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The Purpose of Construction Estimating | true |
The Purpose of Construction Estimating
The purpose of construction-estimating in practice is not to determine the actual cost of the scope, which would take far longer than allotted for bid,
The Myth of Estimate Accuracy
This is a dangerous superstition which encourages unproductive conflict.
Operations is blamed for failing to meet targets not intended for the purpose, ...
Construction contract bids are inherently risky.
Executives want to bid because construction can be profitable. Executives hire estimators to mitigate risk of loss.
An estimator's value is determined by their
An estimator's job is to mitigate
Estimators downplay estimate risk in order to receive approval to bid
It is not possible to measure productivity from estimate quantities.1
For Each Party
For the Solicitor
System Coordination
Determine Feasibility of Functional Requirements
See gold-plating.
For the Contractor
- Make profit to meet growth target
- Secure work for current and projected employees (fill backlog)
%% TODO: "Determine the sale price of a service" %%
[!aside] I take increasing issue with the common model of measuring operational success by negative overrun, as it is incompatible with the preferable target of estimate certainty.
The Role of the Estimator
The role of the estimator is to model the potential cost distribution of the project, taking actions to reduce the model's uncertainty.
The effect of estimating methods can be represented as d\sigma,
thus efficiency is \frac{d\sigma}{dt}.
The Role of the Executive
The role of the executive is to allocate profit and contingency according to the potential cost distribution weighted by the organizational desire to win the project.
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Not with certainty anyway. With Bayes, though, anything is possible. ↩︎