Quietly Re-Thinking Out Loud

I’m often asked for recommendations regarding books on estimating techniques, not the data mind you, but the techniques and methods of estimating.

Unfortunately there aren’t a whole lot of books out there to choose from but still there are some good ones that are well worth the time.

On the top of the list I like Defensive Estimating: Protecting Your Profits by William Asdal, CGR. It’s not about how to estimate a kitchen, a deck or some other project in the literal sense in terms of what items to include and look for but is instead a book about the "big picture" of estimating and is about approaching estimating with a particular type of viewpoint and that is one of "protecting your company’s profit" which is very different than an estimating mind set that many contractors dangerously adopt which is "estimating to get the job".

The lesson of Chapter 2 Establish the Company Profit Number Based on Your Income Needs which again so many contractors fail to do is alone worth the price of the whole book.

Chapter 6 Using Retail Pricing at Every Line brings up a point I’ve often talked about when considering ‘risk’ in building and remodeling projects which is to ‘Put the Risk into the Line Item and Not the Bottom Line‘ , in other words ‘Nullify the Risk at First Entry‘ so that it can be specifically dealt with based on the risk of the task the line item describes.

And he concludes the book with chapters that give some great example of contract and specification language that can be used by builders and remodeler’s to defend their profits.

I highly recommend this book. I thought it was interesting though in reading the editors description of the book they say "Asdal takes the magic and science of estimating and turns it into an art." whereas I would say "Asdal takes the mystic and mystery of estimating and turns it into practical science". I think a problem many contractors have is they view estimating as some kind of mystical purely intuitive art and therefore never really develop the repeatable scientific methodologies (systems) for approaching it and it becomes a mess.

As for the nails, screws, nuts and bolts of producing an estimate and to what to actually look for in estimating particular projects and trades I think Estimating Building Costs by Wayne J. DelPico and Estimating for the General Contractor by Paul J. Cook are pretty good for that. You will get things from them such as how to calculate liner measure, are and volume and then what to look for as you produce cost estimates in the individual trade areas.

Where they are lacking is in connecting the COST of production to the PRICE you need to charge to run a business.

Two other books I think that are very helpful and good resources to have in the ‘nuts and bolts of producing an estimate’ category come from R.S means and are entitled: Kitchen & Bath Project Costs: Planning & Estimating Successful Projects and Home Addition & Renovation Project Costs: Planning & Estimating Successful Projects . And like the two books I just mentioned these two book don’t do a good job of connecting the COST of production to the PRICE you need to charge for your services and are in fact terrible in that regard. Under no conditions should you use these books to actually price a project out. Instead use the line items lists and the project commentary on what to look for as basic templates of what you will need to estimate. Then substitute your own labor, material, and subcontracting costs and markup structure for what they give you.

Given this list people often ask ‘Well, what about Jay Christofferson’s Estimating With Microsoft Excel and while I have read it and keep a copy of it for reference it’s more about using Microsoft Excel to build a software tool than how to actually "estimate" anything so that’s why I don’t include it on this list of ‘Estimating Book Recommendations’.

Tags: defensive estimating, net profit, risk, William Asdal

by: Jerrald Hayes

Way back 90’s I used to have personal web site on AOL and writing at that time what we’re really essentially blog posts years before I had ever even heard of blogs I wrote this:

In the introduction to his book Leadership Is an Art, Max DePree says:

"In some sense, every reader "finishes" every book according to his or her experiences and needs and beliefs and potential. That is the way you can really own a book. Buying books is easy; owning them is not. There is space for you to finish and own this book. The ideas here have been in my mind for quite a few years, changing, growing, maturing. …As a child, I often watched adults study books and learned one of my first lessons about reading. They wrote in their books. Intent and involved readers often write in the margins and between lines…Good readers take possession of what they are learning by underlining and commenting and questioning. In this manner they "finish" what they read."

Well that’s me. My books are more often than not full of underlines, circled text, highlighting, and post-it notes. Their pages are sometimes wavy and wrinkled from being soaked from the sweat dripping off my brow on as I read them on a stair master or stationary bike.

Recently an online friend said to me he’d like to not just get a copy of Defensive Estimating: Protecting Your Profit
but that he like to get my personal notated copy of the book. I thought it was funny reading that in that he pretty much figured out on his own what I did to the books I read so I took a photo of it at the time to document it.

It turns out I’ve got whole bunch of books that look like that or even worse. Tom Peters’ Liberation Management: Necessary Disorganization for the Nanosecond Nineties which was perhaps one of the books that really inspired me to go on the business book reading binge that I’ve been on for over a decade now. It was in fact the book I was referring to above whose pages were all "wavy and wrinkled".

Tags: defensive estimating, Max DePree, Tom Peters

by: Jerrald Hayes

It’s been my observation over the years that framers often quote prices for their projects based on the project’s Square Footage which I’ve always considered a bad idea due to the inherent lack of accuracy (see The Hidden Danger of Square Foot Estimating). Then when they try to move on to bid interior finishing projects the often meet with disastrous results. It’s not that ’square foot’ estimating works for framing and just doesn’t work for interior finish because in reality it doesn’t work for either. It is perhaps just that the dire financial consequences are far greater using ’square foot’ estimating on an interior finish bid than they are for framing.

The finish contractor would either lose their shirt pretty quickly or the better and smarter GCs would recognize that you were out of your league and didn’t know what you doing.

And likewise if the GC is looking for a SF price either they either don’t know what they are doing or they are looking for a finish contractor they can take advantage of because there is absolutely no correlation between the SF footprint of a house and the cost of architectural woodwork installation. Most trim work (although not all of it) is based on linear footage (i.e. baseboard crown etc.) or by the piece, assembly, or unit (such as doors) and when a ’square foot’ unit cost does come into play it has nothing to do with the square footage of the structure and instead relates to the square footage of the material being installed.

Okay those warning and admonitions aside the key to estimating trim is producing an accurate project takeoff. Think about what you need to include in your estimate. Did the GC give you a scope of work document to tell you just what he or she was looking for you to do? Finish carpentry includes such items as:

• doors and door frame
• finish hardware installation
• cabinets and shelving
• milled trim
• non-milled but exposed to view trim
• wall paneling
• stairs and stair railings

And you need to takeoff and plan for fasteners, biscuits, dowels, glues, putty, bondo etc. even if they aren’t included on the plans and specifications you are looking at.

You need to know if the GC is expecting you to supply all those materials, some of them, or none of them? If you are supplying the materials (maybe not the best idea if this is your first "real" trim project when you’re working for an experienced established GC) then you need to get prices for the items in your takeoff from the various suppliers. Be sure that the time it takes you to perform the take-off and the the time it takes you to shop your materials list is included in your bid in one way or another (otherwise you are giving away your time for free).

You also need to keep in mind what the probable state of completion (fabrication)of the items upon their arrival at the jobsite. In other words are the doors pre-hung or will you be assembling jambs and installing the door in place? Are the cabinets finished and ready to install or are they knock-downs that need assembly on site. Same thing regarding the stairs. Are they site built, a knock-down kit, or are they coming fully assembled and all you have to do is install them. And what about the railings? I think stairs are easy and it’s the railings that are really difficult. Some items such as closets and bookshelves may come in part or pieces all ready to be installed or you may have to cut and fabricate them from materials on site.

Having considered all the materials you now need to look at the labor involved. You need to both think of a labor cost related to each and every associated item on your takeoff and also:

• Unloading of materials from trucks, handling and temporary storage and protection
• Special tools equipment and scaffolding
• Handling and hoisting materials from storage to final position. (generally applies to stairs but can apply to other things too such as safes or large cabinets)
• Incidental associated items of work such as backing in partitions for the securing of cabinets and trim.
• Who is going to prime or seal the trim before installation?

Arguably another good idea, especially on the intricately detailed jobs is to take off the number of cuts your crews will need to make to install and fit the trim. While you still need the linear footage of the trim to calculate just how much trim your cost of labor is more realistically ties to the number and difficulty of the cuts your crew needs to make (see Cost Driver and Cost Estimating Relationship for the technical terminology describing those relationships). Typically we price trim installation by the linear foot and add a ‘per cut’ cost modifier only when the particular project or room exceeds what we feel is a ‘typical installation’.

In some of the discussions I’ve been involved with online with neophyte interior finish contractors I’ve recommended that they go out an purchase a Craftsman Books - National Renovation & Insurance Repair Estimator and use the Man-Hour labor estimates that are in there as they apply for the kinds of work you’ll be performing times your Loaded Hourly Billing Rate. I recommend the NR&IRE book as opposed to some of the other ones out there for finish work in that that book has the widest range of finish items that I have seen.

I say to use the Man-Hour calculations rather than the labor costs that they have computed out because your Hourly Rate is unique and I think most every ones Hourly Rate is. They may average around a certain number in a certain range for a certain kind of work but we all have different schedules of overhead calculations and there are regional differences too.

You also might want to check out Jim Tolpin’s Finish Carpenter’s Manual. One of the real good things about the book is at the end of each chapter he gives some of his own man-hour figures for the task he has just described and there a good foundation to start from in building your own. Also check out the new edition of Gary Katz’s Finish Carpentry: Efficient Techniques for Custom Interiors, No man-hour figures in it but it’s full of great technique ideas. I now use both those books as training manuals for new hires.

There are certainly more subtleties involved in producing and interior finish carpentry estimate but this presents a good foundation to build on.

by: Jerrald Hayes

A couple of years ago in Fine HomeBuilding’s Breatime Forum a fellow wrote:

“I live in houston and I am a trim carpenter. I do such a variety of things that I never have know the going price of some of the work that I do. I asked this same question here at FHB and i was told then that I shouldnt get involved in footage rates; that I should price by the job. I generally do that but I would still like to know the going rate on some things so I can stay semi-competitive. Example:

I have a woman who wants crown installed in all of her house. 40 feet of it is about 25 feet up in her entry way. She also wants it painted. She also lives 25 miles out in the boonies, ( no stores within 10 miles). I want the job but I am REALLY REALLY REALLY tired of bidding a job and realizing midway that I underbid ,….AGAIN!!! On the other hand I don’t want to miss out on the work. (plus, she is sorta cute, he he). I am not asking for a free bid I just wants some input on factors that would affect the price. Honestly!, I am tired of underbidding. I mean damn tired of it. I have jacked my prices up 2 times when I was busy and didnt mind if I got the job or not. Both those times I didnt get the job. 80% of my jobs I realize that I should have added a little more to the bid. I always write it off as inexperience or a learning experience. Other contractors I know say that I am too honest and thatI should remember that i have a family to feed. On the other hand my repeat clients say that they like me because I am hobnest and fair; which explains whyI have repeat clients. Any help would be appreciated thanks.”

I wrote in reponse:

Cutawooda- the best I could do is tell you what we would charge for your project and you might take it from there either rejecting or accepting our price and the mechanics of how I came up with it. However I will tell you right off the bat we do not sell our projects on the basis of staying competitive. You either want or need us to do the project or not.

1. I don’t care what everyone else charges.
2. I know what it takes for us to do the work
3. I know what it costs for the people I use.
4. I know what I want for a return on my investment in my company. (In other
   words I know what I want to make)

BUT having not seen the project I still need some more information.

1. How much total crown for the total project?
2. Are you supplying the crown?
3. What kind of crown? (hardwood, softwood, urethane, or plaster)
4. What size crown?
5. What kinds of joints? Miter, cope, scarfs?
6. Any tough joints or a a higher than average number of joints?
7. You mention 40 feet of it is about 25 feet up in her hallway can a scaffold
   be set up easily in that space without damaging the floor or walls?
8. What other temporary protection will need to be set up elsewhere?
9. What size crew do you plan to deploy or is this a one man job in your mind?
   ( You made no mention of your crew if you have one)
10. Painted how? Prime and two coats or what? We virtually always paint and
    then install all our millwork and then schedule a post installation touchup
    or final coat.

You shouldn’t get "hung up" on linear footage rates but you have to have an idea of a linear footage rate as a base price to which you can then modify specifically for a project given conditions. In other words if the typical crown molding price is $8.50 per foot for a normal room ( 8′ to 10′ ceiling) then that price needs to be modified for the difficulty or working up 25′ on a scaffold plus the cost of setting up and taking down the scaffold.

With regard to your statement:

“On the other hand my repeat clients say that they like me because I am honest and fair; which explains why I have repeat clients.”

Watch it! The real danger in that statement is you actually don’t know whether they like you because you are so "honest and fair" or because you are so frigging cheap. Your repeat clients are never going to tell you the truth about what they say about you behind your back. Translation: more often than not "Honest and Fair" is client speak for "frigging cheap".

He then replied back :

“Thanks for your response.

Actually, I am pretty good at trimming. I am a one man crew and got a good rep for doing quality work. The tall stuff I was going to get a helper and another 24 foot ladder. (ladders since there is a stairway obstructing). It is preprimed fj crown. 4 5/8

10 foot ceiling in the rest of the house. Front room she want a squares on the wall below her chair rail to immatate wainscotting. Probably around 12 of them.

I was going to prepaint everything as you do, install it, and then t-up.

total footage on the crown was around 200. 40 of it was 25feet up.

the wainscotting was going to take me around 2hours I figure. Layout about 30 minutes and 1.5 install.

Also, I need to invest in a larger chopsaw. My 10 inch doesnt cut 4 5/8. this is the third job I have recieved that wanted taller crown and its a pain in the *% without the right tools.

I figured the job at $1600.00 that is time and material. What do you think?

I am REALLY trying to be competitive. But I am really trying to “cross the line” and become a business man as well. And I am ready to cross over from “just making it “to assuming the a more responsible position and making some money. I have seen too many “hot shots” go out and experiment on a clients home only to fu.. it all up. I am so cautious about doing good work and casting a “Knowledgeable appearance” , that I found it easier to be a sub contractor and hide behind the skirt of the contrctor who hired me. And it is alot easier that way. Let them do the figuring. But I have seen others workmanship, and I have seen their bills to the clients, and I realize that I am doing better work and charging less money. I cant avoid the occasional handyman or hispanic that comes in and underbids me by 80% but I can learn from guys like you and avoid an empty bank account because I forgot to “pad ” for the days when its a rain out or when the phone just doesnt ring. (The latter just happened for 2 weeks).”

I then came back again with:

Okay Cutawooda, Nothing long with lengthy posts per se. Ya gotta say what ya gotta say to get your point across. I came up with a Price of $1740, wainscoting not included with my Costs coming in at $1130 (costs being Wages, Labor Burden & Materials). For this kind of small project we then markup materials 30% and markup the labor subtotal 65%. The wainscot thing was unclear to me so I ignored that in all my stuff. I’ll try and give you the break down of just how I came up with that price as soon as possible so you can pick it apart and modify it. Just as a point of reference there we two Labor Billing Rates I used in computing this project see the table below.

Labor Rate Worksheet

	Rate Pkg	WC Rate	Fixed OH	Labor Cost	Company Markup	Billing Rate
		20.6%	16.8%		65%
Carpenter-A	$35.00	$7.21	$5.88	$48.10	$24.05	$79.40
		20.6%	16.8%		65%
Carpenter-B	$25.00	$5.15	$4.20	$34.40	$22.36	$56.80

It going to take me a little while to write out and illustrate how I came up with my price in HTML but hey that’s a start.

And a day later to explain that estimate I wrote:

The Crown Installation Estimate

First of all I view one of the the jobs of the estimator as a little more than just entering numbers from an estimating book or database on to a spreadsheet and then totaling it all up. I think the estimator needs to design how the project is going to be handled. What’s going to get done, in what order, how, and by who. That’s all because if it’s not down the way he or she planned it then when it comes time to perform the forensic Job Costing on the project you’d be comparing apples to floppy disks. They’re not even remotely similar.

In the case of this Crown Installation Estimate I divided the job up into three hunks, chunks, quanta, phases or what ever you want to call then and estimated each discrete hunk separately. I actually call them "pocket" estimates to metaphorically imply that they are small easily handled hunks of information that you could keep in your pocket. I try to keep them as a discrete contiguous group of tasks that can be done as a whole. That helps later in both scheduling the work and defining payment schedule parameters. You could also think of these chunks as Work Orders. Essentially any client project estimate can be broken down into several individual work orders.

For the purpose of estimating I divided this project up in to three chunks.

1. Set-Up & Preparation
2. The Trim Installation
3. Painting (final touch-up) and Takedown/Close-out

1. Set-Up & Preparation
I figured to do this project I would plan to have one my carpenters go off to Home Depot to pick up some of their primed finger jointed trim. He would then return to the shop and -lay the stuff out > sand the primer > spray back and fronts with Benjamin Moore White Metal Wood Enamel. He’s then done for the day with that project and can move on to something else. Probably 4 hours of time but I estimated it at 5. The Hourly Billing Rate for that carpenter (what I call a Carpenter-B) is $56.80.

Set-Up& Preparation

	Matl		Labor		Total	MHrs
Costs		$0.00		$172.00	$172.00	5
Markups	35%	$0.00	65%	$111.80	$111.80
Price		$0.00		$280.00	$280.00	5

Just a quick note here, These figures are copied right from my estimating program and it automatically rounds of the Price line so 172+111.80=283.80 which is then rounded off to $280

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2.The Trim Installation
For the next phase I selected a Unit Cost from our Internal Cost Database for the Trim Installation and entered it twice. For the first entry I filled out the Quantity as 200 for the total Linear Footage of the Project. For the second entry I entered 40 as the Quantity to account for the 40 feet of installation that had the increased level of difficulty because of the 25′ ceiling height and narrow confines. Since the material was already accounted for in the first line item I deleted the material cost from the second so it wouldn’t extend out in the calculations. Essentially I’ve charged twice as much for the labor on the high section of crown.

Trim Installation
Cost Worksheet

	Qty	Unit	Matl Cost	Matl Ext	Labor Cost	Labor Ext	MHrs	MHrs Ext
Crown, stock pine, 11/16" x 4-5/8"	200	LF	$2.10	$420.00	$1.24	$247.68	.036	7.2
Crown, stock pine, 11/16" x 4-5/8"	40	LF	–	–	$1.24	$49.53	.036	1.4
Cost Totals				$420.00		297.22		8.6

As an aside while doing this "chunk" of the estimate I knew that the material budget line cost for the crown in this case was different from what I was actually going to be getting. The $2.10 per foot was for a stock clear crown and I was getting some pre-primed finger-jointed pine from Home Depot for just $.89. For such a small project I didn’t bother with making the change in the price. I was installing a painted finished final product so since either material would meet the performance specification I let slide and decided the company would earn the excess on this project knowing full well that somewhere sometime in the future I will estimate short and that excess will help cover that in the future.

While there is 1% figured for Contingency in my company’s Overhead Markup I’m sort of padding that Contingency a little further with that $242 dollar difference knowing that the slightest little thing can turn such a small project like this into a money loser.

On a larger project I probably would have made an adjustment for the change in the materiel from the Cost Book Item to what I was actually using. Regardless of that I still however would have specified in my proposal that I was using FJ trim and not have represented it as clear pine.

The carpenter actually doing this installation in this particular case is not the same Carpenter-B @ $56.80 per hour that I used to set-up the job. I’d be sending a Carpenter-A @ $79.40. That’s because the total lineal footage of the project should be able to be done in 8.6 MHrs meaning it was a one day project for one guy. If it had been a sixteen hour project I might have sent two Carpenters either an A-B combination or a B-B group but I wasn’t going to do that for just an 8-1/2 hour project. The A-B or B-B group probably could have done it all in just 4+ hours but then they would have to travel to somewhere else for the rest of the day and that wouldn’t have been as efficient a use of their time.

I was doing the project in oil paint so I needed the overnight for any touch-ups to dry. As part of the "Work Orders for this "chunk" would have been instructions to fill nail holes and caulk as required so that on a final visit the whole thing can be Touched-Up or another coat of paint applied. In other word get as much done as possible so the remaining tasks to finish the project can be kept to just one trip.

---

3. Painting (final touch-up) and Takedown/Close-out
For the final coat and touch-up and clean-up I’ve got that same Carpenter-A @ $79.40 who did the installation going back there again to: apply a final coat > fix any problems > clean-up > present the bill and pick-up a check > then return clean brushes and put away any tools and equipment that he or she wouldn’t need for the next project. I budgeted that at five hours knowing that it would probably take three maybe four.

Painting & Takedown Worksheet

	Matl		Labor		Total	MHrs
Costs		$0.00		$240.50	$240.50	5
Markups	35%	$0.00	65%	$156.32	$156.32
Price		$0.00		$400.00	$400.00	5

 

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The Complete Project Summary
Okay someone is going to say that I didn’t include the cost of the paint putty and caulk anywhere in my estimate and that’s sort of true. That paint, the Benjamin Moore White Metal Wood Enamel, is something that we use on all our woodwork as kind of the default primer/paint ( it’s self priming and builds up fast so I really like it a lot). We buy it and the other stuff caulk and putty by the case in bulk and not by the project. Since I knew I was over estimating the cost of the trim I knew I was covering the costs of those materials and still making the contribution to the Cost of materials account that any materials would be credited against.

Project Summary

	Matl		Labor		Total		Time
	Cost	Price	Cost	Price	Cost	Price	MHrs
Costs			$172.00	$280.50	$172.00	$280.50	5
Markups	$420.00	$570.00	$297.22	$490.00	$717.22	$1060.00	8.6
Price			$240.50	$400.00	$240.50	$400.00	5
	$420.00	$570.00	$709.72	$1170.00	$1129.72	$1740.00	18.6

While that’s just the way that I would have done the estimate for this project I’m really entrusted in getting some feedback on the pros and cons of the technique and my thinking. While it took a couple of hours to write out this explanation of just how I did it it actually took just 15 minutes to do the actual estimate either entering or looking up all the data in my estimating system. The extimate numbers and client information are automatically entered in to a Contract form so the only thing I had still remaining to do was to tweak the payment schedule numbers however I wanted them to appear. Probably $600 with the $1140 balance due on completion.

by: Jerrald Hayes

I’ve just finished work on and published a new, and what should be the version for now, of the Shareware Excel WorkbookThe Capacity Based Markup Worksheet (also known as the ” PILAO” Worksheet) which sprung out the PROOF Worksheets in Library discussion in the Journal of Light Construction Estimating Forum.

by: Jerrald Hayes

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.

by: Jerrald Hayes

"There is no such thing as a good, fair, or accurate Square Foot Price for an estimate. At the very best, a price based on square footage (the footprint) is nothing more than a WAG or SWAG ( Wild Assed Guess or Sophisticated Wild Assed Guess). Square Foot Estimates are inaccurate, undependable, and dangerous to use."

What follows is the Sample Deck Estimate that I’ve used several times to illustrate the lurking problems with using Square Foot estimating systems for projects. (warning don’t use these numbers because they are semi-fictional and arbitrary just for the purpose of illustrating this example.)

Deck#1-16 x 32 feet

Take that off as two Systems; The Deck measured by the SF and the Railing measured by the LF.

	Take-off Dimensions	Total	Units	Unit Price	Totals
Deck	16′ x 32′	512	SF	16.65	$ 8524.80
Railing	16′+16′+32′	64	LF	43.95	$ 2812.80
Project Price Total					$ 11337.60
As a per Square Foot Price					$ 22.14

So (theoretically) if I want to estimate by the Square Foot I have just figured out that "I can build decks for $22.14 per SF."

Deck#2-8 x 16 feet

So the next customer wants a deck and I tell him I can build decks for $22.14 per SF and he says that he’d like one 8′x 16′ and that works out to 128 SF x $22.14 per SF which comes to $2834.40. Great! Project sold! That was easy.(or was it?)

Checking the price I just gave I go back and estimate the project using the System Costs Method that I used in my original example that gave me this SF Deck price in the first place it works out like this:

	Take-off Dimensions	Total	Units	Unit Price	Totals
Deck	8′ x 16′	128	SF	16.65	$ 2,131.20
Railing	8′+8′+16′	32	LF	43.95	$ 1,406.40
Project Price Total					$ 3,537.60
As a per Square Foot Price					$27.64

and deck # 2 SHOULD Cost $ 3,537.60 and not $2834.40.

That’s a difference of $703.68. So what did I do there? ‘Give the guy a %20 discount because his deck was smaller and easier to do????? I don’t think so. I just gave away my time and money. Not only am I doing the work cheaper than I should but since the project is smaller I am also losing in total sales volume so I’m making less money twice as fast! How’s that strike you?

Square Foot Pricing doesn’t really work and you shouldn’t even be thinking in those kinds of terms.

I’ve got a pretty detailed method of looking at a deck project (at lot more detailed than the 2 System Costs method I used in my example above) but for basics in addition to considering species I think contractors would be better off and better businessmen if they looked at, took-off, and priced deck projects according to the following basic schedule of values.

Excavating for Pier Footings (price varies according to soil conditions)	Each
Concrete Pier Footing	Each
Post	Each
Beam	LF
Ledger	LF
Deck Framing System (price varies according to joist sizing & spacing)	SF
Deck Surfacing (price varies according to angle and/or decking patterns)	SF
Railing System	LF
Stairs	Per Tread

 

A Square Foot Estimate is often nothing more that a SWAG and with a potential of 20% error I don’t think it should be used for anything more than conversational and hypothetical talk over coffee or a beer. For real "business-like" pricing I would use the Systems Estimating Method.

Square Foot estimating and pricing should really be limited to just the bantering builders and remodelers do with each other while getting their coffee in the mornings. With a potential of 20% error it has little relevancy and practical use when it comes time to actually get in to production and build something. When you hear someone say —“I know that I will have to keep a much closer eye on my bottom line with this one.”— You don’t (and can’t) do that with Square Foot Estimating.

For the purpose of estimating building and remodeling there are basically four types of estimates. These types may be referred to by different names and may not be recognized as definitive, but most professional contractors estimators will agree that each type has its place in the construction estimating process.

1. Order of Magnitude Estimates: The order of magnitude estimate could be loosely described as an educated guess. It can be completed in a matter of minutes. Accuracy is plus or minus %20

2. Square Foot or Cubic Foot Estimates: This type is most often useful when only the proposed size and use of a planned building is known. Very little information is required. Accuracy is plus or minus %15.

3. Systems (or Assemblies) Estimate: A systems estimate is best used as a budgetary tool in the planning stages of a project. Accuracy is expected at plus or minus %10.

4. Unit Price Estimate: Working drawings and full specifications are required to complete a unit price estimate. It is the most accurate of the four types but is also the most time consuming. Used primarily for bidding purposes, accuracy is plus or minus %5"

 

 

There is also a fifth type of estimate worth a precautionary mention

5. Stick Estimates: The stick estimate is essentially a Unit Price estimate taken to the anal retentive extreme. Every stud, box of nails,and possible procedure imaginable is listed and accounted for and assigned a value. While a lot more time consumming accuracy is no better than it’s related cousin the Unit Price Estimate.

As a guide to how I think each of the four main estimating methods can be used effectively I’ll offer the following scenario.

I run into Joe Blow downtown one morning buying the paper and he says "Hey I was thinking about putting a deck on my house how much does that cost?"

I think I know Joe Blow’s house so I say, "Well Joe, I think you’re talking about five or six thousand dollars" (Order of Magnitude Estimate, given free, no charge!)

Joe says "Hey that’s not that bad, you have one of you business cards handy. I’ll talk with my wife and we’ll give you a call"

I get the call a week later and go over to meet with Mr. and Mrs. Blow. We talk about a couple of things. The size and the shape that they want and checking a note sheet that I have (it’s actually based on the "Speedy Reckoner" section of the HomeTech estimating books) I take a couple of SF costs and using my calculator I say " I think we’re talking around $5200 for pressure treated and maybe around $6400 for cedar"(#2. Square Foot or Cubic Foot Estimate, still for free)

Mr. and Mrs. Blow look at each other and say, "Gee cedar sounds great. We want a cedar deck"

I then say "Okay lets figure some things out here and come up with a construction agreement" I open up my price book or laptop and we start to compile their project. There’s 32" of a connection to the house (ledger) @ x$ per LF. There are three posts and piers @ y$ each, cedar decking @ z$ per SF, etc etc. "What railing design would you like? Okay that one is xx$ per LF and that one is yy$ per LF. Okay you’d like YY design, that one is really nice, fancy too, let me see that makes the project price well lets see… $6920. Well that’s a little bit more because of the YY railing design. Okay you like what we’ve got here let’s write this up and we can get going on this in a week and a half. (3. Systems (or Assemblies) Estimate, job sold.)

Where does #4. Unit Pricing come in? Lets say I haven’t sold a definitive job but I have sold a contract to design a deck and develop accurate pricing for what ever design I develop then I could use Unit Pricing or I could use Unit Pricing on a set of plans and specification that they had prepared by a designer or architect. Or I could have used a combination of Systems Estimating and Unit Price Estimating to deal with the condition on one corner of the deck where I had to work the deck around this one tree that Mr. & Mrs. Blow wanted to keep to help shade the deck.

In all the models where I’ve looked at this cost per Square Foot issue (SF of Kitchen SF of Bathroom SF of Deck and more) to the best of my knowledge in every single one as the project gets smaller the cost per SF always goes up.

If you talk to enough contractors about this someone always says in defense of SF estimating. "Well you just have to know how much to raise the SF cost as the project gets smaller", Well how do you know that? How do you know or determine what that quotient is? There is just no way to accurately come up with a number for that. (Well actually there theoretically is but that’s one helluva a complicated algorithm to create and it would be different for every different kind of project).

‘Fine tuning’ SF estimating is kind of analogous to saying I could shoot more accurately if I had a laser sight on my flintlock musket. No you wont, it just ain’t gonna get any better. The flintlock is just inherently inaccurate as soon as the ball leaves the barrel and no sight is ever going tomake up for that inaccuracy.

Other articles discussing the application and inherent problems in Square Foot Estimating:

 

	Journal of Light Construction March  2006 The Myth & Math of Square-Foot Cost by Dennis A. Dixon
	Journal of Light Construction July 1999 Unit Pricing Pitfalls By Sal Alfano   Abuilding’s shape affects square-foot costs

 

by: Jerrald Hayes