Top 5 tips for accurate cost estimating

It’s one of the finer skills of the Quantity Surveyor and whilst technology supports the process from Question to Answer, don’t ignore the fundamentals which will help you provide the most accurate estimate or cost plan. Here are some top tips to bear in mind when your client picks up the phone;

  1. Basis of estimate

Your estimate or cost plan should always be an appropriate response to the information provided, framed by the design stage and the purpose, not the other way around. The RICS provide useful guidance on information requirements, as to the RIBA in their plan of work. Educate yourself as to what can be reasonably expected in terms of the basis of your estimate and don’t be afraid to stand your ground when it comes to expectations. Far too often we are asked to provide detailed cost plans on less than detailed design information.

  1. Inclusions, not exclusions

Artist’s don’t paint 90% of a picture, neither should Quantity Surveyors. Your client will appreciate your expertise and consideration of all of their costs, even if it’s just your ‘best guess’. There’s no use excluding Asbestos removal if the building you’re refurbishing is riddled with it. No-one really reads the fine print do they? So don’t trip your clients up with exclusions, opt outs or caveats, unless you categorically have to!

  1. Market

Do you really understand the market? Ask yourself that question. If not, you need to. Tender price inflation is volatile, costs are increasing, prices are fluctuating. NRM2 encourages the tender price inflation and construction inflation approach to re-basing estimates. But should we also be looking at package specific inflation factors for structural steel, which can be commanding up to 10% from the supply chain to fix the price for a year? I think so.

  1. Contingency

It’s not as simple as a percentage…..albeit functionally, it can be expressed on this basis. We need to consider risk, design development, potential for scope changes and general project contingency for unforeseen. All of these categories of contingency need to be considered separately and the process by which they are calculated varies significantly. Consider a risk register. Consider the state of the design information. Consider the appetite the client has for changing their mind. Consider the site logistics and the type of project. In summary, don’t cut corners when it comes to contingency, have a good hard think about what this really means.

  1. Benchmark

“Your estimate is high” – how many times have you heard that line? Buildings always cost more than your client wants them to, unless the brief is abject opulence at any cost. In anticipation of this, or similar responses from your client, give them some insight into what a building should cost, so at least they have some context. I recognise that a ‘green’ client’s view of the world may differ significantly from one with a wealth of experience but that doesn’t mean to say this isn’t a relevant added extra.

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