By John Kenney, Cotney Consulting Group.
What is the purpose of estimating? Estimating determines the expected costs of labor, material, construction equipment and tools needed to complete a project by your company. The first thing to do to create an estimate is to create an estimating plan.
Preparing and assembling accurate costs are the most critical constants when it comes to managing projects successfully. Cost overruns from poor estimating cause contractors more profit fade than scheduling or performance issues on a project. A recent study by the U.S. Government Accountability Office has found that 90% of roofing projects underestimated costs, which resulted in cost overruns of between 50% and 100%.
Project cost overruns are significant problems for project management as well. Project managers manage their projects to meet budget, time and performance targets. Unforeseen risks while the project is in the performance phase are the root cause of overruns. The estimator must eliminate most of these conditions by accounting for them with a solid process in the cost assembly phase.
The estimating process begins with a comprehensive understanding of your project's scope of work. Whether it is scope prepared by an owner's designer or your own companies' scope recommendation, your estimating team must be able to visualize and mentally build the project, starting with the site mobilization through project completion. This estimating skill is best developed by having hands-on experience in the field, which gives you a better insight into means and methods, materials, labor durations and the challenges faced during installation.
A knowledgeable and well-trained estimating team is only one key component to your success. You must have solid processes and procedures in place. By changing the way you do business and implementing these procedures will not be easy, but it will be a clear-cut process to get accomplished. Change is never easy, but it can be straightforward. If you make these changes in your business, it is a win-win strategy. Your customers will be pleased about their purchase when you deliver on the value you sell, making more money.
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