Cost Estimating Woes
Cost Estimating Woes
(OP)
Has anyone had the experience of giving a cost estimate to their supervisor and then supervisor reduces the amount of the estimate? Then the bids for the work come in and they are over the estimated cost of construction. Anyone else had that experience?





RE: Cost Estimating Woes
RE: Cost Estimating Woes
Probably happens more frequently at the smaller firms where there is little or no access to estimating references and resources as well as no trained estimating professionals.
Protect yourself by keeping a paper trail. Make the scope in your estimates more descriptive and detailed. Obtain quotes on items.
It is not likely that someone would be willing to lower the estimate when there are indisputable facts staring him in the face.
RE: Cost Estimating Woes
Remember though, it is 'An Engineers Opinion of Probable Cost', not a cost estimate. (I suppose there is some legal interpretion between the two which is lost on me) I think what is more important is making sure you quantities are correct (Ie cut/fill, asphalt/concrete, sewer pipe, water, FH, etc)
Here is a hypothetical situation that someone told me once. Suppose you screw up your quantity estimate and did not count 1,000 feet of storm pipe. A savy contractor in business for 30 years sees your mistake but keeps his mouth shut.
On his bid, he lowballs everything except storm pipe, which he hyper-inflates. Overall his bid comes in low (gets the contract), but his unit cost for storm sewer is $500 per linear foot.
Then when the inevitable change order comes, he can point to his agreed upon bid amounts and make a killing....or so the story goes...wonder if that could happen.
RE: Cost Estimating Woes
RE: Cost Estimating Woes
RE: Cost Estimating Woes
RE: Cost Estimating Woes
Ultimately, the agressive use of risky subcontractors who later defaulted proved to be our biggest problem.
The unit head/supervisor also understands his cash flow, revenue and overhead needs. The supervisor may be more or less aggressive depending on those needs.
I always figure things worst case or include easy items to cut out. The supervisor then has easy targets to reduce costs. They are satisfied they did their job, and the guts of the estimate remain.
RE: Cost Estimating Woes
It is a crude management tool that the less sophisticated and even some large comapnies use to drive their people harder.
If a company takes risks and low bids to get work and then screws suppliers they will eventually go bust. What happens is suppliers and subbies quote high to the company at bid stage expecting to get screwed down to the price they need. Eventually the company stops winning work and goes belly up.
Some old adages in this business:-
1) Do not contract risk.
2)Any fool can get work with a low bid.
3)If a price is too low then do not expect what you have asked for.