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Traditional Estimating Methods |
Traditional Estimating Methods
Also "single-point estimation" as opposed to the standard three-point.
"Traditional estimating methods" as referenced frequently in this notebook are those construction-estimating methods that produce:
- an exhaustive and specific bill of material
- 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).