STRATEGIC ESTIMATING:
3 ESSENTIAL ESTIMATING PRACTICES FOR COMPLEX BUILDS
BEST PRACTICES FOR ESTIMATING IN CAPITAL CONSTRUCTION
As you explore the following estimating best practices, know that they arose from the collective wisdom of industry-leading estimating teams. The first practice addresses a fundamental aspect of estimation: using historical data. The following two are also critical aspects: standardization and automation, especially the automation of repetitive tasks. Once you start incorporating these practices, you’ll enjoy better accuracy, higher efficiency, and — most importantly — greater profitability.
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USE HISTORICAL DATA
Historical data is the bedrock of precise estimating. But there’s a challenge: How do you manage fragmented data spread across personal drives and digital archives? The thing is… scattered data happens. It’s the frequent result of siloed and legacy systems, team changes, evolving project scopes, and the sheer volume of data generated over the life of a project. The real difficulty in working with historical data is synthesizing all the diverse, extensive datasets to inform accurate estimates for complex, changing construction projects.
Top estimating teams use technology to gather and retrieve data — and to apply advanced normalization and filtering methods. Advanced normalizing might mean aligning cost data from different countries or eras, accounting for inflation, or adjusting productivity rates for varied labor conditions. Complex filtering might mean discerning which data — for instance, historical weather patterns, local labor laws, and previous supply chain disruptions — will most accurately inform the estimate. Both techniques call for accurate historical data.
STRATEGIC ESTIMATING SAVES TIME AND LEADS TO FASTER, MORE CONFIDENT BIDS.
When expert estimators find inconsistencies and gaps in historical data — like incomplete material usage records or labor productivity variations — they view the discrepancies as opportunities for indepth exploration and pattern recognition. If tight deadlines add pressure, top estimators resist relying on intuition. Instead, they use advanced software to find and focus on the data that will lead to consistent, comparable data exactly right for new projects.
Innovative estimators also update their internal databases regularly. Doing so turns historical data into an asset, ready to give reliable benchmarks at any moment for any project. Strategic estimating saves time and leads to faster, more-confident bids. And just like that, your team could earn a reputation for being trendsetters, using lessons from the past to fuel future victories. Using historical data in your estimating practice calls for four elements: Normalized internal benchmark data, filtered data dimensions, allowances based on past cost ratios, and the fedback actuals that close the data loop and keep your data current.
“The precision we get from InEight Estimate provides the confidence we need. In today’s competitive marketing, there’s no room for error in our estimates.”
- Bob Carlson, Director of Estimating, Hunter Contracting Company
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NORMALIZED INTERNAL BENCHMARK DATA
In large-scale construction projects, like a new subway line, experienced estimators know that normalized internal benchmark data is not just about aligning numbers like labor productivity rates and unit costs. It’s about interpreting and applying historical data about past project successes and failures to current projects, changing market conditions, and complex urban environments. In other words, the estimating function isn’t about looking for data. It’s about seeking insights to drive innovation and efficiency in current projects.
Suppose you’re normalizing data for a subway project. In that case, you might encounter historical patterns that reveal efficiency gains in tunnel excavation due to technological advances or shifts in the regulatory landscapes that affect material costs. How do you adjust for factors expected in an urban setting or forecast whether market trends will affect costs? Will the latest new materials keep expenditures down? Where could you use new construction methods to shorten schedules, minimize wasted resources, or improve safety measures? This forward thinking approach turns estimators into strategic advisors who can give genuine insights that make or break the success of a project.
THE ESTIMATING FUNCTION ISN’T ABOUT LOOKING FOR DATA. IT’S ABOUT SEEKING INSIGHTS TO DRIVE INNOVATION AND EFFICIENCY IN CURRENT PROJECTS.
“I like the accuracy of InEight Estimate, and knowing that I don’t have to worry about errors in a spreadsheet. I really like the quote management system. It’s very robust and allows us to analyze. We use it extensively.”
- Rob Trulson, CEO, T&T Construction
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FILTERED DATA DIMENSIONS
Top estimating teams also use advanced analytics to filter data to guide strategic decision-making. They use sophisticated data-slicing techniques that look at basic and advanced project parameters, like predictive material usage trends and equipment performance analytics. A study published in Data in Brief shows the power of this approach and the strong effect of analyzed data on construction cost and time.
Big data in construction is changing how estimators work. Research from Pepperdine University shows that you need big data and analytics technology to spot and fix potential project problems. Seasoned estimating teams integrate big data into their workflows, turning traditional practices into more predictive models. Estimates then become potent tools for strategic planning and risk management instead of existing as mere financial forecasts.
THE GOAL IS TO CREATE A FRAMEWORK THAT ACCOUNTS FOR FORESEEABLE AND UNFORESEEABLE COSTS.
ALLOWANCES BASED ON PAST COST RATIOS
Applying past cost ratios is another exercise in strategic decision-making. It involves analyzing historical data with an eye on patterns and anomalies from past projects and predicting how those elements might affect the current bid. This action calls for a deep dive into historical project data to see how complexities like unexpected site conditions or design modifications have historically influenced overall costs.
If you’re after precise cost estimates, set your allowances based on past ratios. According to Carnegie Mellon University’s resource on cost estimation, experienced teams tailor contingencies based on historical insight and foresight into the unique challenges of the current project. Tailoring also means accounting for factors like changing market conditions, technological advances, and regulatory changes that might influence project costs.
The goal of applying ratios is to create a framework that accounts for foreseeable and unforeseeable costs. It makes estimates more precise, protects the project from financial risks, and contributes to overall success.
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CONTINUALLY FEEDING ACTUALS BACK
Veteran estimators know that continually feeding actuals back into the system is like fine-tuning a high-precision instrument. It’s not about updating databases. It’s about creating an always-current baseline for future estimates. Regularly exporting actual project data into a centralized, cloud-based repository keeps historical data current and creates a more accurate estimating environment. This ongoing feedback loop leads to a level of precision that static historical data — and manual data wrangling — can’t match.
This practice is essential for teams working on projects with high numbers of variables and high stakes. Take, for instance, a complex infrastructure project spanning several years. During the project, you might run into fluctuating material costs, labor productivity shifts, and unforeseen site challenges. Adding more data into the system gives you a rich, evolving dataset — a live repository with insights beyond surface trends. It allows you to spot patterns, anticipate potential issues in similar future projects, and adjust estimating parameters accordingly.
A study in the Journal of Management in Engineering supports this practice, finding that “with unprecedented clarity,” performance feedback has significant, positive effects on construction process performance.
CONTINUALLY FEEDING ACTUALS BACK INTO THE SYSTEM IS LIKE FINE-TUNING A HIGH-PRECISION INSTRUMENT.
SUCCESS STORY
IMPROVING ESTIMATE ACCURACY:
KIEWIT POWER CONSTRUCTORS’ DIGITAL LEAP
Estimators at Kiewit Power Constructors (KPC) wanted to improve productivity and efficiency. The Kansas-based team struggled with outdated methods that limited communication and estimate accuracy, leaving them less confident in their bids. They couldn’t access historical cost data quickly, which meant hunting for past cost information and manually entering it into spreadsheets. Complex close-out and bid forms were labor intensive, too. InEight Estimate transformed the team’s approach and ushered in a new standard for accuracy. The system allows estimators to query actual past costs for similar projects across the company. They can easily collaborate and share real-time data with multiple teams. With more confidence in their data, the team spends less time chasing outliers and figuring out which numbers to trust from disparate spreadsheets. Estimators use the system to examine different versions with different scenarios. Overall, InEight Estimate boosted the team’s bid confidence and gave the team more time to focus on innovative cost-control measures for clients.