Cost Estimate Development Sequence

COST ESTIMATE DEVELOPMENT

SEQUENCEImplement A System

Adjust For Better Performance

Your biggest challenges as a cost estimator:

Your biggest challenges as a cost estimator:

■ Accurate and complete project information

Your biggest challenges as a cost estimator:

■ Accurate and complete project information■ Access to cost data

Your biggest challenges as a cost estimator:

■ Accurate and complete project information■ Access to cost data ■ Produce a cost estimate that meets the expectations of the review

team

Your biggest challenges as a cost estimator:

■ Accurate and complete project information■ Access to cost data ■ Produce a cost estimate that meets the expectations of the review

team ■ Meet the deadline for cost estimate completion

Your biggest challenges as a cost estimator:

■ Accurate and complete project information■ Access to cost data ■ Produce a cost estimate that meets the expectations of the review

team ■ Meet the deadline for cost estimate completion■ Validate the cost estimate

You can overcome those challenges by…

You can overcome those challenges by…■ Planning your cost estimating development activities

You can overcome those challenges by…■ Planning your cost estimating development activities■ Measure your performance

You can overcome those challenges by…■ Planning your cost estimating development activities■ Measure your performance■ Ask for feedback from the review team

You can overcome those challenges by…■ Planning your cost estimating development activities■ Measure your performance■ Ask for feedback from the review team■ Adjust your plan for the next cost estimate

You can overcome those challenges by…■ Planning your cost estimating development activities■ Measure your performance■ Ask for feedback from the review team■ Adjust your plan for the next cost estimate■ Rinse and repeat!

So, here is my step-by-step strategy:Step 1

Step 11. Review all available documents

Step 11. Review all available documents

– Ask for clarifications

Step 11. Review all available documents

– Ask for clarifications– Take notes on all missing/incomplete information

Step 11. Review all available documents

– Ask for clarifications– Take notes on all missing/incomplete information– Set-up a request for clarification registry

Step 11. Review all available documents

– Ask for clarifications– Take notes on all missing/incomplete information– Set-up a request for clarification registry – Set-up a risk/opportunity registry and add all relevant information

Step 11. Review all available documents

– Ask for clarifications– Take notes on all missing/incomplete information– Set-up a request for clarification registry – Set-up a risk/opportunity registry and add all relevant information – Make a habit to review documents for all specifications which

might have an impact on cost

Step 11. Review all available documents

– Ask for clarifications– Take notes on all missing/incomplete information– Set-up a request for clarification registry – Set-up a risk/opportunity registry and add all relevant information – Make a habit to review documents for all specifications which

might have an impact on cost– Build-up the project in your mind theatre and take the time to see

the big picture

Step 2

Step 22. Define the purpose of the cost estimate:

Step 22. Define the purpose of the cost estimate:

– Is it a cost estimate for a tender submission?

Step 22. Define the purpose of the cost estimate:

– Is it a cost estimate for a tender submission?– Or, is it a budget cost estimate for a client/owner/engineering

firm? If so, what is the expected accuracy?

Step 3

Step 33. Set-up the cost estimate development kick-off meeting

Step 33. Set-up the cost estimate development kick-off meeting

– Invite all cost estimate review team members

Step 33. Set-up the cost estimate development kick-off meeting

– Invite all cost estimate review team members– Feel free to invite construction professionals within the company

who might have a valuable input

Step 33. Set-up the cost estimate development kick-off meeting

– Invite all cost estimate review team members– Feel free to invite construction professionals within the company

who might have a valuable input– Discuss:

Step 33. Set-up the cost estimate development kick-off meeting

– Invite all cost estimate review team members– Feel free to invite construction professionals within the company

who might have a valuable input– Discuss:

■ Constructability methods

Step 33. Set-up the cost estimate development kick-off meeting

– Invite all cost estimate review team members– Feel free to invite construction professionals within the company

who might have a valuable input– Discuss:

■ Constructability methods■ Price sourcing strategy

Step 33. Set-up the cost estimate development kick-off meeting

– Invite all cost estimate review team members– Feel free to invite construction professionals within the company

who might have a valuable input– Discuss:

■ Constructability methods■ Price sourcing strategy

– What scope will be subcontracted?

Step 33. Set-up the cost estimate development kick-off meeting

– Invite all cost estimate review team members– Feel free to invite construction professionals within the company

who might have a valuable input– Discuss:

■ Constructability methods■ Price sourcing strategy

– What scope will be subcontracted?– What scope will be self-performed?

Step 33. Set-up the cost estimate development kick-off meeting

– Invite all cost estimate review team members– Feel free to invite construction professionals within the company

who might have a valuable input– Discuss:

■ Constructability methods■ Price sourcing strategy

– What scope will be subcontracted?– What scope will be self-performed?– How many quotations will be required to validate a price?

Step 4

Step 44. Develop the cost estimate schedule:

Step 44. Develop the cost estimate schedule:

– List all activities needed to be performed to complete the cost estimate

Step 44. Develop the cost estimate schedule:

– List all activities needed to be performed to complete the cost estimate

– Estimate the time required for each activity

Step 44. Develop the cost estimate schedule:

– List all activities needed to be performed to complete the cost estimate

– Estimate the time required for each activity– Build the schedule logic and determine the milestones

Step 44. Develop the cost estimate schedule:

– List all activities needed to be performed to complete the cost estimate

– Estimate the time required for each activity– Build the schedule logic and determine the milestones– Determine the resource required for cost estimate completion

Step 44. Develop the cost estimate schedule:

– List all activities needed to be performed to complete the cost estimate

– Estimate the time required for each activity– Build the schedule logic and determine the milestones– Determine the resource required for cost estimate completion– Communicate with management regarding the resource

requirements

Step 44. Develop the cost estimate schedule:

– List all activities needed to be performed to complete the cost estimate

– Estimate the time required for each activity– Build the schedule logic and determine the milestones– Determine the resource required for cost estimate completion– Communicate with management regarding the resource

requirements– Build-in time for unexpected activities: last minute take-off for

subcontractor price review and validation, changes to the project documents, etc.

Step 44. Develop the cost estimate schedule:

– List all activities needed to be performed to complete the cost estimate

– Estimate the time required for each activity– Build the schedule logic and determine the milestones– Determine the resource required for cost estimate completion– Communicate with management regarding the resource requirements– Build-in time for unexpected activities: last minute take-off for

subcontractor price review and validation, changes to the project documents, etc.

– Build-in time for cost estimate reviews

Step 5

Step 55. Develop Work Breakdown Structure to meet the following

requirements:

Step 55. Develop Work Breakdown Structure to meet the following

requirements:– Tender closing and submission

Step 55. Develop Work Breakdown Structure to meet the following

requirements:– Tender closing and submission– Cost estimate review

Step 55. Develop Work Breakdown Structure to meet the following

requirements:– Tender closing and submission– Cost estimate review– Price sourcing strategy

Step 55. Develop Work Breakdown Structure to meet the following

requirements:– Tender closing and submission– Cost estimate review– Price sourcing strategy– Construction methodology

Step 55. Develop Work Breakdown Structure to meet the following

requirements:– Tender closing and submission– Cost estimate review– Price sourcing strategy– Construction methodology– Estimate validation and benchmarking

Step 55. Develop Work Breakdown Structure to meet the following

requirements:– Tender closing and submission– Cost estimate review– Price sourcing strategy– Construction methodology– Estimate validation and benchmarking– Internal database update

Step 6

Step 66. Develop the cost estimate:

Step 66. Develop the cost estimate:

– Quantity take-offs based on WBS and price sourcing strategy

Step 66. Develop the cost estimate:

– Quantity take-offs based on WBS and price sourcing strategy– Develop direct costs

Step 66. Develop the cost estimate:

– Quantity take-offs based on WBS and price sourcing strategy– Develop direct costs– Develop indirect costs based on preliminary construction schedule

Step 66. Develop the cost estimate:

– Quantity take-offs based on WBS and price sourcing strategy– Develop direct costs– Develop indirect costs based on preliminary construction schedule– Optimize resources

Step 66. Develop the cost estimate:

– Quantity take-offs based on WBS and price sourcing strategy– Develop direct costs– Develop indirect costs based on preliminary construction schedule– Optimize resources– Update costs as they become available from

subcontractors/suppliers

Step 66. Develop the cost estimate:

– Quantity take-offs based on WBS and price sourcing strategy– Develop direct costs– Develop indirect costs based on preliminary construction schedule– Optimize resources– Update costs as they become available from

subcontractors/suppliers– Incorporate all additional information if applicable (changes to the

project documents, clarifications, etc.)

Step 66. Develop the cost estimate:

– Quantity take-offs based on WBS and price sourcing strategy– Develop direct costs– Develop indirect costs based on preliminary construction schedule– Optimize resources– Update costs as they become available from

subcontractors/suppliers– Incorporate all additional information if applicable (changes to the

project documents, clarifications, etc.)– Price and incorporate risk registry items as applicable

Step 66. Develop the cost estimate:

– Quantity take-offs based on WBS and price sourcing strategy– Develop direct costs– Develop indirect costs based on preliminary construction schedule– Optimize resources– Update costs as they become available from

subcontractors/suppliers– Incorporate all additional information if applicable (changes to the

project documents, clarifications, etc.)– Price and incorporate risk registry items as applicable– Review cost estimate draft with the review team

Step 66. Develop the cost estimate:

– Quantity take-offs based on WBS and price sourcing strategy– Develop direct costs– Develop indirect costs based on preliminary construction schedule– Optimize resources– Update costs as they become available from

subcontractors/suppliers– Incorporate all additional information if applicable (changes to the

project documents, clarifications, etc.)– Price and incorporate risk registry items as applicable– Review cost estimate draft with the review team– Update the cost estimate as per review notes

Step 66. Develop the cost estimate:

– Quantity take-offs based on WBS and price sourcing strategy– Develop direct costs– Develop indirect costs based on preliminary construction schedule– Optimize resources– Update costs as they become available from

subcontractors/suppliers– Incorporate all additional information if applicable (changes to the

project documents, clarifications, etc.)– Price and incorporate risk registry items as applicable– Review cost estimate draft with the review team– Update the cost estimate as per review notes– Update costs as more information becomes available from

subcontractors/suppliers

Step 66. Develop the cost estimate:

– Quantity take-offs based on WBS and price sourcing strategy– Develop direct costs– Develop indirect costs based on preliminary construction schedule– Optimize resources– Update costs as they become available from subcontractors/suppliers– Incorporate all additional information if applicable (changes to the

project documents, clarifications, etc.)– Price and incorporate risk registry items as applicable– Review cost estimate draft with the review team– Update the cost estimate as per review notes– Update costs as more information becomes available from

subcontractors/suppliers– Final cost estimate and tender submission review.

Your turn now! What is your best strategy?Please leave your comments and share what works best for you. How do you manage to finish your cost estimates on time and have them pass the final review? Do you want to see what others are saying about the challenges they face as cost estimators? Take the survey, it is anonymous:https://goo.gl/forms/udLFq83q5Su7j5uY2

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Want to read more about cost estimating? You can find me blogging at www.LearnCostEstimating.comOr, send me an email at Doina.Dobre@EmeraldGroup.ca