What Is Cost Estimation in Construction?
Cost estimation is the methodical forecasting of a project’s cost before and during execution, at accuracy levels that improve as the information matures.
Definition and levels
An estimate matures with the design: an order-of-magnitude estimate from benchmarks (SAR per m²) at ±25%, then an elemental estimate from the building’s main components at ±15%, then a detailed item-by-item estimate from a complete BOQ at ±5–10%. Each level serves a different decision: feasibility, budget, contract.
What an estimate contains
Direct costs (materials, labour, plant, subcontractors) plus indirect costs (site management, supervision, insurance, bonds) plus risk and contingency, plus profit margin. Omitting the indirects and the risk is the most common reason a tender is won at a loss.
How Etimadco estimates
A first phase matches your items against the real prices of suppliers registered on the platform; a second phase analyses the market price for whatever did not match — with a location factor for each city and a confidence score on every item that shows where a human review is needed.
Worked example
A 400 m² villa in Riyadh: the order-of-magnitude estimate is 400 × 1,900 = SAR 760,000 (range 640,000–880,000). Once the drawings are complete, the detailed estimate across 210 items gives SAR 812,000 at higher confidence — the gap is normal and narrows as the information matures.
FAQ
What contingency percentage is appropriate?
As a guide, 5–10% on projects with a clear scope and 10–20% where the scope is uncertain — falling as the design matures and the unknowns shrink.
Why do two estimators price the same project differently?
Different assumptions: waste, productivity rates, supply prices and indirects. A single shared price reference — such as the Etimadco index — narrows the gap.
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