At the outset of the project, when the scope and definition are in the early stages of development, little information is available, yet there is often a need for some assessment of the potential cost. The owner needs to have a rough or approximate value for the project’s cost for purposes of determining the economic desirability of proceeding with design and construction. Special quick techniques are usually employed, utilizing minimal available information at this point to prepare a conceptual estimate. Little effort is expended to prepare this type of estimate, which often utilizes only a single project parameter, such as square feet of floor area, span length of a bridge, or barrels per day of output. Using available, historical cost information and applying like parameters, a quick and simple estimate can be prepared. These types of estimates are valuable in determining the order of magnitude of the cost for very rough comparisons and analysis but are not appropriate for critical decision making and commitment.
Many situations exist that do not warrant or allow expenditure of the time and effort required to produce a detailed estimate. Feasibility studies involve elimination of many alternatives prior to any detailed design work. Obviously, if detailed design were pursued prior to estimating, the cost of the feasibility study would be enormous. Time constraints may also limit the level of detail that can be employed. If an answer is required in a few minutes or a few hours, then the method must be a conceptual one, even if detailed design information is available. Conceptual estimates have value, but they have many limitations as well. Care must be exercised to choose the appropriate method for conceptual estimating based on the available information. The estimator must be aware of the limitations of his estimate and communicate these limitations so that the estimate is not misused. Conceptual estimating relies heavily on past cost data, which is adjusted to reflect current trends and actual project economic conditions.
The accuracy of an estimate is a function of time spent in its preparation, the quantity of design data utilized in the evaluation, and the accuracy of the information used. In general, more effort and more money produce a better estimate, one in which the estimator has more confidence regarding the accuracy of his or her prediction. To achieve significant improvement in accuracy requires a larger-than-proportional increase in effort. Each of the three conceptual levels of estimating has several methods that are utilized, depending on the project type and the availability of time and information.
Written by : James E. Rowings, Jr.