Estimating – The Nature of the Work

Accurately forecasting the cost, size, and duration of future projects is vital to the survival of any business. Cost estimators develop the cost information that business owners and managers need to make a bid for a contract or to decide on the profitability of a proposed new project or product. They also determine which endeavors are making a profit.

Regardless of the industry in which they work, estimators collect and analyze data on all of the factors that can affect costs, such as materials, labor, location, duration of the project, and special machinery requirements, including computer hardware and software. Job duties vary widely depending on the type and size of the project.

The methods for estimating costs can also differ greatly by industry. On a large construction project, for example, the estimating process begins with the decision to submit a bid. After reviewing various preliminary drawings and specifications, the estimator visits the site of the proposed project. The estimator gathers information on access to the site; surface topography and drainage, and the availability of electricity, water, and other services. The estimator records this information, which may go in the final project estimate.

After the site visit, the estimator determines the quantity of materials and the labor required to complete the firm’s part of the project. This process, called the quantity survey or “takeoff,” involves completing standard estimating forms, filling in dimensions, numbers of units, and other information. A cost estimator working for a general contractor, for example, estimates the costs of all of the items that the contractor must provide. Although subcontractors estimate their costs as part of their own bidding process, the general contractor’s cost estimator often analyzes bids made by subcontractors. Also during the takeoff process, the estimator must make decisions concerning equipment needs, the sequence of operations, the size of the crew required, and physical constraints at the site. Allowances for wasted materials, inclement weather, shipping delays, and other factors that may increase costs also must be incorporated in the estimate.

After completing the quantity surveys, the estimator prepares a cost summary for the entire project, which includes the costs of labor, equipment, materials, subcontractors, overhead, taxes, insurance, markup, and any additional costs that may affect the project. The chief estimator then prepares the bid proposal for submission to the owner. On large construction projects, there may be several estimators, each specializing in one area, such as electrical work or excavation, concrete, and forms.

Construction cost estimators also may be employed by the project’s architect, engineering firm, or owner to help establish a budget, manage and control project costs, and to track actual costs relative to bid specifications as the project develops. During construction, estimators may be employed to manage the cost of change orders and negotiate and settle and extra costs or mitigate potential claims. Estimators may also be called upon as expert witness on cost in a construction dispute case.

Computers play a vital role in cost estimation because the process often involves complex mathematical calculations and requires advanced mathematical techniques. For example, to undertake a parametric analysis (a process used to estimate costs per unit based on square footage or other specific requirements of a project), cost estimators use a computer database containing information on the costs and conditions of many other similar projects. Although computers cannot be used for the entire estimating process, they can relieve estimators of much of the drudgery associated with routine, repetitive, and time-consuming calculations. New and improved cost estimating software has lead to more efficient computations, leaving estimators more time to visit and analyze projects.

Work environment. Estimators spend most of their time in offices, but visits to construction worksites and similar facilities are common. In some industries, there may be frequent travel between a firm’s headquarters, its subsidiaries, and subcontractors.

Estimators usually work a 40-hour week, but overtime is common. Cost estimators often work under pressure and stress, especially when facing bid deadlines. Inaccurate estimating can cause a firm to lose a bid or to lose money on a job that was not accurately estimated.