AI for Construction Estimating: The Ultimate Guide for 2024

AI for Construction Estimating: The Ultimate Guide for 2024

The use of artificial intelligence in construction project management is increasing every year. From AI data management to remote project monitoring, AI in construction is implemented for a wide variety of purposes. 

Recently, AI technologies made inroads into pre-construction estimating solutions – tools that help contractors estimate project costs before submitting bids. In this article, we’ll discuss how AI for construction estimating can amplify the efficiency of estimating and help you submit winning bids. 

What is construction estimating? 

Construction estimating is the process of predicting the costs associated with a construction project. It is a thorough assessment of the costs of materials, labor, equipment, and other resources needed to complete the project. The main goal is to create a construction estimate – a precise document that is used to make a bid for a construction project. 

Construction estimating is a complex process that is usually performed by professional estimators or business owners themselves. It consists of precise calculations that are based on a detailed analysis of project documentation, historical data, and market trends. 

Construction estimating is one of the most crucial parts of the preconstruction phase. Making wrong estimations can be extremely costly.

If you underestimate project costs, you will have to make cuts into your own profit margin to complete the project. If you overestimate the expenses, your bid will likely be outcompeted by other contractors, and you won’t win the project at all. 

What does construction estimating consist of

Construction estimating includes assessment of several key aspects. Here are the aspects a professional estimator needs to take into account: 

Material takeoff and equipment costs

By analyzing project specifications and drawings, an estimator creates a material takeoff – a comprehensive list of all materials and their quantities required by the project. Materials are usually measured by area (roofing and flooring supplies), volume (sand, gravel), length (pipes, cables), and number (windows, doors, etc). Estimators also factor in historical data, since market trends can cause fluctuations in prices depending on when the materials are purchased. 

After performing a takeoff, general contractors typically create work packages that are later assigned to the workers or subcontractors. They also work with suppliers to get accurate pricing for materials and equipment, which is then used to create a winning bid. 

Labor costs

Estimating labor costs is another key element of the process. You will need to estimate the rate you pay your team, which includes a basic wage and an estimate for the cost of every task, as well as the total number of hours required to complete the task. 

Importantly, it’s not enough to simply multiply total hours by an hourly wage. You need to take into account taxes, insurance, retirement contributions, union dues, as well as sick and vacation leaves. 

Additionally, if you need to hire specialized workers, such as project-specific managers, electricians, plumbers, or HVAC technicians, you’ll need to take their wages into account as well. 

Indirect costs

Indirect costs include payments for items not clearly outlined in the bid, but which are necessary for the duration of the project. Estimators take into account the rate for each of these items and the duration for which the items will be needed. Some of the most common indirect costs include: 

  • Overheads. These include administrative expenses such as office rent, utilities, and insurance.
  • Permits and Fees. The cost of permits or fees required by local authorities.
  • Utilities. Costs related to temporary utilities such as water, electricity, and internet services on-site. 

Usually, estimators take into account the total expected annual revenue of the business, and the total estimated annual overhead cost. 

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Contingency costs

It is also important to allocate a budget for unexpected costs. This fund acts as a financial buffer to cover unforeseen issues like delays, design changes, or unexpected site conditions. 

Similarly, your budget should cover variances, or fluctuating expenses. Since estimates are usually lower than actual construction costs, the contractors need to set aside a significant budget to cover the discrepancies if construction costs increase due to weather, supply chain interruptions, changes of suppliers, or other events. 

Site conditions

The specificities of the construction site should also be taken into account during the estimating process. While estimators usually analyze drawings and photographs of a construction site at first, a visit allows one to notice the specificities of the site that may impact construction costs. For instance, a site with bad drainage, lack of easy access to the roads, and bad location of utilities, will make the project more expensive. An estimator will take photographs, talk with site owners, and analyze information to figure out the impact that certain aspects will have on construction costs.  

In sum, construction estimating is a complex and multifaceted process that requires professional competences and precision. Years ago, estimators used pen and paper to manually perform all calculations. Today, construction estimating software is often used to speed up the process. Nevertheless, some challenges in construction estimating persist. 

construction estimating process

Challenges in construction estimating

Among the common challenges faced in the estimating process are:

Data accuracy and availability

Having exact data is crucial for accurate estimates. Missing or outdated information can skew results, which leads to either underestimation or overestimation of costs. Even small mistakes or overlooked numbers can cause problems. 

Complexity of projects

Large-scale projects involve numerous variables, which makes it difficult to account for every detail accurately. Each variable can affect the overall cost and timeline significantly. Estimating labor costs is particularly difficult, especially in regions with volatile labor markets. The same goes for forecasting productivity in terms of labor hours and associated costs.  

Time constraints

Estimators often work under tight deadlines, which can compromise the thoroughness and accuracy of their estimates. Additionally, if an estimator has to manage multiple projects simultaneously, this can strain resources and increase the risk of errors. Despite the now-commonplace use of construction estimating software for automated calculations, the process is still lengthy and inaccuracies are still commonplace. 

AI estimating software augments capabilities of previous-generation construction estimating software solutions. 

Features of AI construction estimating software

After reviewing available construction estimating AI software, we have identified two key applications of AI for estimating. 

Performing takeoff from electronic drawings

Using AI for construction estimating is highly effective if you need to perform takeoffs from electronic blueprints. 

A lot of contractors still use whiteboards and spreadsheets to conduct takeoff. However, even digital solutions remain relatively ineffective – for instance, pointer solutions like digitizer tablets still need a lot of manual effort, especially if the space is irregular. This reduces the accuracy of takeoff and slows down the process. 

Using artificial intelligence in construction estimating enables you to speed up the process and boost its accuracy. Pattern recognition is a precise technology that can identify unfamiliar objects, including those that are partially hidden. When an ML system analyzes an image, it automatically recognizes outlines of each room and performs necessary calculations. 

Working with text

AI software for construction estimating offers advanced features to handle text effectively. These tools can automatically scan and interpret specifications, contracts, and project documents. This automation improves construction data management by reducing manual data entry errors and saving time. 

Here are some key features and benefits of using AI for data management during the estimating process:

  • Automated Data Extraction. AI identifies and extracts essential information from text documents, which streamlines the estimation process. It’s useful to utilize an in-built AI chatbot for this – in this way, you can extract the necessary information in just a few clicks. 
  • Natural Language Processing (NLP). NLP capabilities enable the software to understand context, which improves the accuracy of text interpretation. This guarantees that information is precise and you don’t miss anything. 
  • Document Management. AI-based solutions centralize all project-related documents, which makes it easier to access and reference necessary information. 

However, it is important to note that AI has its limitations and can’t fully replace professional estimators. It is crucial to cross-check information and validate automated extractions against original documents. An estimator should also confirm that all data points match across different documents, and spot any irregularities or omissions that could impact the estimate. 

Why choose custom AI software for construction estimating

Although there are some off-the-shelf estimating solutions that integrate AI capabilities, this is still a very new technology that has not yet been fully explored. For many contractors, it can be beneficial to opt for custom software development. This allows you to get a unique solution that provides advantages over the competition. Some other benefits of custom AI software include: 

  • Tailored Solutions. Unlike off-the-shelf software, custom solutions are designed to fit your unique workflows and requirements. This enables smooth integration with existing systems and processes. 
  • Scalability. Custom AI tools can be scaled to handle projects of varying sizes and complexities. This flexibility allows you to manage everything from small renovations to large-scale constructions. 
  • Cost-Efficiency. While initial development costs might be higher, custom AI software can save your money by integrating features offered by different off-the-shelf providers in a single solution. 
  • Security. Custom solutions offer security measures tailored to protect your sensitive project data. High-level encryption and other security protocols will make sure that your data remains confidential. 

AI for construction estimating example

Kan Phaobunjong, a chief estimator at Spawglass Construction Corp., had reached out to Apiko with a request to develop an AI-based construction estimating solution. Spawglass has completed a wide variety of projects over 70 years of its existence, and accumulated a large amount of data that could be useful for faster and more precise estimations. 

The software Spawglass used before registered data on labor, quantities of materials, equipment, and productivity. However, it was not possible to quickly and productively retrieve and use this data to make more precise estimations. As a result, the estimators spent a lot of time on estimating productivity from scratch, whereas a more precise and fast calculation could be done by taking into account historical data saved in the database. 

Apiko developed a Proof of Concept for Spawglass. An AI-based chatbot was connected to a custom knowledge base that contained the company’s data. This enabled fast and precise retrieval of historical data and sped up the estimating process. 

construction estimating software example


“They were a dedicated and passionate team - very resourceful. Apiko’s work was met with positive acclaim, as they delivered a fully optimized AI tool. The team was highly receptive to timelines, and internal stakeholders were impressed with the service provider's team dynamic and passion.”
Kan Phaobunjong
Chief Estimator at Spawglass Construction Corp.


Artificial intelligence in construction management is finding diverse applications, with new tools being developed by established companies, startups, and custom software developers. Today, AI in construction estimating is mainly used to perform material takeoff from electronic blueprints and analyze project specifications. At Apiko, we have extensive experience in providing AI and ML software engineering services for the construction industry. If you have a project idea in mind, don’t hesitate to reach out. Whether you need a construction asset management tool, a work order management solution, or an AI-based estimating software, our team is always ready to lend you a hand. 


Can AI do construction estimates?

Construction estimating is usually performed by professional estimators or business owners. AI-based solutions automate manual processes and booststhe efficiency and speed of estimations, which is crucial for submitting a successful and accurate bid. However, AI can’t fully replace estimators, since certain aspects of estimating require local expertise and knowledge of the market. 

What are the limitations of AI in construction? 

AI does not have required expertise to make the estimating process fully automated. For instance, a site visit provides an estimator with invaluable information that can only be gathered by a human eye. AI can’t provide site-specific information, it can only speed up the estimating process which is based on already-gathered data.