When a client asks for an estimate, just dropping in some numbers that barely connect to reality and then just rounding out a project is completely unrealistic and has potential for a serious disaster.
Here’re six time-tested ways to determine the right estimate:
1: Understand how various tasks in a project are interdependent
Each task in the process of estimating is connected in some way to the other; nothing “stands alone.” For instance, the installation of doors is inextricably linked to creation of walls. So, if the estimated numbers for the install of the house’s doors are off, then the estimated numbers for wall creation will follow suit and be off.
2: Gather input from various teams
An estimator should know how various teams in the company work. While you may not be an expert in their task, you need to have a basic understanding of their work process, including where they start and how they prepare for an upcoming project. Maybe research common challenges they face and the factors that contribute to a finalized project.
When you begin estimating the project, discuss with all respective teams about their prospective role in project and get their input. This will help you immensely in arriving at an accurate estimate.
3: Study historical data
Having a database that houses and stores the projects that the company has worked on and completed is a good idea for estimating. The system would store all the numbers used and submitted on a project . Being able to delve into a database like this provides contractors and their companies an opportunity to review mistakes . Where were we short? Where were we over? This could also provide a baseline (starting point) on any new similar project.
4: Ask the right questions
Every project is different. The complete understanding of a project will help you forecast the time and resources required to complete it.
Have a solid set of questions to ask and the replies might require further questioning. If needed, send in a list of secondary questions to get more details.
5: Develop an standardized estimating process
An efficient estimating process enables you to stay within your proposed budget. A structured, repeatable process enables you attain equal results faster. Administrative processes often take up more time than one usually plans for. A better process will help you streamline it and move ahead in a faster manner.
6: Provide for cost contingency
You cannot predict everything prior to kicking off a project. It’s a smart move to include a cost contingency to provide a cover for unexpected uncertainties. There is no hard and fast rule regarding the amount you should add or subject. You may add a certain percentage, or use a complicated model that factors in risk levels.
Using the 6 points listed above, will make the estimating process as accurate as possible and will provide a “flow” to each and every project. Proper bids eans prober jobs. More jobs is more money.