Estimation’s 7 Capital Sins: how to avoid those accidental pitfalls!


Project estimation or development work is one of the most arduous responsibilities for many construction industry professionals. It is, however, one of those unavoidable duties that must be carried out, often at several points throughout the project.

Estimation is done upfront to cost the project and map out timeframes. Other estimates include the estimate for change orders during the project, and clients are frequently offered ballpark estimation figures on work they ‘might’ want to be done.

Have you ever wondered how precise are your projections? According to a poll conducted by QuickBooks and TSheets, roughly 1/3 of construction companies earn less profit than predicted based on their projections. That’s not unexpected, given that 40% of participants aren’t sure how accurate their estimates are.

It’s unlikely that one incorrect estimate on a money-losing project will knock you out of business. You can find yourself completely ending your business if you tie together a few unproductive initiatives. Only two or three incorrect estimates, according to 25% of all respondents, would be enough to bankrupt their business.

Even though meeting the estimation targets appears to be a difficult endeavor, most contractors commit common estimation blunders. As a result, contractors frequently experience cost overruns, delayed project delivery, and late payments as a result of inaccurate estimation.

Estimate, Estimation, Civil Engineering, Cost Management, Whole Life Cycle Costing, Optimism Bias
Estimate, Estimation, Civil Engineering, Cost Management, Whole Life Cycle Costing, Optimism Bias

Project estimation

Let’s see what are the common project estimation pitfalls that occur in construction project management, and how they can be avoided. 

Estimation Based On Unclear Project Needs

Client business needs, end-user usability requirements, functional requirements, and others are all part of the project requirements. You won’t be able to create reliable cost estimates until you have a clear understanding of project requirements obtained from the perspective and understanding of your client’s subject matter experts. Nonetheless, as you carry out the project based on those erroneous estimates, you find yourselves receding farther and further away from the base projections as you learn more about what it will take to finish the project.

How to Avoid

To overcome this, considerable time for requirement analysis should be set aside; The project’s end-user officials should be trained on how to best add value to requirements definition; Additionally, the team members should be educated to delve deep into those requirements. Furthermore, the project requirements should be documented in extensive detail, utilizing a structured technique that eliminates the uncertainty that occurs with traditional English narratives.

With well-crafted specifications, you’ll be in a better position to create more accurate cost estimate that your clients can trust.

Inability to Account for Bias, Pessimistic and Optimistic Perspectives

The project manager must be mindful of their own bias, as well as that of the project team and management. Pessimistic bias occurs when a person intends to add time because they believe it will take longer or there will be some sort of blunder. Let’s not be too harsh on this character. They frequently have strong reasons for taking this strategy, which is most likely based on their previous experience or the fact that they can perceive enormous gaps in the scope’s description. This must be balanced against the optimistic bias. 

This upbeat type tends to feel that everything is easy and that more can be accomplished than is practical. For instance, suppose an SME is asked how long it will take to complete a set of tasks. The quote is predicated on them doing the assignment flawlessly, without taking into account the experience of the individual(s) involved in the task. Optimists who wish to be viewed as having a “can-do” attitude are the most harmful. A project manager needs to have a “can do” mentality, but it must be matched with realism, as with many of these buzzwords.

Some people believe that they can complete a task in a few days without any problem however, in reality, it is not achieved. The real estimate is often not fulfilled. 

How to Avoid

The recommended thing to do is to adopt a behavior that is a blend of optimism and pessimism. The project manager should believe that he along with his team can complete the project in a fixed period, but that estimated fixed time estimate should match realism. 

Estimate, Estimation, Cost Management, Whole Life Cycle Costing.
Estimate, Estimation, Cost Management, Whole Life Cycle Costing.

Project Risks Are Not Taken into Account 

This relates to the preceding point about being overconfident. Cost estimation goes hand in hand with risk planning. Every project contains risks, and it’s the job of Project Managers to detect them early and evaluate how they may impact the project. Risk management is an important part of the planning process, but many of the hazards we face are tied to people. For instance, what if the technical architect is unable to complete her present project on time; how will she be replaced with someone having comparable or superior abilities?

How can a reliable acceptance test be ensured if the client’s project team includes bad user acceptability testers? How can a potential delay be avoided if an equipment vendor agent fails to deliver on its promise of early delivery?

How to Avoid

To mitigate this error, such risks must be taken into account, appraised in terms of their likelihood of occurring, and reflected in cost projections. Not all of them will happen. Some will only take place in part, with limited consequences. Some will happen. It’s prudent to be realistic about potential risks in order to avoid being caught off guard later on.

Failing to Understand Quotations and Estimations 

 An estimate is a prediction, but a quote is a defined price. When a customer requests a quote, it’s critical to make sure you know exactly what you’re pricing for. Fixed-price contracts are frequently agreed upon without enough study and description of the needs. Particular vigilance should be exercised where you or your organization is attempting to win business.

How to Avoid

In this case, it’s critical that you spend a little extra effort upfront defining and agreeing on the scope. The extra time spent now could spare you from a later loss-making endeavour. There are projects where the scope is not clearly specified and the project ends up costing much more than it should. 

Making Informed Guesses

It’s astonishing to believe that people in the industry still rely on educated assumptions when there’s so much information available online, historical databases, and cost estimation software.

It’s a risky move for your company to make, and it’s a horrible thing to do. It’s a guaranteed technique to raise the chances of your company having to deal with expense overruns.

How to Avoid

It has been witnessed when a team is under pressure to complete the bidding process fast it begins to cut corners.

As a general guideline, all expenses should be based on the most up-to-date information available.

Failing to Double-Check Your Construction Estimate

Creating a cost estimate is a time-consuming and exhausting procedure, and the prospect of going over all of the documentation at the end might feel like a penalty. 

While it’s tempting to think that what you’ve put together is correct based on past experience, your estimates should always be double-checked, either by yourself, a colleague, or a third party.

How to Avoid

Everyone makes mistakes from time to time. Even the most seasoned estimators can be fooled. Small margins of error accumulated over time might add up to a significant financial burden that will almost certainly have to be paid for out of your own pocket. The importance of this cannot be overstated. Check, check, and double-check.

Estimate, Estimation, Cost Management, Civil Engineering, Whole Life Cycle Costing
Estimate, Estimation, Cost Management, Civil Engineering, Whole Life Cycle Costing

Final Thoughts

Construction project estimation is a thorough and extensive project which requires detailed efforts and careful execution. However, everybody can make errors even the most experienced project managers commit mistakes during cost estimation. It’s never late, you can learn from those mistakes that damage your business and take the necessary actions to avoid them. 

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