There are any number of things that make big projects different from little projects. The first one that comes to mind, for me, anyway, is that while small projects are typically billed out at time and materials, large projects are more often subject to being quoted out and that requires estimating what the job will cost and how long it will take.
Calculating and totaling all the inputs that make up an estimate isn’t always easy. As was once explained to me, you’ll only ever really know what the project will take once you’re done. But that sort of flippancy isn’t really helpful. The fact is that calculating estimates is just another process, although unlike straight-up technical processes (like terminating lines), estimating is often a mix of both science and art.
And it’s as essential a process as any others you bring to bear on the job site. Being way off the mark on your estimates is as costly a mistake as failing at anything else that you’re responsible for. Even more so, as inaccurate estimates cost time, money and, potentially, a lot of both.
When framed in that context, competent estimating is as crucial a skill as any other. Your estimates directly impact scheduling, budgeting, and ordering materiel. Running the timelines of the project depends on both expertise in project management and good Gantt chart software (shameless plug here for some of my other columns), but those things depend upon the quality of the inputs that came from the estimation. Without a solid estimate, you’re off to a bad start.
Today, I’m going to introduce some of the basic concepts that go into effective estimation, with an eye to expand upon them in upcoming columns.
The oldest method of estimating is depending upon past experience. Whether it’s your experience, or that of the people who work with you, having a sense of the time and materiel required often comes from the expertise of having done this a long time.
If you want to sound fancy, especially if you’ve gone to school for project management and want to use the terms you learned in class you can call depending upon past experience “comparative” or “analogous” estimation.
This makes sense when the project you’re quoting on is similar to ones you’ve completed in the past. Ideally, it’s similar to projects you completed successfully. Although past projects that weren’t may have taught you valuable lessons you can apply today.
Top-down and bottom-up estimating differ markedly, as you can guess from their names. Top-down is most appropriate for an initial once over, to determine the broad outline of what it will take to complete the job. Because it’s not in-depth it’s most often used to evaluate whether you want to tackle a project at all, before committing.
If you do commit, that’s where bottom-up estimating comes in. It’s much more detailed, and requires breaking the project down into all of its component tasks, calculating the time and materiel for each of them. The sum of all of that will comprise the total estimate for the project.
While bottom-up estimating is very detailed, it’s also a huge amount of work. A friend of mine who’s an electrician by trade, now working full-time as an estimator for a large contractor just completed a detailed estimate for a huge industrial project valued at a couple million dollars (just for the electrical), and it took him a couple of weeks of solid work.
Estimating using a parametric model takes estimating based on experience and goes a step further. Using software that’s been input with data from past projects, it calculates and produces detailed estimates. But like all software, it’s only as reliable as the data it’s working from.
Coming up, we’ll drill down into these in greater detail.