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Basis of Estimate

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It is often the case where an estimate is put together without documenting the basis for it. The Basis of Estimate (BOE) is an important document that is needed as a reference to support the actual estimate, both during the actual presentation of the estimate and for future reviews (especially helpful when the people originally involved are no longer available or past history becomes hazy and the “amnesia syndrome” starts to set in).

 

While a lot of the information making up the estimate report itself is self evident with no further need for clarification (for example the data comprised of columns showing the quantity, unit price and the resulting extended price) other information including critical information - which might have important cost and schedule aspects - may not. Adding notes to the estimate, whether done via the estimating software itself or in the spreadsheet, while helpful, still can not substitute the need to have a formal Basis of Estimate document.

 

So what exactly do we want to document in the Basis of Estimate? While the contents should be tailored to the needs of the interested parties a basic Basis of Estimate could cover the following:

 

- Estimate purpose.

For whom is the estimate prepared for and end usage, who is the client and listing of point of contacts for future reference.

 

- Project scope.

Details of what the project entails, including project metrics where relevant (such as size, volume, capacity, weight), purpose/ application of project, location of project, etc. Also worthwhile mentioning the type of contract, weather firm fixed price/ lump sum, fixed price/ unit price, cost reimbursable, or target.

 

- Period of Performance.

What is the expected award date, project construction start, project duration.

 

- Estimate classification.

Specify intended estimate accuracy (estimate class).

 

- Methodology and cost basis.

What estimating method was primarily used (e.g. capacity factor, parametric model, equipment factored, semi-detailed or detailed). What was the data source (e.g. published cost database, proprietary purchase database, historical projects).

 

- Execution plan and resource usage.

Brief summary of how the project is planned to be executed with particular focus on factors affecting cost and schedule including specifying workweek, resources and equipment availability and composition, use of overtime or double shifts, etc.

 

- Risks and project unique factors.

Summary of risks with emphasis on items affecting cost and schedule, as well as listing project unique factors such as project location specific market and geographic conditions including site access, labour availability, weather, time of year, previous experience with similar projects, complexity of project.

 

- Contributors.

Who was involved in the estimate and what roles did they play and what data and assumptions did they contribute.

Basis of Estimate (BOE)

Communication

The importance of good communication. Or telepathy as the alternate!

An “armchair scheduler” or frontline messenger?

Why Project Controls

Selected Articles

Meetings

Love them or hate them. How to conduct successful productive meetings.

Funny, but true. Video on the functions of Project Controls.

Enjoy!

Settings do matter: pick the wrong settings and your schedule’s output will be meaningless.

What the text books didn’t tell you
Primavera P6 Settings
Video - Project Controls

Selected Articles

Tips on Scheduling

50% Science, 50% Art, 100% Communication

Why Project Controls?

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