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Step one: define scope and quantities
Start with what is being built: floor area, clear height, dock doors, office share, and site conditions. Worked example: a 100,000 square foot distribution building with 24 dock doors and a small office. Record each quantity in one sheet so every later cost traces back to a measurable input. Separate the building shell, interior systems, paving and utilities, because each responds to different price drivers. Note what is unknown, such as soil quality or utility distance, and mark those lines as provisional instead of guessing silently. A clear scope sheet prevents the most common estimating failure, which is pricing a vague building.
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Step two: price by category with sourced rates
Assign a unit rate to each category, such as cost per square foot for the shell, per door for docks and per acre for paving. Use rates from recent local bids, contractor conversations or published cost guides you can name, and write the source beside each rate. In the example, multiply 100,000 square feet by the shell rate, then add dock, fire protection, electrical and site lines separately. Keep soft costs, including design, permits, financing and insurance, in their own block. Showing categories side by side lets reviewers challenge one assumption at a time rather than debating a single total.
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Step three: add contingency and set tracking
Finish with a contingency sized to uncertainty: higher when design is early or site data is missing, lower once bids are firm. In the example, carry a larger allowance on the provisional site and utility lines than on the standard shell. Then convert the estimate into a tracking sheet with budget, committed and actual columns for each category, reviewed on a fixed schedule. Record every change order with a reason. When actual spend drifts from plan, you can see which assumption moved, update the forecast and decide whether to adjust scope, rather than discovering the overrun at project close.