A Quality Estimate Starts Any Project Off Right
A good estimate is a powerful tool to start a project off correctly.
An architect I worked for astutely tracked three items on each project: the winning bid, the project estimate during the CD phase, and the spread between all bids received. His purpose was twofold: The tight bid spread proved the completeness and comprehensiveness of our construction documents as a tool to control cost, and the delta between the estimate and the bid proved (besides the ability to design to a budget) the quality of the bid. This firm won many clients with its estimate-bid-spread data because right from the start, the prospective client knew the estimate (aka out-of-pocket costs) was a bankable number.
A good estimate aligns expectations for everyone. It prepares the owner for what to pay, which affects his financing strategy, cash flow, and bill-payment abilities. A trustworthy estimate validates the rest of the project before things really get going. It is a road map of sorts and confirms that the project is doable.
A good estimate prevents an inaccurate final project cost. The estimate becomes the touchstone for the negotiated contract amount. The reason an estimate is not always directly reflected in accurate bids is because bids have a lot of gamesmanship to them. Do you price for reality or price to win? This is one of the dilemmas for owners, especially when comparing bids. Are they "for real"? Can you really "use the numbers"?
A good estimate grounds everyone in reality; it anchors minds in real dollar figures so that outcomes later in the project can be put in proper perspective. This usually means no one is taken by surprise, which prevents lawsuits. In the world of money changing hands, no one likes to be taken off-guard in the value of something they own. Likewise, value engineering (VE) scenarios are minimized because the owner has a good idea of what to budget for. When this happens earlier, goods are acquired with maximum purchasing power instead of rebated at the discounted rate, which makes VE such a fruitless, frustrating, and value-losing exercise.
A good estimate is often derived from an exercise that is a paid endeavor. Estimates, like bids, take large amounts of meticulous number crunching and analysis to craft. For this reason, they are expensive to produce with confidence. No one likes or willingly gives away work that took a lot of time to generate; they naturally do a better job when compensated. Estimates are naturally more impartial, thorough, and reliable when purchased.
Estimates should be done at many phases throughout a project, and this information should be used to inform the development of the project. Static snapshots are no good if they are not used to guide and keep the project affordable for the owner. In the end, an estimate is the final word leading to a guaranteed maximum price everyone agrees on and for which the project is eventually built. Estimates matter.
Lee writes on healthcare design, project, and strategy topics in his blog, “Owner’s Toolbox” at http://www.poechmann.com.