A good estimate must start with a complete understanding of scope of work followed by an accurate quantity takeoff.

It's all too easy to miss out identifying items of work in the project. This may be due to absolutely mundane reasons such as missing drawings, details or specs.

It could be due to a misinterpretation of the scope based on an ambiguous statement or comment. Or, it could be due to a more serious reason such as lack of experience in conceptualizing the work to be performed in the field. Understand your resources and their cost to you - material suppliers, labor force, subcontractors, construction equipment, indirect costs, management.

Easier said than done, this requires a thorough analysis of costs. A cost engineer may very well team up with the accountant, field superintendent, project manager and purchasing manager among others. Even outside labor consultants may be hired to reach cost data to be incorporated in estimates. Remember, such data is not static, but changing in time and periodic review and update is a must.

Evaluate your strength and weakness and establish comparative advantage. This is where the upper echelons of management should participate extensively. Typically, they have the background experience not just within the company but with other companies and industries vis-à-vis competition.

Once the main parameters are established, the middle management in collaboration within departments may detail out the analysis and attach workable numbers. These, in turn, become the ammunition of choice for the estimating department so that they can come up with an estimate that is not only sufficiently low but also profitable for the company.

Determine appropriate Overhead and Profit rates

In order to achieve optimal overhead and profit applications, the step mentioned above has to be completed so that risk factors are established and evaluated. Considering the general description of profit as being the return for taking a risk, it's essential that it has to be a calculated risk. To arrive at these figures, not only the company cost structure and records must be thoroughly analyzed but also competition must be evaluated. In general, it is not recommended to trim bid figures from overhead and profit since they represent the long term viability of an ongoing business concern.

Use sound estimator's judgment and keep an open mind and ear.

When preparing a bid level estimate, care must be taken to identify not only labor and material cost items shown on the plans, but also labor and cost items that may not be reflected on the plans. This is where good estimating and estimator's judgment comes into play. It is right to consult a project manager, an engineer, a field superintendent and even a simple workman.

A few new ideas here and there may mean understanding the project better and trimming estimating costs which may in turn mean a winning and profitable bid as opposed to a disappointing loss.

Outsource with the professionals

Nobody can cost estimate better than the local, matured estimators. They are capable of identifying local costs you might never imagine they have to be included.  Outsourcing not only will give you a peace of mind, it will also help you win many job awards and save important amounts of cash.  

ACE is your ideal cost estimating partner.