88 lines
2.4 KiB
Markdown
88 lines
2.4 KiB
Markdown
---
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id:
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aliases: []
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tags:
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- estimating
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---
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# Construction Estimating
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Construction estimating is a subset of cost estimation.
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## Purpose
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The purpose of [[construction-estimating]] in practice
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is not to determine the cost of the scope,
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which would take far longer than allotted for bid,
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### For the Solicitor
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* Determine feasibility of functional requirements
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> [!info] Type 2 Owners
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> For some owners, money is no object,
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> and standardization is far more important
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> than any potential construction savings.
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>
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> These owners can be expected to decline every [[value-engineering]] option offered
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> (see [[gold-plating]]).
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### For the Contractor
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* Make profit to meet growth target
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* Secure work for current and projected employees (fill backlog)
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%% TODO: "Determine the sale price of a service" %%
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> [!aside]
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> I take increasing issue with the common model
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> of measuring operational success by negative overrun,
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> as it is incompatible with the preferable target of estimate certainty.
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#### The Role of the Estimator
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The role of the estimator is to model the potential cost distribution of the project,
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taking actions to reduce the model's uncertainty.
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The effect of estimating methods can be represented as $d\sigma$,
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thus efficiency is $\frac{d\sigma}{dt}$.
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#### The Role of the Executive
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The role of the executive is to allocate profit and contingency
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according to the potential cost distribution
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weighted by the organizational desire to win the project.
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$$
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{E}[P]=
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$$
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## Misconceptions
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### Standard Practices
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In general, many things thought to be standard are quite the opposite.
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* Use of square receptacle symbols
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### Proposals
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Proposals are not legally binding,
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which is a double edged sword
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for intermediate subcontractors like electrical:
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* Proposals to GC's can be withdrawn for any reason
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* Proposals from subcontractors can be withdrawn for any reason
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This is obviously not popular practice,
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however it is important to recognize
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that errors aren't set in stone
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until a contract is signed.
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Destigmatizing proposal retraction is of critical concern for subcontractors.
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See [[estimating-culture]] for more on estimate error game theory.
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It's important to recognize that retracting a proposal
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may upset a few people employed by the GC,
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but consider how little your own opinion matters to your company's strategic decisions.
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Much bigger people are involved after the proposal is accepted.
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