Invest in getting estimates right

Estimating is the earliest stage of involvement a contractor has on a construction project. Despite often being the shortest phase, it sets the whole scene for the rest of the project. If you get it wrong, you live with the consequences for the rest of the project, making it vital to get it right first time.

The art of estimating is a balancing act. Too high and you will be consistently beaten on price by your competitors. Too low and you will lose money before you have started. You have to gauge the level and aim for the right position, which is a very small window. That is why it is important to face estimating and tendering with a thorough understanding of the entire process.

As an estimator or bid manager, the success of the business relies on you hitting that window as it impacts the performance of the company as a whole. There are, of course, alternative procurement practices that look at factors other than price. I believe we will, and need to, start focusing on the long-term implications on the relationships that we build and the professionalism that we demonstrate as an industry through these practices. As you start to focus on building beneficial relationships with clients, previous reputation becomes increasingly important as does demonstrating consistency.

The approach of tendering low and gaining profits from the claims that come later is not a desirable characteristic of the industry nor one that we should persist with. It results in a situation where no one wins, especially the public who are left with poor quality buildings. Instead, we should focus on how we can demonstrate to clients that we are a professional industry. By having a thorough understanding of components and the creation of estimates, we are more likely to have an end product and cost that was expected and desired – and gain repeat business as a result.

Professionalism in construction is at the heart of the CIOB, which is why it was great for it to take this topic seriously and launch the new Estimating and Tendering course. By investing the resources of the CIOB Academy in this process, it provides an opportunity for those interested in estimating and tendering to discuss both principle and practice in order to inform and improve their day-to-day working. Last year, the CIOB also updated the Code of Estimating Practice, which has built on the previous versions but started to provide greater levels of detail and context for the theory. The code is a great starting point for construction professionals involved in estimating and contracting, with the course breaking it down into digestible pieces to put the code into practice.

One problem I have seen over my years is that often those responsible for estimates are also project managers who have come off one project straight into estimating for the next. Any challenges or difficulties faced on one project can lead to disenchantment with the next, and motivation can be low to kick-start another project. We need to be able to pause and separate projects, allowing us to reset ahead of the estimation process and approach each one afresh. As I say, estimating is the first building block to every project. Let’s get it right first time and set the example for the rest of the project.

[edit] About this article

This article first appeared on the CIOB website in February 2019 and can be accessed here. It was written by John Parry, director at Rogerson Parry. Mr Parry provides training for the CIOB Academy’s Estimating and Tendering: Principles and Practice course, launched in November 2018 to support professionals in the industry and improve their success when pricing and bidding for work.

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• Accruals.
• All-in rates.
• Approximate quantities cost plan.
• BCIS.
• Bills of quantities.
• Business plan.
• Contract sum.
• Contract sum analysis.
• Cost control.
• Cost monitoring.
• Cost overruns.
• Difference between cost plan and budget.
• Elemental cost plan.
• Estimate.
• Final account.
• Front-loaded costs.
• Initial cost appraisal.
• Measurement.
• New Rules of Measurement.
• Order of cost estimate.
• Overheads.
• Pre-tender estimate.
• Spon's Price Book.
• Tender pricing document

--CIOB