Estimating

The parties involved must agree on the cost estimate for the project before starting the estimation process. This activity involves obtaining information about the project, such as previously developed scopes and schedules, from which the estimator can calculate cost estimates. The scope level depends on the project type, complexity, design matrix, and criteria. At this stage, the cost estimator must clearly describe and document all assumptions. The estimated cost information must also record the additional and subsequent to have a traceable history of each of the estimates made.

A baseline estimate encompasses all estimated costs for a project, apart from anticipated future escalations. These estimates are often calculated based on different techniques, such as: defining the scope, size, and complexity of a project. Instead, the detailed estimates vary depending on the stage of development of the project. As the design progresses, more details become known, leading to a more detailed cost estimate. The critical data needed at this stage are scope details, inflation rates, material shipments, unit cost databases, and market conditions. Construction estimates provide the customer with a summary of the material costs required. Construction budgets vary based on the size and scope of the project. Collecting and interpreting all of the scope documents can be challenging, but the project team should set up the scope documentation early on to estimate direct costs. The cost estimator also notes all cautionary notes, assumptions, and exclusions while preparing the base estimate. The estimate can also be attached and included as a reference annex for the rest of the project activities.

 A base estimate review is necessary to ensure that all assumptions and foundations for a project are correct. It also means that all base cost estimates are a true reflection of the scope of work and schedule. Prevents double counting of matches and ensures no missing components. This stage reviews estimates based on cost and historical data or project/ specific conditions by applying the necessary location and productivity factors. The estimator also checks indirect and overhead costs against direct costs as a base.

An integral part of project planning is the development of a risk and contingency plan. Risk management is always an ongoing process to maximize the chances of opportunities and minimize the chances of threats. In addition, the estimator must include the impact of the hazards on the total costs of the project.

Cost estimators must communicate cost estimate data to all the necessary parties. A good communication approach determines what information should be shared and who should receive it. It also determines the information channels through which the information must pass. Thus, communication is as important as numbers, and information can be used as an effective critical tool to ensure project success.

PEER REVIEW Another construction estimator should always review a budget. Perform spot checks to verify quantities and costs and check the completeness of a project's scope. Peer review is a crucial phase to close significant gaps in the estimate and an opportunity to reduce costs. Assumptions are also removed and clarified in this phase. Following this review, the estimator may submit the estimate to management for approval. Finally, the project management staff reviews the project cost baselines.

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Throughout the project, the estimator continually updates the information; it never finishes estimating the result of the project. Estimation is always a continuous process.