99 lines
2.7 KiB
Markdown
99 lines
2.7 KiB
Markdown
---
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id:
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aliases: []
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title: Risk Management for Construction Estimating
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tags:
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- authorship/original
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- destiny/permanent
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- status/incomplete
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- topic/construction
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- topic/estimating
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- topic/risk
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- type/cross-topic
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---
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# Risk Management for Construction Estimating
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Cross-topic of [[risk-management]] and [[construction-estimating]].
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## Prioritizing Tasks
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ROE prioritizes estimating tasks by their contribution to _cost certainty_.
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### Estimating as Risk Mitigation
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* reduce risk of wasted estimation effort due to bid loss
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(prefer lower bid)
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* reduce risk of project overrun
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(prefer higher bid)
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Estimating resources are allocated by Return on Mitigation (RoM)
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### Determining Necessary Detail
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ROE determines the appropriate level of [[estimating-detail]]
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given an organization's [[risk#Risk Tolerance]].
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#### EVI Takeoff
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Expected value of information (EVI)
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#### Takeoff Optimization
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For systems where EVI analysis determines manual takeoff is still necessary,
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optimizations can be made to decrease the required effort of takeoff,
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and thus the opportunity cost of takeoff.
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See [[optimal-estimating-patterns]] for more.
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# Estimating Detail
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The acceptable level of detail of an estimate
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in [[construction-estimating]] is a contentious subject.
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What's worse, estimators often disagree
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on what makes an estimate more detailed than another.
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The commonly repeated answer is this:
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> As detailed as possible,
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> given required turnaround and available estimating resources.
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This analysis is flawed
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because it implies more time always ought to be preferred,
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when the reality is that when considering larger organizational factors,
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ideal estimate certainty is likely far lower than most expect.
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The correct answer involves optimizing for these factors:
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* value of increased bid certainty
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* value of increased estimate volume
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An estimate's detail is irrelevant to its quality.
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A less detailed estimate is a more [[risk|risky]] bid,
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but it is not the role of the estimator to determine acceptable risk.
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## Experiment
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Perform a system takeoff (lighting for example) in exacting detail,
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the maximum amount you would ever consider using,
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and measure the time required to do so,
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as well as the cost of the scope.
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Have another estimator takeoff the same scope
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using the proposed time saving strategy.
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Repeat the test on additional projects.
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Treat the detailed takeoff as the true value
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and find the error of the time saving strategy.
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$\frac{d\sigma}{dt}$
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### Expectation
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Time-saving strategies will overestimate or underestimate detailed takeoff
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depending on the assumptions used in their creation.
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## Human Error
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It is commonly understood that a "detailed takeoff"
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is more "accurate" than a square foot estimate.
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