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estimates and sending estimate information
directly to a program for procurement
or integrating with your company’s
accounting system.
• Online collaboration. Comments, adjustments,
and approvals can be done
digitally, avoiding paper chases to find
out which physical project file is still sitting
in whose in-tray.
Proper integration of construction management
software can therefore speed up business
as a whole, as well as the cost estimating
activity itself.
The Not-So-Smart Side of Applications
for Cost Estimating
Cost estimating software may be necessary
in order to be responsive to customer
requirements, but it is not sufficient on its
own. In other words, it would be a mistake to
just rely on software without any additional
checks and balances.
The quality of the results you obtain from estimating
software depends on the quality of
the information you put into it. Consider the
cost data that it uses. Few if any commercially
available cost databases use continually
checked data, refreshed every year, item by
item, locality by locality, because the effort
required is enormous. The real costs you see
for building materials or activities in your
own projects may differ, and it is important
to use this real data in your estimating process
instead of dated information.
Similarly, do not confuse purpose-built
cost-estimating applications with spreadsheet
applications. The latter do not offer
“hard coded” formulas for meaningful calculation.
The flexibility of spreadsheets is
also their weakness: people can change the
way a spreadsheet performs its calculations,
destroying the relevance of the results and
leading to errors. By comparison, construction
estimating software, when given the
right data to work with, can reliably calculate
costs and related information by category
(materials, labor, plant, time), and rapidly
produce both summary and detailed cost
estimates.
The Added Value of the Human Cost
Estimator
Capable cost estimators can make intelligent
use of software. They can leverage the power
and speed of the cost-estimating application,
at the same time applying their knowhow to
confirm or improve the results.
Characteristics of good cost estimators include:
8 | Building Entrepreneur
• Understanding of architectural and engineering
drawings.
• Knowledge of construction materials
and methods.
• Acquaintance with customs or preferences
about how their own company
executes its construction projects.
• A systematic and organized approach.
• Know how in preparing estimates that
are accurate and clear for management
and customers.
• Competence in evaluating bids from
subcontractors, not only on price, but
also on scope and responsiveness with
an eye on past performance as well.
• Engineering skills to structure the estimate
in a way that assists cost optimization,
possibly with different construction
methods and materials.
• Sound judgment and ethics to ensure
that cost estimating serves the business
and customers properly and treats subcontractors
fairly (no “bid shopping” as
a prime contractor or “bid peddling” as
a subcontractor.)
• The continuing acquisition of experience
and information to improve results further.
This can include finding out why
estimates for a project were accepted or
rejected, how many contractors provided
estimates for the project in question,
and if the lowest bidder made any omissions
in the estimate it provided.
When a computer does the manual and repetitive
work, a greater part of a cost estimator’s
time can be spent on improving the
process by improving the presentation of
estimates. Applications may offer different
reporting options from which to select cost
breakdowns and proposals, including charts
and graphics to enhance clarity.
The experience and judgment of the cost estimator
are still necessary to decide matters
such as units of measurement for estimating.
A cost estimator can shape the presentation
of the costs by using units favored or
recognized by the customer, or that yield
quantities that are neither too big, nor too
small.
Potential Pitfalls for People Doing
Cost Estimating
Conversely, cost estimators should avoid the
following estimating errors:
• Failing to read relevant project documents.
• Skipping the site visit. Another necessary
reality check for the relevance of
construction elements, measurements,
and unit costs to be used.
• Mistakes and omissions. A cost estimating
software application is like a car. If
a part is missing, expect a malfunction,
and if you drive it without care, expect
an accident.
• Arbitrary cost adjustments. The final
cost estimate from the application
might not be the one you expected or
that your customer wanted, but it might
still be the right one. While applications
often offer the possibility to adjust pricing
manually, sound business justification
is always a prerequisite.
• Failure to check the final result. Figures
from an application must always be
checked for meaningfulness, possibly by
comparing them with previous similar
projects. Applications and computers
are still “garbage in, garbage out” systems.
If you feed them bad data or omit
chunks of a project, you will get bad or
incomplete results. Check, check, and
check again.
Are Programs or People Better for
Construction Cost Estimating?
From the lists above, it becomes clear that
human beings and software applications
are highly complementary when it comes to
construction cost estimating. Most of the
characteristics of a good cost estimator (as
in a person) are not available in software,
although artificial intelligence may lead to
new software capabilities in the future. On
the other hand, computers achieve levels
of speed and reliability in resource calculations
that are far beyond those of human
beings.
Finally, the Ultimate Guide to Construction
Cost Estimating is…
…you, as a competent, knowledgeable, conscientious
cost estimator, supported by a
suitable construction estimating software
application. This person-technology combination
is a key part of preserving and improving
the profitability of a construction
company, in ways that neither a person nor a
computer can do alone. Moreover, the added
value generated by this combination (detail,
relevance, clarity of presentation) can make
a favorable impression on the customer
when it is most needed, meaning at the outset,
and justify payment for the estimating
work alone.
Originally appeared on Capterra, www.capterra.com,
Article written by Rachel Burger