Estimating Inflation & Development Costs

Inflation

The BidMagic estimating software program lets you add an inflation percentage to cover the fact that prices will probably rise between the time you bid and the time you start work. They'll also rise between when you start work and when you finish.

NOTE: Inflation is sometimes also called escalation.

Enter your estimate of the annual rate at which building material costs will rise between now and when the project is finished. If you don't have a crystal ball to tell you what the future inflation rate will be, the current inflation rate is probably as good a guess as any!

Also enter the number of months between now and the project start date, and the number of months the project will take from start to finish. If you lock these quantities, BidMagic will calculate them, using the dates on the Bottom Line card (see pages 335-336).

NOTE: Locking the inflation fields slows down overall calculation speed by a second or two.

A percentage adjustment for inflation will be calculated. It is based on the inflation rate, multiplied by the time between the current date and the midpoint of the project.

Development Costs

If you are a developer or a builder of 'spec' houses, enter the cost of acquiring land-- both the actual cost of the site itself, plus closing costs.

NOTE: If planning to resell the property, include both the purchaser's closing costs (when you buy the land) and the seller 's closing costs (when you sell the lot and house).

If planning to resell the property, also include a percentage for Broker's Commission, as figured on the total resale amount. The Commission percentage can also be used if you pay a commission to an in-house or outside salesperson as part of your marketing costs.

NOTE: The cost of site clearing, project utilities, roads etcetera will usually be itemized in Specifications. If you prefer to include them in development costs, add them to the raw cost of land.