Estimating: Art or Science?
Estimating is knowledge and philosophy living side by side. I want you to read through“Estimating / Art or Science.” I have included it here for a reference to my estimating philosophy. Once you have a good understanding of estimating, you can get into the salesman’s mind set. Once you understand and have the knowledge of what goes into an estimate, you will be a much more successful project manager.
Estimating, Art or Science?
Think of estimating as an art with a formula based on actuality + history + experience. Actuality = what does a part really cost us? History = what have we learned from the past? Experience = what is our best educated and engineered guess?
Science takes an unproven theory and acts on it in hopes of creating precision. Science can prove to be accurate or once proved, misleading, should then be disbanded. There are very few estimates that will turn out to be exact and precise, to the “t” as we say. Therefore it is important in any estimate to make as few errors as possible.
The greatest risk to an estimate is overlooking a key element that is both necessary and significant to the cost. You must also understand no estimating system is stand alone, irrespective of how sophisticated the system or program appears on the surface. No estimating system can eliminate risk. However, a system based upon standard data, history that has been studied, while throwing in a little experience and engineering, will minimize risk.
Accuracy should be built in several ways. First, elemental data must be reduced to the smallest possible increment. By doing so if an error, oversight or basic transposition were to happen, the effects would be minimal and should have no great cost effect on the whole of the project. Secondly, upon completion of every individual project, you must go through a complete cost analysis. You should review the methods used and any difficulties that have been encountered along the way. The last project, aids you on future projects. Lastly, learn to quit looking up for “pie in the sky” on future projects. Look down on the ground, where you will find the nickels and dimes that were left behind.
Any estimating system must understand an orderly sequence of normal handling, production and finishing operations. The system should not encourage a random selection of values based on undefined standards or the illogical order of the operations required. First things should be considered first, second steps second and so on. An estimate spread sheet or complete system built on study and logic combined will reduce the risk of forgetting any single operation. The goal is to increase the bottom line of future projects by what you have learned from the past. By studying the past projects, your risk becomes greatly reduced in the future.
An effective estimator should also be a millwork engineer, who has an understanding of project management. The estimator must have a mental picture of the entire project. His knowledge of the production and installation process will give a clear composite as to the final product, for the estimate. Once that mental picture is complete, an estimator can progress along the standard data chart selecting values. He then acknowledges the unusual factors that will be required through the production and installation processes. Upon final review if need be, talking with the builders and/or installers, the estimate can be completed. Clear pictures that create solid estimates will be realized in bottom line profits.
Finally as an estimator, you must never lose sight of the objectives and responsibilities of your position. These objectives and responsibilities can be described in two sentences. First, you are responsible to the client for creating a cost effective project budget that will be completed on time. Second, and far more basic, is to budget a project that will make a profit for the company.
