---
id: risk-oriented-estimating
aliases: []
tags:
  - topic/estimating
  - topic/risk
---
# Risk Oriented Estimating

Risk-Oriented Estimating (ROE), is a methodology for [[construction-estimating]] which
* prioritizes estimating tasks,
* determines necessary [[estimating-detail]]

ROE leans heavily on [[uncertainty#Value of Information]],
which challenges the natural tendency to shy from uncertainty
with the reality of the cost of certainty.

ROE does not endorse common shortcuts that round up to "cover" uncertainty,
as these ultimately _increase_ risk by inflating the apparent project cost,
increasing the probability of loss to a competitor.

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## Scratch

Bid risk may fit a [Taleb distribution](https://en.wikipedia.org/wiki/Taleb_distribution).

Actuarial Science

Estimating as risk mitigation,
resources allocated by Return on Mitigation (RoM)

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## Prioritizing Tasks

ROE prioritizes estimating tasks by their contribution to _cost certainty_.

## Determining Necessary Detail

ROE determines the appropriate level of [[estimating-detail]]
given an organization's [[risk#Risk Tolerance]].

### EVI Takeoff

Expected value of information (EVI)

### Takeoff Optimization

For systems where EVI analysis determines manual takeoff is still necessary,
optimizations can be made to decrease the required effort of takeoff,
and thus the opportunity cost of takeoff.

Count-based takeoff speed increases with count.

Optimizing the takeoff process means:

* _Minimizing_ the need for information outside of drawings
* _Maximizing_ organizational consistency

> [!note]
> Recent events have complicated my philosophy above.
> It appears that similar efforts have already been made here,
> their success being a matter of perspective.

#### Naming Conventions (Use Case vs. Description)

Naming by use case is intuitive for those without estimating or field experience,
but has the side effect that those accustomed to the names
will inevitably _treat them as descriptive_.

| Use Case            | Description   |
| ------------------- | ------------- |
| Hi-Hat              | Daisy-Chain   |
| Furnished By Others | Rough-In Only |

## Going Further

[[functional-labor-factoring]]
