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Sometimes a project comes up where while you feel you have all the skills and expertise to build or fabricate the project you just don’t have the historical estimating information to price the job correctly. So what do you do?

The first step is to break down the project into more “handable” discrete parts, in other words create a Work Breakdown Structure (WBS). Perform quantity takeoffs (materials) for each part of the WBS breakdown and then you can do anyone of a number of things….

  1. Look for Similarity to Other Tasks – While you may not have figures you feel you can use for specific things like building banquettes for a restaurant interior you may find that cutting the the plywood forms that will be the basis of your banquettes will probably be similar to preparing (cutting up) sheet stock for cabinet carcase fabrication and indeed the assembly of the banquettes will probably be similar to assembling carcases too.One of the things you may find is that when you break down the project into lets say for example 5 distinct tasks is that one or two of those task you may then realize is very similar to some other task that you already have historical data for. You can then create a new task item for this new unfamiliar work you are doing based on that historical data which you have then just tweaked up or down a little for this new tasks definition.Then sit down with your partners and any employees and talk about the time requirements for each component part of the project and see what they think. Your recollections and theirs of similar tasks and their durations can be used to estimate the present task effort and durations. Task Effort and Duration are two different things. You need to know the Effort to set your price since that will be your estimate of how many labor hours you folks actually put into the work while the Duration is how much time it takes up on your schedule. If you have to wait for paint to dry between coats for instance that wont add to the Effort since you are doing nothing or doing something else while your waiting for the paint to dry but waiting for the paint to dry will take up blocks of time on your schedule. It is important to note that all projects are different; each project is affected by different constraints and assumptions, but it many cases this is a fairly accurate method to estimate task duration.
  2. Look for Expert Advice – Ask someone who knows. Ask another contractor friend but be careful with that and take what he or she says with a grain of salt because there is a chance they don’t really know either.
  3. Use what’s called Nominal Group Technique (also known as Delphi Technique)
    Quoting from some research I collected regarding this:
    —“This is a group method that extracts and summarizes the knowledge of the group to arrive at an estimate. It assumes that each member of the group has a good understanding of the project and a general knowledge of the nature of the task. Each member of the group is asked to estimate the duration of the task. The results are then tabulated and presented to the group in graph form showing estimates from shortest to longest. The graph is then divided into quartiles. Those whose estimates fall in the outer two quartiles are asked to share the reason for their guess. After discussing these rationality’s each member of the group makes another estimate as to the duration of the task. This second pass should result in a shorter range of durations. The group then repeats the process from the first pass. A third pass is then performed and the average of the estimates is used for the duration of that task.”—That is very similar to where I mentioned approaching your partners and employees above but is a formal codified approach .
  4. Use PERT Three Point Estimate Technique This method utilizes a formula that is essential derived from certain parts of probability theory. Three estimates are made for the duration of a task:
    O: Optimistic – the shortest duration one has had or might expect to experience given that everything happens as was expected.
    P: Pessimistic – the duration that would be experienced if everything that could go wrong did go wrong and yet the task was completed.
    M: Most Likely – the duration that would most likely occur if the task were to repeated over and over again.You then plug those values into he formula E = (O + 4M + P)/6 and that give you duration/and/or effort estimate. As I just said too you can do it as a group (maybe the best course given your relative inexperience estimating) and then you’ll use the averages of the three estimates for O, P, and M values.
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J. Jerrald Hayes
Primus Inter Pares at Paradigm Projects, Ltd.
I am an architectural woodworker and general contractor turned IT, Business and Project Management consultant, software developer wannabe senior division triathlete and ski racer, Yankee fan and founder of ParadigmProjects.com, 360 Difference Mac4Construction.com,iOS4Construction.com and now TheBuildingAndRemodelingWiki.com too.
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