At times, estimating can be as much an art as it is a science. In its simplest form, an estimate is a list of all costs associated with a project. A thorough estimate might also list everything that it doesn’t include. Since the most common estimating error is omission, the ability to communicate valuable information can be challenging. As a tool to provide information, an estimate can have different forms.
Conceptual - Similar to a feasibility study, the projected cost and scope may be needed to support a project’s viability. A conceptual estimate should provide enough information to allow an owner to determine whether a proposed project is feasible. The best sources of this information come from historical cost records of completed projects. This step is often necessary prior to committing to design or professional services fees. A good conceptual estimate should provide enough information for the owner to have a clear understanding of how much home they can purchase for their money.
Preliminary - When a dimensioned floor plan is available, preliminary cost estimates can be started. The accuracy of the estimate is dependant on the level of detail available. It’s not uncommon to produce several preliminary estimates as the design progresses and decisions are made regarding finishes and features of the home. Unit cost pricing, consultation with trade partners and historical records are beneficial for providing information, and can be used to help the owner establish a reasonably accurate budget during the design phase.
Detailed - A detailed cost estimate is usually started when the design is complete and the construction drawings have commenced. Even though some costs may not be available until engineering of the drawings and building permit documents are ready, the detailed estimating process can begin. In order to avoid surprises and potentially expensive changes, detailed specifications and written scopes of work should be completed, and provided to trade contractors and suppliers. This will facilitate accurate pricing from competing trades prior to awarding any of the work.
Dynamic - Once construction begins, the estimate should be converted into a working budget and constantly monitored. The budget should always be reviewed before any work is ordered or scheduled. Procedures should be in place to ensure accurate payments are made and surprises are avoided. A good cost-coding system will support organized management of project funds and eliminate misappropriation. Budget status reports should be provided on a routine basis and the Owner should be kept informed of any changes as they occur.
Debrief - A powerful estimating process that is often overlooked by most builders, should take place after each project is complete. Every project has the potential to provide valuable information for future customers. The completed home should be broken down into individual cost components and analyzed against other projects of similar scope. Cost debriefing provides information to builders that wish to improve their processes and provide valuable services to their customers.