1. Basic Principles of Estimating
DR. Nabil Dmaidi

2. Estimating A prediction of probable cost.
Is figuring out how to put the pieces together in the most economical manner.
Estimating is both art and science.
DR. Nabil Dmaidi

3. Estimating (cont.) Identify and quantify the pieces-takeoff.
Identify construction methods.
Engineering - Will it be stable during construction?
Productivity
DR. Nabil Dmaidi

4. Bidding is NOT the same as Estimating
Identify RISK
How do you get paid?
DR. Nabil Dmaidi

5. Successful Estimating
Contractors are not in business to win bids.
Contractors are in business to make money.
Estimating is the base of a company’s success.
DR. Nabil Dmaidi

6. Estimating for Profit
Good estimating minimizes contractor’s risk and facilitates project management and defines the scope of work.
The estimate is the plan that furnishes the field people with all the details in a controlled and prearranged format.
DR. Nabil Dmaidi

7. Estimating Requires: Skills Effort
Above all, an organized system that will prevent errors and omissions.
DR. Nabil Dmaidi

8. Estimating is very expensive; therefore, we must use our time wisely and effectively if we are to be successful.
DR. Nabil Dmaidi

9. Size of Project in Thousands of Dollars
Cost of Estimating
Chart 1 55 50 A 45 40
hours B 35 30 25 C 20 15 10
100
200
300
400
500
Size of Project in Thousands of Dollars
A Simple project
B Medium complexity
C Difficult project
DR. Nabil Dmaidi

10. Cost of Estimating (cont.)
Chart 2
170
160 A
150
140
130 B
120
hours
110
100 C 90 80 70 60 50 40 30
1.5
2.0
2.5
3.0
3.5
Size of Project in Millions of Dollars
A Complex
B Medium complexity
C Simple
DR. Nabil Dmaidi

11. Profit Should Correlate to Risk
Job Comparison
Compare two jobs of identical direct cost, yet very diverse in overhead and risk factor:
Job “A” Job “B”
Material $200,000 $100,000
Labor , ,000
Subcontractors , ,000
General Expenses , ,000
Subtotal , ,000
, ,000
, ,500
Selling Price $423,500 $423,500
DR. Nabil Dmaidi

12. Profit Should Correlate to Risk (cont.)
Job Comparison
# labor 7 7 7 6 6 5 5 5 5 5 5 4 1 2 3 4 5 6 7 8 9 10 11 12
week
12 weeks  65 labors 15 15
# labor 10 10 3 3 3 3 2 2 2 2 1 2 3 4 5 6 7 8 9 10 11 12
week
12 weeks  65 labors
DR. Nabil Dmaidi

13. Profit Should Correlate to Risk (cont.)
Materials Low to medium risk
Labor High risk
Subcontractors Low risk
General Expenses Low risk
DR. Nabil Dmaidi

14. Accuracy is Critical for Success
A typical project can be broken down as follows:
Material %
Labor %
Equipment Expenses 8-10%
Overhead 10%
Profit 2%
DR. Nabil Dmaidi

15. Common Estimating Mistakes
Misread or misinterpreted specifications, drawing, or any other contract document
Takeoff omissions or overlaps
Missing quotes
Estimating by unit prices
Using the percentage method to establish the cost of certain systems
Prorating indiscriminately
Crumbling under pressure to procure work
DR. Nabil Dmaidi

16. Common Estimating Mistakes (cont.)
Cutting prices to meet or beat someone else’s quote
Underestimating the complexity of a project
Expecting an excessive amount of favorable changes
Overemphasizing volume purchasing
Undertaking a project with incomplete bid documents
Scaling drawings
DR. Nabil Dmaidi

17. How to Improve your Estimating Procedure
Company labor tables and current material prices should be stored in your database.
Manual estimating is not cost effective and it is subject to more errors and omissions.
Computerized estimating should automate and expedite the manual estimating process.
Establish the company labor unit sand labor factoring tables.
Maintain current material pricing.
Establish an estimate review procedure.
DR. Nabil Dmaidi