Cost Estimate Development Sequence

COST ESTIMATE DEVELOPMENT

SEQUENCEImplement A System

Adjust For Better Performance

Your biggest challenges as a cost estimator:


■ Accurate and complete project information


■ Accurate and complete project information■ Access to cost data


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

team



team ■ Meet the deadline for cost estimate completion



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


– Ask for clarifications


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


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


– 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


– 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


– 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:


– Is it a cost estimate for a tender submission?


– 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


– Invite all cost estimate review team members


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

who might have a valuable input



who might have a valuable input– Discuss:




■ Constructability methods




■ Constructability methods■ Price sourcing strategy





– What scope will be subcontracted?





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





– 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:


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



– Estimate the time required for each activity



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



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



– 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



– 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.



– 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:


requirements:– Tender closing and submission


requirements:– Tender closing and submission– Cost estimate review


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


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


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


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:


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


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


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


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


– 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



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

project documents, clarifications, etc.)




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




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




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




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


– 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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Cost Estimate Development Sequence