Understanding the Four Main Cost Categories in Construction Estimating

Breaking Down the Essential Components of Construction Cost Categories

Unravel the intricacies of cost categories and their pivotal role in organizing and allocating estimated costs of a construction project. Delve into the vital understanding of how every single aspect of a building structure holds unique dependencies on labor, material, equipment, or a subcontractor for installation.

Key Insights

  • Cost categories are essential in organizing estimates for construction projects, helping allocate each estimated cost correctly.
  • Every item included in an estimate needs at least one cost category, which could be labor, material, equipment, or a subcontractor, each carrying out specific roles in the installation process.
  • While there are four primary cost categories, occasionally, some items might not fit into these categories necessitating an additional cost category, belying the complexity and depth of construction cost estimation.

Note: These materials offer prospective students a preview of how our classes are structured. Students enrolled in this course will receive access to the full set of materials, including video lectures, project-based assignments, and instructor feedback.

Let's talk about cost categories. What are they? To put it simply, we organize our estimate into categories so that it's easy to understand where we need to allocate each of the estimated costs. To go a little deeper on cost categories, it's important to understand that every single item to be included in an estimate that's part of a building structure is going to require labor and or material and or equipment or a subcontractor to do the installation.

Some items could be labor only. That's the time that it takes to install it. Some can be material only.

Some could be labor and material. Let's take concrete for example. It requires the labor to place the concrete, the material for the concrete, and it may also require the equipment to pump the concrete into place.

You could also have a subcontractor that comes in and says, nope, I'll do all of it from my price, and then you'll have a subcontractor amount. Those are the four primary cost categories. There are times that some items, like special inspections, may not actually fit into these cost categories, and a fifth cost category could be added, such as other.

Learn Construction Estimating

  • Nationally accredited
  • Create your own portfolio
  • Free student software
  • Learn at your convenience
  • Authorized Autodesk training center

Learn More

But other than that, there are four primary cost categories where most of your costs are going to be contained. It's important to understand that every item in your estimate must have at least one cost category. So let's take a closer look at these four main cost categories.

photo of Ed Wenz

Ed Wenz

Construction Estimating Instructor

Ed started Wenz Consulting after 35 years as a professional estimator. He continues to work on various projects while also dedicating time to teaching and training through Wenz Consulting and VDCI. Ed has over 10 years of experience in Sage Estimating Development and Digital Takeoff Systems and has an extensive background in Construction Software and Communications Technology. Ed enjoys spending his free time with his wife and grandchildren in San Diego.

  • Sage Estimating Certified Instructor
  • Construction Cost Estimating
More articles by Ed Wenz

How to Learn Construction Estimating

Learn to create accurate project cost estimates using industry-standard tools and techniques with hands-on training.

Yelp Facebook LinkedIn YouTube Twitter Instagram