An estimate should comprise of the following:
- A description of the project scope
- A list of information on which the estimate is based
- The proposed contract strategy
- The assumed installation techniques
- The project schedule milestones
- The currency exchange rates used and estimated inflation
- The assessment of project risks and contingency
- The base date of the estimate and its estimated accuracy.
The principles of estimating are the same for all disciplines, and it involves a number of distinctly different components:
- A database
- An algorithm
- The effect of people's attitudes
- Definition of scope
- Definition of method of execution
- Identification of the risks.
The estimating approach depends on:
- The status of the estimate basis (see 2c below)
- The end use of the estimate:
- funding of the project
- preparation of tender documents
- tendering for project
- finalizing project funds
- The need for details
- Previous historical data
- The tools available
- The time and budget available for preparing the estimate.
This last item is perhaps the overriding determinant. If a senior executive asks for an ‘off the cuff’ number, it could be anything from +/–50 per cent to +/–100 per cent, depending on our experience and ability to interpret the crude project description. The problem is that the first number quoted is always remembered. Consequently, one should quote a range. However, if we are allowed to spend £500,000, and have three months, we could probably ...