How can someone without extensive estimating credentials tell if they have a good or a bad estimate? If they don’t have the estimating experience yet know the scope of the project, it can be a relatively straight forward evaluation. While it definitely helps to have estimating experience, a lot of problems can be eliminated without having estimating experience.
One of my favorite, and best, methods in determining a good or bad estimate is asking questions about the scope. Try starting the questions on the total cost of the project. How does the total compare to other similar projects? What makes this project cost different or the same as the other projects? What is the overall scope of the project? Are there any exclusions? If so, why?
Then go down a level to find out what scope is included on a major division basis. Are all the CSI divisions listed? Even if there are no costs in a given division, they should be since this shows someone considered there might be costs. A missing division can be a mistake waiting to rear its ugly head. Ask similar questions on the division evaluation as the overall project scope. If there are missing sub-divisions within a given division ask why.
Next is evaluating the details of each sub-division. In conjunction with this questioning process use the project documentation as a part of the process. Whether it is a program statement or plans and specifications, many questions can be developed to determine if the scope is represented in the estimate. Use the documents for preparing the estimate. Look to see how well the drawings are colored to represent the takeoff of the items. If there are areas not colored, and there will be some, ask about them. Try to determine through the questions if there are any apparent duplications or omissions in scope. Interface points between the different subcontract trades are areas this will likely occur.
Evaluating the numbers is a bit more difficult but still doable. Find out how the wage rates were developed and ask for supporting documentation. Likewise find out how the material prices were developed. If from quotes, ask for the quote sheets identifying the vendors and the scopes being quoted. Find out what sources were used for the bulk material prices used in the estimates. Ask what multipliers were used to arrive at the prices used in the estimate. If unit prices containing labor and materials are being used through out the estimate, this is a big warning flag of a potentially bad estimate. Labor hours should be used. Find out how they were developed and how they compare to other projects.
As a last tip on finding out whether you have a good estimate or not, try the BS indicator. If the answers stink, you likely have a bad estimate.
Oh, By The Way… When someone answers a question regarding a missing item with “That cost is included with…” I know I am dealing with a bad estimate. If the cost is not shown, it is not included. This is one of the major “rules” in estimating.
