The different methods of cost estimating

January 11, 2022

First Principles Estimating

First principles estimating is considered to be best practice and the most accurate method of estimating possible.  It is used by millions of estimators, engineers and project managers all over the world.  

The following list shows some of the main estimating methods within Benchmark Estimating. Many customers even use a combination of these methods within the one project to maximise the flexibility and speed of estimate preparation.

Running a “routine”

A Routine is ideal for any estimating task that has multiple parameters and is repetitive in nature. They are used by clients who need to price repetitive day-to-day quotes quickly and accurately, for the rapid pricing of detailed, individual Items in an estimate and they are also ideal for pricing of repetitive maintenance tasks. Routines are completely customisable to your business and can be written by you to suit your needs.  Routines not only speed up estimating, they capture knowledge of senior personnel and add intelligence into your estimating and business processes.

Adding pre-defined items to create your own schedule/scope of work

This method is ideal when you are creating the schedule of Items (scope of work) for a project.  You can add pre-built Items from a central Item Library or from a previous Project.  After you add Items into an estimate, they can then be easily adjusted if required to suit the Project; the estimator can make many project specific adjustments including changing production rates, variables (for depths, widths, hours per day, wastage, density etc) and much more.   Using the Benchmark Item Library offers huge benefits in terms of increased consistency, minimises the risk of leaving costs out of an estimate and maximises productivity.

Pricing new items

If you haven’t priced an Item before and don’t have a similar one in your Library or in a previous Project, Benchmark Estimating allows estimators to build up Items, even complete Projects, from first principles.  You can do this by adding in your Labour, Materials, Plant and/or Subcontract components from your central Resource Library, or you can also add project-specific Resources.  When building up Items you have the powerful “Resource Calculator” feature at hand to help you calculate your quantities, and you can utilise the full suite of features like Variables and Production Rates to assist you in this process.

Importing a bill of quantities

If you are given a bill of quantities from a client, you can import this automatically into your Benchmark Estimating estimate. You can then price this bill using many of our software’s features and one way is with the powerful “Auto Allocate” function.  A bill of quantities can be imported from spreadsheets and also from leading design and quantity takeoff software, such as On-Screen Takeoff.

Pricing maintenance contracts with “auto allocate from project”

If you estimate schedule of rates contracts for maintenance projects we have an ideal and purpose written solution for you.  Following your successful contract award, the original quote in Benchmark Estimating becomes your “master” project which contains your accepted schedule of rates and their build ups.   When required to price “work packages” during the execution of the contract you can simply import the new bill of quantities and use our powerful “Auto Allocate from Project” feature.   This uses the rate build up and submission rate from the accepted quote and prices your new “work package” automatically.  It can even update your direct costs based on changes in your Resource Library to give you an accurate estimated margin, which in turn allows project managers to fine tune their budget for maximum profitability.  Foreach subsequent year of the contract (or at whatever time period is required)you can easily apply an escalation % to update your submission rates.

Pricing multi-site projects with “power routines”

If your project involves similar operations at many different sites/locations, Power Routines is ideal.  Power Routines allow for consistent data capture about the parameters/requirements of each site, and then runs a Routine to price the work at each site.  Power Routines can create your complete estimate in seconds, giving the estimator more time to review and fine tune your bid. These will help you to dramatically improve the speed and consistency of estimating these important, major projects.

Parametric estimating

Benchmark Estimating facilitates many estimating scenarios and a very specific one is parametric modelling.  This method makes excellent use of various features especially our Variables function and powerful calculation and formula functionality.  Clients can set up“ models” or “template projects” and duplicate these for each new estimate, then simply adjust their variables/parameters and instantly see the impact on the price.

Three point estimating

This method of estimating will produce a minimum, most-likely and maximum price for a Project based on “three-point-estimating” techniques and probabilistic Risk Analysis and Monte Carlo Simulations.  

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