What is preliminary costing in construction?
Why is preliminary costing crucial?
A quote may look attractive in terms of price but still result in a loss. Preliminary costing therefore checks the expected effort and the resulting sales price before a quote is submitted. It makes assumptions transparent and creates a foundation for later comparisons.
In construction, costing often begins with a bill of quantities, an inquiry, or custom line items. Each service is broken down into the required resources and cost components.
Typical cost components
- Labour costs based on role and estimated time required
- Material quantities, purchase prices, waste, and transport
- Vehicles, machinery, equipment, and rentals
- Services provided by subcontractors
- Site and company overheads
- Risks, price uncertainties, and necessary reserves
- Surcharges, discounts, deductions, and target contribution margin
A logical calculation process
- Review services, quantities, and execution conditions.
- Determine work steps and required resources.
- Estimate quantities and time requirements realistically.
- Apply current cost prices and external costs.
- Add overheads, risks, and surcharges in a transparent manner.
- Review unit prices, total price, and expected outcome.
- Clearly state assumptions and exclusions in the quote.
Simplified example
A line item requires 40 labour hours, materials costing CHF 3,600, a machine for two days, and transport. These direct costs are supplemented by company-defined overheads, project-specific risks, and the desired profit margin. The key is not any single surcharge, but ensuring the values used align with the business and the service provided.
NPK and preliminary costing
The Standardised Item Catalogue (NPK) structures the scope of services. The calculation complements this with quantity, effort, and price. Standardised items do not replace professional assessment: variables, preliminary remarks, execution conditions, and quantities must still be understood.
Preliminary costing does not end with the contract award
After the order is placed, the calculated values become target values for purchasing, work preparation, and project management. During execution, hours, material, and measurements show whether the assumptions still hold true. After project completion, the job-costing review provides the decisive feedback.
Digital estimating
When the bill of quantities, items, prices, and project are digitally linked, data does not need to be transferred multiple times. With Caturix Quotes, you can build and calculate both custom and NPK-based quotes and assign them to the subsequent project.
Frequently asked questions about preliminary costing
Can you calculate without a bill of quantities?
Yes. For smaller or self-defined services, the company can create its own items. The scope of services, quantities, and assumptions must still be clearly described.
How up-to-date must the baseline data be?
Price lists, wage rates, and historical data and experience-based values should be maintained regularly. Outdated master data will produce unreliable results, even with sound calculation logic.
Is the calculated margin already the project profit?
No. It is an expectation based on the costs and assumptions used. Only the actual quantities, costs, and revenues reveal the real result in a target-vs-actual comparison.
Frequently asked questions
Can you calculate without a bill of quantities?
Yes. For smaller or self-defined services, the company can create its own line items. However, the scope of services, quantities, and assumptions must still be clearly described.
How up-to-date must the baseline data be?
Price lists, wage rates, and historical data and experience-based values should be maintained regularly. Outdated master data will produce unreliable results, even with sound calculation logic.
Is the calculated margin the same as the project profit?
No. It is an expectation based on the costs and assumptions used. Only the actual quantities, costs, and revenues reveal the real result in a target-vs-actual comparison.