of different sizes. Next to it, the app shows a 2024 benchmark for multi-family homes in the US. The middle of that range is 223 dollars a square foot, and the cheapest came in at 149. Our 80 is below all of them. The middle half of those buildings landed between 186 and 279 dollars a square foot, and the priciest hit 353. When a price falls that far outside the range, treat it as a warning. So here's the half that's missing. That 4 percent from earlier only buys toilets, outlets and wire, with no pipes and no water heater. There's no site work, no windows or doors, no heating and cooling, and no kitchens. And no soft costs, like design, permits, fees and loan interest. This is where people get burned. Forget those, and the money runs out before you get the keys. In the US, the same builders' group put construction at about 64 percent of a new home's sales price in 2024, and the lot at around 14. Their averages work out to roughly 162 dollars a square foot for the build alone. And on US apartment jobs, soft costs often run 20 to 30 percent of the total. One more thing. The app's own quality check gives this estimate a perfect 100. It checks the lines you've got. It has no way of knowing about the lines you forgot, so that one's still your job. So before you trust any total, run three checks. One, is every trade there, from the site work to the last light switch? Two, are overhead, profit and contingency on top, as percentages you can actually see? Three, does the cost per square foot land inside a benchmark range? Way below usually means something's missing. Way above, ask why. For check one, walk through the house in your head, from the ground up. The lot, the foundation, the frame, the roof. Windows and doors, heating, plumbing, wiring, the kitchens. Every one of those needs a line. If there's no line, find out why. One important note. Prices and quantities in cost databases and benchmarks are approximate, a guide only. Check every price and every quantity carefully yourself. We can't be responsible for errors. If a builder hands you a price, ask for the estimate line by line, not just the bottom number, and run the same three checks on it. You can do all of this on your own house, for free. OpenConstructionERP is free and open source, and the install video is right here. It walks you through setup, all the way to your first estimate.
