vault backup: 2025-09-25 16:45:58

traditional-estimating-methods.md

@@ -17,3 +17,39 @@ are those [[construction-estimating]] methods that produce:
 * a single, definitive final price for each bid item
 
 Such methods lack the ability to intelligently express [[uncertainty]].
+
+### Limitations of Traditional Estimating Methods
+
+Traditional estimating methods, sometimes referred to as "Detailed Takeoff",
+seek to detail all constituent subcosts,
+including 100% itemized pricing by way of a *material extension*,
+a complete list of all material included in the price.
+
+For clarity and contrast to [[risk-oriented-estimating]],
+which does not require itemized pricing,
+I'll refer to these methods as "item-oriented estimating".
+
+By popular belief, item-oriented estimating is the only "correct" way to estimate,
+however few to no estimators create 100% "Detailed" estimates
+as the effort would require a significant increase in estimating time
+for little reward in overall **precision**.
+
+> [!info] Pareto Principle
+> The Pareto principle states that for many outcomes,
+> roughly 80% of consequences come from 20% of causes.
+> 
+> In the case of estimating efficiency, this means that optimal strategy
+> is to focus on the 20% of estimating effort
+> representing 80% of the overall efforts contribution to the total.
+
+It is popular to dismiss alternate estimate models as potentially inaccurate,
+but this dismissal fails to acknowledge
+the potential for _much greater_ inaccuracy in item-oriented methods.
+While an estimate based on item extension is 100% **precise**,
+in that it computes to single final number,
+the method has no such inherent guarantee of **accuracy**.
+It relies on the estimator to miss absolutely nothing,
+and to adjust for all labor conditions and market factors _exactly_.
+
+Most estimators wouldn't rate their margin of error at less than 10%,
+though most would refuse to answer anyway (see [[estimating-culture]]).