Drawing up estimates for construction work is mandatory, since almost every project has a budget that needs approval. In the article we will talk about the basic principles of developing construction estimates and how the Business.Ru service will help in drawing up estimates.

What you will learn about:

Basic principles of budgeting

Any estimate is made to have a plan for completing a specific project, but also solves other problems. For example, drawing up estimates for construction and other repair work is necessary to:

• separate the money needed for various materials, procedures and work;
• understand and tell the customer how much construction will cost;
• manage cash flows evenly and correctly, in accordance with time and requirements;
• check the financial feasibility of a particular design.

The construction estimate shows the cost of materials and work that are necessary for each of the processes separately.

Traditionally, the estimate is an annex to the contract for the provision of construction services.

The functionality for drawing up estimates is one of the new products of the Business.Ru service. This is useful for entrepreneurs and system users who are engaged in construction or finishing work professionally. Also, the ability to draw up construction estimates will simplify communication with contractors for store owners who delve into the process of repairing their facilities.

The principles for drawing up estimates are prescribed in the special guide “Methodology for determining the cost of construction products on the territory of the Russian Federation” MDS 81-35-2004.

According to him, there are several types of estimates. Basically, the document defines estimates when working with government orders and official bodies.

Types of construction estimates

MDS 81-35-2004 identifies the following types of construction estimates:

• local estimates (primary documents for the construction of large objects and structures: buildings, roads, etc. at a basic price level and with a forecast);
• object estimates (documents with figures from local estimates, compiled with prices of the current year);
• summary estimates (created on the basis of previous documents, as well as on the basis of the expected costs of operating the administrative apparatus). They determine the final limit of funds that will be required for the construction of objects.

Important! Methodological recommendations are necessary for professional estimators for large government orders or construction companies. When preparing such estimates, they usually use directories with prices for 2000, and then change them using a coefficient.

If we are talking about small companies when working with private companies or individuals, then a simpler version of the estimate is drawn up. The type of such document differs according to the areas of construction: a general estimate for construction work, as well as an estimate for finishing, electrical, design, plumbing, roofing, installation and other types of work.

An estimate for construction work is necessary if there is a global project ahead: from the construction of a new building to the addition of a new premises.

The sample estimate for construction work differs from other estimates in a large number of positions. For example, it may indicate not only a list of installation, but also dismantling work.

A sample estimate for construction work looks like this:

You can create a sample estimate for construction work yourself in an Excel spreadsheet, or you can use special services for preparing estimates. For example, this functionality is available in the cloud accounting system Business.Ru.

Based on the results of work in the service, the finished estimate is also uploaded to Excel, where it can be further corrected.

Electrical installation work is the whole range of repair work related to electrical wiring. These include complete and partial replacement of electrical wiring, electrical wiring in a new building, and even installation of an electrical panel, sockets and lamps.

The peculiarity of such a document is that the basis of the estimate is a list of works with costs. You can make an estimate for electrical installation work using the Business.Ru service.

Example of an estimate for electrical installation work:

After the contract between the contractor and the customer, a store with electrical equipment is selected where the purchase will be made (or the equipment is purchased by the client himself through the online store).

Design work is the first stage in the construction of a building. When designing a structure, the estimate takes into account the remuneration of specialists. Typically, estimates for design work are drawn up using special reference books where wages and coefficients are calculated. Such a document has a small number of columns.

Example of an estimate for design work:

The estimate for repair work can be very varied. It includes sections related to finishing or minor repairs.

An example of an estimate for repair work to level the walls in a room where radiators were already installed:

Plumbing work is a group of works related to the installation and replacement of water and sewer pipes, as well as the installation and dismantling of washbasins, toilets, taps, radiators, etc.

Small private companies and individual entrepreneurs make estimates for plumbing work without taking into account guidelines for remuneration.

A sample estimate for plumbing work is presented below:

As is the case with the general estimate for construction work, the estimate for roofing work usually includes not only installation, but also dismantling work.

The picture shows a sample estimate for roofing work in an administrative building:

Welding work is usually prepared as a separate estimate only by professional estimators in large construction companies, taking into account methodological recommendations.

However, if minor welding work is performed, then the estimate for welding work can be performed in simpler programs for preparing documents. For example, in the cloud service “Business.Ru”.

Sample fragment of an estimate for welding work:

If work is carried out with excavation of soil or, conversely, backfilling it (into holes), such work is called earthwork.

The estimate for excavation work usually includes the cost of the work itself (wages for workers and foreman), as well as consumables: shovels, bags, etc.

This is what a fragment of a sample estimate for earthworks looks like, made according to methodological recommendations:

Dismantling work is a set of works associated with the destruction of a building or part of it (for example, walls, windows, doors, etc.).

Typically, in such a document, in addition to the cost of dismantling work, the fee for removing garbage from the floor, collecting and removing garbage to a landfill is indicated.

Sample estimate for dismantling work:

Installation work is a set of works related to the installation of something. The estimate for installation work includes calculation of the price of the equipment, as well as the cost of its installation.

In the Business.Ru program, you can create a similar estimate that will help sell a set of goods for the installation of technically complex products. For example, when implementing smart home systems or an electronic barrier.

By the way, a sample estimate for barrier installation work, which a store could print for a client, is presented below:

Commissioning works - a set of works after installation of equipment: checking and adjusting all processes. Typically, estimates for commissioning are drawn up in large construction companies, taking into account the codes and positions of the standards specified in special reference books.

Sample estimate for commissioning work:

Finishing work is the final stage of repair. For example, work on wallpapering, laying laminate flooring, installing doors, etc.

A sample estimate for finishing work in one of the office rooms is presented below. It includes finishing of the ceiling, walls and floor.

Estimate for work and materials

An estimate for work and materials is a simplified type of estimate that is used for minor repairs. For example, if your store just needs to paint the walls, the sample labor and materials estimate will only include the cost of paint and refinishing.

Estimate for survey work

Survey work is a list of works necessary to explore the construction site. The survey estimate includes both economic and technical work.

Economic calculations include studies that substantiate the benefits of constructing a building in this particular location. Technical is a set of matters in the field of geology and geodesy, which are also carried out before construction.

The sample estimate for survey work mainly includes costs for salaries, as well as for the delivery of specialists to the site of the proposed construction (gasoline, car rental, etc.).

The concept of estimated cost in construction

Determining the estimated cost is used not only by estimators, but also by all foremen who draw up estimates without taking into account standards. In the most general sense, the estimated cost is the amount of money intended for construction. It represents the final amount on which the contractor and the customer rely to determine the amount of financing.

When deriving the estimated cost, prices for construction goods, costs for equipment (rent, purchase), removal and delivery, and wage costs for workers and their supervisor are taken into account.

The estimated cost is determined by direct and overhead costs, as well as the estimated profit of the organization.

Direct costs include the cost of materials, operation of machinery and mechanisms, as well as wages of employees.

Overhead costs in construction estimates are indirect cash costs that are associated with the organization of work. These include, for example, remuneration for the administrative apparatus, payment for the use of programs for drawing up estimates and other documentation, the use of mobile communications, rental of administrative premises, etc.

Estimated profit is money to cover the costs of contractors and stimulate the work of workers (for example, bonuses for overtime).

Top 5 mistakes when drawing up estimates

When preparing construction estimates, errors periodically occur. Here are the top 5 most common mistakes.

1. No budget at all. The customer meets with the foreman and finds out the prices for the work in words. The contractor was recommended by a friend, so the future client does not doubt his honesty and simply inquires about the prices in order to estimate the costs.

As a result, the amount of construction or repair costs exceeds all permissible limits. After all, if there is no specific agreement on materials, the contractor will buy more construction materials than required.

1. There is no scope of work. The construction estimate may simply indicate the amount of costs for a particular action (for example, repairing a utility room), but does not indicate the scope of work.

As a result, it turns out that when drawing up the estimate, the contractor indicated only the main work on this object, and forgot additional, smaller ones (on purpose or by accident - it doesn’t matter in this case). The client has to pay extra.

For example, in a store the ceiling is being leveled. The contractor decided to use mesh and a minimal layer of plaster. But during the removal of the old coating, very large joints between the slabs are discovered, which requires 5 times more plaster consumption. The client's repair costs are rising.

1. Additional work in the estimate. This error may be accidental or special. Sometimes non-professional builders do not know about simpler technology and assume a more complex set of works. Additional work may appear in the estimate intentionally in order to increase the cost of labor.
2. Exceeding the quantity of materials in the estimate. Overestimating the amount of materials by more than 15% of what is required is not the contractor's insurance, but a mistake. After all, in order to make a good construction estimate, for example, for the renovation of a store, you need to measure all the walls, windows, doorways, check the unevenness of surfaces, etc. However, rarely does a contractor approach calculations so thoroughly.
3. Not all work is included in the estimate. An unscrupulous contractor may devote the bulk of the estimate to preparatory work. The customer, without fully considering the estimate, but only seeing the final amount, sees that the price suits him, and signs the contract.

As a result, the contractor does the rough work and disappears. The customer, having carefully looked at the estimate, sees that he really only paid for the preparatory part. As a result, such an “error” in the construction estimate leads to overpayment.

The project is the construction of a facility (presumably a shopping and entertainment center). The facility is located in Mytishchi, Moscow region at the address: st. Letnaya, 26. The estimated commissioning date for the facility is 2019.

Object coverage areas

When developing the concept for building a business center, it is necessary to determine the boundaries of the service area surrounding the site.

Conventionally, the area around the object can be divided into three zones (depending on the proximity of the location):

• 1st encirclement ring: limited by Yubileinaya, Mira streets, and the Yauza River.
• 2nd ring of encirclement: covers most of the city, with the exception of remote areas - Stroitel, Chelyuskinskaya, Stroyplastmass district, Eastern Perlovka and Druzhba.
• 3rd ring of encirclement: covers the entire city of Mytishchi, including the districts of Stroitel, Chelyuskinskaya, Stroyplastmass, Eastern Perlovka and Druzhba.

Internal and external factors of project success

External factors are beyond the control of the investor, but their influence on the subsequent development of the project is of fundamental importance when implementing a business center construction project.

A comparison of external and internal development factors is presented in the table below.

Based on the analysis, we can come to the conclusion that when deciding to build a business center, several parameters must be taken into account:

• Prospects for economic, social and demographic development of the region.
• The level of competition in the area where the facility is located.
• Socio-demographic characteristics of the population living in the area.
• Features of the object itself.
• Investment indicators of project implementation.

It should be noted that the cost of construction of business centers in St. Petersburg averages 450 million rubles with an area of ​​40,000 sq. m. m. However, this figure differs slightly from that in Moscow.

It should be noted that the cost of building business centers in Moscow is about 600 million rubles with a square area of ​​over 40,000 square meters. m.

SWOT analysis of the object

Below is the final table of the SWOT analysis of the facility proposed for construction.

Having analyzed the strengths and weaknesses of the object, its development and threats, we can consider the possibility of implementing two different options for using the space:

• Shopping mall.
• Shopping and entertainment center.

Shopping mall

In this case, you can focus on the shopping gallery. The larger size of the shopping area will increase the variety of goods offered. Rental rates for retail space are significantly higher than for entertainment space. In this case, the coverage area of ​​the shopping center will be only the first ring of the environment.

This business plan for the construction of a business center is the most optimal, subject to the construction of a two-story facility.

Shopping and entertainment center

In the second case, you can focus on the entertainment component. The main advantage of this proposal is the fact that there is an acute shortage of leisure facilities for children in the city market. The presence of an entertainment area increases the time buyers spend on the premises. In new shopping centers, the ratio of retail and entertainment space is 50% to 50%.

It is proposed to place a grocery supermarket on the ground floor.

If there are a large number of entertainment operators, the shopping and entertainment complex will be able to attract visitors to the first and partly the second ring surrounding the city, since there are not enough entertainment venues in the city. It should be taken into account that rental rates for this type of service are lower than for retail space, which will ultimately lead to an increase in the payback period of the project.

Foreign experience suggests that the most optimal implementation of the project would be the creation of a shopping and entertainment complex, since this option reduces commercial risks.

The planned business center belongs to class A. It is the highest among those that can be assigned. A class A rating indicates the prestige of all premises of the building, the presence of modern life support systems and the work of the center itself.

The cost of building a class A business center is presented below using a specific example. We must not forget that the construction of a shopping center in another city may involve completely different financial investments.

Compilation of project cash flows

Presumably, the shopping center will have the following parameters when obtaining a construction permit:

• The total area of ​​the shopping center is 9672 sq. m.
• Including the 1st floor - 4847 sq. m.
• Including the 2nd floor - 4825 sq. m.
• Occupancy rate in the first year is 70%.
• Occupancy rate in subsequent years is 95%.
• Risk of non-payment - 0%.
• Revenue growth per year is 5%.

Since the lease agreement establishes the amount of the fine for delays exceeding 30 days, the risks of non-payment during the construction of a business center are equal to zero. The annual increase in rental prices will be 5%.

The table below shows this more clearly.

Investments in the construction of a business center (RUB)

The most important point is to study the issues of financing capital investments. For this purpose, both the company's own and borrowed funds can be used. Below are the construction project financing data in more detail.

Project financing:

• Total investments - $13,439,642.
• Including the 1st year - $10,939,642.
• Including 2nd year - $2,500,000.
• Total borrowed capital - $13,439,642, including 1st year: $10,939,642, 2nd year: $2,500,000.
• The loan repayment period is 10 years.
• The interest rate on the loan is 18%.

In the process of studying the financial results of a project, an important point is the study of the amount and amount of the tax burden in the company according to the business plan.

The results of planned tax deductions for the project are presented below.

Taxes paid during the operation of the project:

• For property - 2.2%.
• On profit - 20%.
• VAT - 18%.

To build cash flow, we need to determine the approximate amount of revenue from renting out space, for which we need to zoning the shopping center area. Zoning elements are presented in the table below.

Zoning

Calculation of income from the rental of premises for a planned business center is a central point, as it is related to its efficiency. There are various forecast options for obtaining such income: optimistic, average and pessimistic. The table below presents the characteristics of each option more clearly.

The first table presents a pessimistic forecast for the income generation option.

Calculations of rental income. Rental rates - pessimistic forecast

The table data allows us to conclude that as a result of the implementation of the project, the pessimistic amount of income received from renting out space in the shopping center will be $3,909,468.

The table below presents data on calculating income from rental space in a shopping center using the average option.

Calculations of rental income. Rental rates - average

The table data allows us to conclude that as a result of the implementation of the project, the average amount of income received from renting out space in the shopping center will be $4,429,399.

It is also necessary to predict an optimistic forecast for the possible receipt of income from the property from renting out space, which is presented in the table below.

Calculations of rental income. Rental rates - optimistic forecast

The table data allows us to conclude that as a result of the implementation of the project, the optimistic amount of income received from renting out space in the shopping center will be $4,776,385.

Let's calculate the cost of borrowed funds and their repayment schedule in the table below.

Note: In month 3, the monthly payment will include a two-year grace period and interest capitalization of $5,143,445.

The table data indicates that the monthly payment for the project will be $3,214,579 per month.

other expenses

Let's consider and calculate all kinds of operating expenses during the construction of a business center:

• The first two years the security work will cover half of the permanent volume.
• The calculation of cleaning services includes cleaning of all areas and territories.
• The payment of wages is taken into account in full, taking into account all taxes and VAT.
• Annual salary increase of 5% per year.
• All operating expenses are passed on to the tenants (except for the 1st year and half of the 2nd year expenses).

To compile cash flow, we calculated the following data:

• Approximate average income from rental premises for 10 years of project implementation, provided that in the first year the rented area is 70%, and in subsequent years - 95%.
• Depreciation of the property will be 3.33% per year.

Calculations within the framework of financing activities include excess interest under tax law, since the pre- and post-financing format will not be drawn up.

Since construction is accepted “by stages of work”, and cash flow is generated starting from the first year, which is counted from the moment the project generates the first ruble of income, the enterprise loses the right to a VAT refund in the first year upon completion of construction.

Since the project balance is a positive value when the facility reaches 100% capacity, other and emergency expenses were not taken into account in the calculations.

Based on the available data, it seems possible to display the planned cash flows generated by the project.

The table below shows the operating costs for the project.

Operating expenses

The presented table shows that the amount of operating expenses in the first year will be $271,707, then it increases over the years and reaches $740,157 in the 10th year.

In the subsequent analysis of the project's effectiveness, the dynamics of project income during the first 10 years will be considered in the table below.

Project income

The table data allows us to conclude that the amount of income from the project in the first year will be $2,717,987, then income will increase, and by the 10th year it will be $39,702,947.

When studying a project, it is important to calculate depreciation charges, which are presented in the table below.

Depreciation by project

As can be seen from the table, the amount of depreciation charges in the third year will be $262,153, and in the last, 10th year, $227,582. The total amount of depreciation charges for all years of project implementation will be $1,956,147.

The table below shows the cash flow for the project.

Cash flow

The table shows that the total cash flow for the project will be $1,300,415.

Discount Rate Estimation

It is used to convert future income streams into a single current value. The discount rate (r) will be calculated cumulatively using the formula:

α is the average inflation rate for the period.

MRR (Minimum Risk of Return) - the minimum real risk rate associated with the functioning of the project.

RI (Investment Risk) - the level of average required return (risk) by project participants.

The minimum real risk rate MRR for this case will be equal to the cost of borrowed funds, namely 18%, that is, the rate on a bank loan.

In accordance with the investment agreement, the average required return on RI by project participants is set at 2%.

Thus, the discount rate will be equal to:

r = (0.13+0.18*1.02)*100% = 30%

conclusions

When drawing up a business plan for the construction of a business center, the project was reviewed and optimistic conclusions were drawn.

In the next three years, the Mytishchi district will experience moderate economic growth, but the average indicators for the district lag behind the average indicators for the Moscow region. The leading industries will remain mechanical engineering, instrument making, and the construction industry.

By the end of 2018, it is planned to increase the growth rate of retail trade turnover by 40% and increase the annual volume of household services to the population by 35%. The growth in trade turnover will be ensured by the growth of the middle class and its income.

There is an acute shortage of space that meets international standards; the demand for high-quality retail space exceeds supply. This will lead to improved quality of creation and management of shopping centers.

The main sources of demand today are clothing stores. They account for about 50% of the space in shopping centers. The vacancy rate in 2018 will be 10-15%. The expected increase in the volume of retail real estate will be about 75,000 sq. m. m. Currently, the average rental rate for retail premises in the city is about $405/sq. m. per year (including VAT and operating expenses).

In the area of ​​the first ring of encirclement there are a large number of objects that compete in both the food and industrial goods sectors.

When calculating cash flows, the average rental rate, vacancy rate of 5%, as well as all operating costs and loan payments were taken into account. The cash flow for the project turned out to be positive, but still not large enough.

The discount rate, which includes the average inflation rate, the risk generated by the project, and the average required return, was 30%.

Thus, the presented project can be accepted for consideration, since calculations show its profitability and efficiency.

On the Yudu website you can order professional services for drawing up estimate documentation. YouDo performers have specialized education and extensive work experience, which makes it possible to guarantee the correctness of budget preparation, as well as compliance with all norms and requirements of current legislation when making calculations.

Why do you need estimate documentation?

The construction of any building, including a trading house, is a complex process that takes a lot of time and requires huge expenses from the future owner. And to ensure that these expenses do not go beyond the budget allocated for these purposes, you need to order an estimate for the construction of a shopping center before starting construction. Estimate documentation, taking into account the fact that it is drawn up professionally, is very important, as it allows:

• Monitor the compliance of planned activities with the work carried out in fact
• Control construction costs
• Avoid fraud on the part of the contractor

In addition, the shopping center estimate will provide an opportunity to see the full “picture” of upcoming costs and their feasibility.

Types of estimate documentation

• An estimate for the construction of a shopping center, drawn up in a labor-intensive manner. This method is used for small volumes of construction work. It is understood that the customer pays only for the services of the construction organization, and delivers the building materials to the site independently
• Universal estimate for construction. It is a document that indicates not only the types of work, but also all the materials used. The total cost of materials is indicated in the appendix to the estimate documentation
• Detailed estimate. Only specialists who have experience in preparing calculations for just such documentation can calculate the estimate for a shopping complex of this type. Here, specialists draw up estimate documentation only in accordance with current information on prices for building materials and prices for work performed

Where and how to order inexpensive estimate documentation?

You can order the services of professionals to draw up an estimate for the construction of a shopping complex on the Yudu website. Here the services are provided by specialists whose level of skill has been confirmed by preliminary testing.

To place an order for Yuda, you must:

• Fill out an application on the main page of the site
• Indicate in the application the type of work, additional requirements, deadlines and desired cost
• Wait a few minutes until the contractors respond to your application and will be able to correctly calculate all construction costs
• Choose a specialist whose work best meets the requirements

Yudu contractors will be able to calculate construction estimates in full compliance with established norms and standards. Estimate documentation drawn up by specialists of this level will allow in the future to exercise full control over the construction process.

In our work in the construction of commercial real estate, the most important thing is to understand the customer’s goals. The rest is a matter of technology and professionalism of our team.

The DOMAKS company is proud of its highly qualified specialists who can easily cope with any task assigned to them. We offer you fast and reliable construction of commercial real estate buildings.

To be more specific, we will happily take on the construction of amazing shopping centers, business centers, hotels, hangars, hotels, parking lots and other industrial buildings created according to unique designs. The services provided by DOMAKS are as ideal as possible for you as clients, because we care about your interests, putting them above all else!!! Completely unique developments that can be erected by our workers in the shortest possible time and at the same time of very high quality will undoubtedly become your asset!

You are unlikely to find analogues to the projects built by DOMAKS specialists on sites like ours, because we use the most modern technologies and the best building materials for the construction of commercial real estate in St. Petersburg, Moscow, as well as in many other cities of Russia. Nothing is impossible for our clients! Do you need an excellent construction company with the best specialists to bring your desired hotel complex project to life? Do you want to implement a car parking or gas station project for the lowest possible price? With us, the construction of such complexes is more than realistic and rational!!!

Guarantees for the construction of commercial real estate

We guarantee that by contacting DOMAKS you will be in the hands of experienced specialists in the construction industry! Over the years, we have been able to achieve unprecedented results and now we can gladly offer our clients the best transaction conditions. Rest assured, the decision to turn to the best DOMAKS specialists will insure you against many production problems and incidents, as well as unforeseen material expenses. Competent recommendations and advice from our qualified specialists will help you easily navigate and make the right choice in favor of the most suitable building materials, as well as finishing materials and finishing elements. Moreover, please note that our prices are even more than affordable.

Quality of work

You can learn first-hand about the quality of our work and the excellent fulfillment of the terms of the contract. We do not hide our achievements and are not afraid to say that our company is one of the best in St. Petersburg for the construction of buildings intended directly for commercial purposes. You can also look at the reviews of our clients posted on the DOMAKS website and make sure that our words are right!!!

Prices

Buildings with an area of ​​up to 1000 m2 – 1.5-2 million rubles

Cost of construction of commercial real estate

Depending on the area, conditions, parameters, internal engineering systems, finishing requirements, the cost of construction (building frame, internal engineering, finishing) will be approximately:

Office real estate (business centers) - price: 20 -28 thousand ₽/m2

Real estate for warehouse purposes

Cold warehouse: 8-12 thousand ₽/m2

Industrial refrigerator: 15-22 thousand ₽/m2

Shopping centers - price: 24-36 thousand ₽/m2

Open multi-level parking lots - price: 8-12 thousand ₽/m2

Multifunctional buildings with an area of ​​up to 1000 m2 - price: 20-35 thousand ₽/m2

• Performing the Functions of the General Contractor - 5-7% of the cost of construction and installation works
• Performing the Function of a Technical Customer – 1-2% of the cost of construction and installation work