The Goldilocks Estimate
Updated: Sep 9, 2019
As mamma bear used to say, every quantity surveyor puts together their construction cost estimates in their own unique way. There are many parts to compiling an estimate. Your competition may get the same subcontractor’s price, they may not, but across all the sub-parts of the estimate, each estimate will vary and be assembled differently. Measurement of the works should be commonly accurate, but materials and labour cost inputs may be factored differently. The assumed method of construction may vary, including temporary works, hoisting, safety provisions, planned programmed activities, hired vs own plant, etc. Experience tells us that each of us finds our own way of arriving at the right price for the project but have developed our own unique preferences in method and applied thinking that when reflected upon, in hindsight, to be a little high on some aspects and a little low on others, but overall just right.
Back costing the project you win against the estimate that won it, is vital for learning based improvement of your future estimating. Analyse everything, including the break evens. Breakeven could be a fluke mixed with good luck, masking an estimation assumption flaw. Every project will have something new to learn how to estimate. Someone designs something for the first time, and you have to estimate its cost.
Occasionally, when you are ploughing through your estimate structure, you strike a gap in the input data you have requested. Time is short. Plugging the gap quickly is one reason to have a construction cost guide on file. Coupled with your own “gut feel”, rates from a guide serves a purpose when nothing else is ready to take its place. An estimate with gaps is an underestimate, but an estimate where everything has an opinion as to cost, is a collection of facts and assumptions that is more likely to be right than wrong. And therein lies the definition of an estimate. When you strike the balance between resource input and accuracy output, that generates profitable projects, you will have established your own Goldilocks Estimate Formula, that is not too hot, not too cold, but…
By Matthew Ensoll FNZIQS Reg.QS.
Editor of, 'The New Zealand Building Economist'