99 lines
4.0 KiB
Markdown
99 lines
4.0 KiB
Markdown
---
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id: 2026-05-25T15:02:03-0400
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title: 2026-05-25 15:02:03
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tags: []
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daily: "[[2026-05-25]]"
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---
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# 2026-05-25 15:02:03
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The perceived value of detailed takeoff is baffling
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because its single advantage over reference class forecasting
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(which offers innumerable advantages over detailed takeoff)
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is in itemized pricing,
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but this advantage is nullified
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by the known phenomenon that the precise
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selection of particular items and their quantities
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can not be trusted to be exactly accurate
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due to uncertainty of project conditions,
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and by the observation that material pricing at the time of bid
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is not representative of the cost of buyout.
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The inevitable retort is
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"It's an *est*imate, not an *exact*imate,"
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or some other such reductive dismissal.
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True enough, this method is _a_ way
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of getting close to the true answer of project cost and schedule,
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but it's not an intuitive one.
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For an organizational process to be economical
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it must contribute value greater than its cost.
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Reduction of loss (risk mitigation) is a form of value,
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and is the vector by which detailed takeoff is expected to be economical:
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a more confident estimate (a narrower high-confidence interval)
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allows the organization to bid more aggressively (bid lower)
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without increasing their assumed risk in project execution.
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A lower bid increases the probability of award,
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decreasing the risk that estimating resources will have been wasted.
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We can assume that this is not the vector by which _[[conest|ConEst]]_
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is expected to generate value,
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both because it does not appear to be effective in this regard[^1]
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and because the ConEst estimate is not used as basis to decrease the bid.[^2]
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[^1]: See [[2026-05-22_11-57-18]].
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[^2]: This may be missed opportunity.
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My baseless (and perhaps naive) speculation
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is that a "Hey, we took a closer look and got our price down a bit more"
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may indicate to the customer a [[stag-hunt|stag hunting]] behavior
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that is more valuable than the real decrease in expected profit.
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As an estimating method,
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detailed takeoff is not more _precise_
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(its use does not significantly decrease our certainty),
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but it is more _granular_.
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An estimate based on detailed takeoff can be easily[^3] subdivided
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for use in [[earned-value-management]],
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but its most immediate use is in identifying variation
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from the expected case.
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In other words,
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deciding when overruns can be blamed on mismanagement,
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and when they are simply bad luck.
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[^3]: Depending on the takeoff software.
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The last case is where I'd bet the perceived value of ConEst is found.[^4]
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I can't help but feel that this effort is misplaced.
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If [[pdi-operations|ops]] is like [[pdi-estimating|estimating]],
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I have no doubt that they could _all_ benefit from training.
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Identifying who exactly needs it more, then, is pointless.
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As well to identify which cases of great project success
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can actually be attributed to exceptional management
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and not simply [[the-failure-of-risk-management#Red Baron Effect|the Red Baron effect]].
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[^4]: Crew loading and schedule are important points in estimating,
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and EVM is a fine solution there,
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but it would be straightforward to apply the same RCF principles
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that we use for Bid estimates for these as well.
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That we use detailed takeoff in lieu of such methods
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suggests that it is believed necessary for other reasons.
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***
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Working exclusively in multifamily for this time
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has lead me to spend a lot of time thinking about the question
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of how estimating resources are best allocated.
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My understanding of the industry is that,
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despite the apparent focus on cost,
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executive focus is usually on maintaining a consistent volume of work.
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Because as contractors we are thinly-capitalized,[^5]
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failing to do so seems to represent a larger risk
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than a low-margin contract.
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Under these conditions,
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estimating has very little to do with the project itself,
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so we can make assumptions about it
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that might not normally seem appropriate.
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It is because of our narrow market
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that we get to have these much more interesting discussions.
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[^5]: See [[merrow_2022_contract-strategies]].
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