Accurate cost estimating is a serious priority in the construction industry. With the increasing competition and optimization for profit margins, conceptual estimating becomes more critical. As the industry grows and evolves, conceptual estimating technology assists the estimating processes to develop well. Estimators can use a history of estimating information during initial cost estimation to determine the final project cost.
Table of Contents
So, what is conceptual estimating?
Conceptual estimating is the first predesign effort made to determine a project’s cost and is usually a part of the feasibility analysis of a project. It tells the owner the anticipated costs before contemplating a project’s feasibility and further development.
Therefore, a cost estimator prepares a conceptual estimate with limited information on scope and limited detailed design engineering data. To develop appropriate estimates using conceptual estimating, an estimator needs considerable skills, experience, and judgment.
Pros & Cons of conceptual estimating
Like any other estimation process, conceptual estimating has its advantages and disadvantages, as we will discuss below.
Pros of conceptual estimating
Working with conceptual estimates saves you a lot of time and energy when creating estimates. Conceptual estimating acts as a cost control by acting as the first preliminary check on cost. Below are some of the pros of conceptual estimating.
Leverages Historical Data
Conceptual estimating combines cost estimating with cost history, and this enables users to develop quick and accurate estimates. Normalizing a project cost database with inflation and location makes an old project relevant again as you can compare the related costs on labor, equipment, and materials.
It gives you a general project cost
The primary basis of conceptual estimating is giving a general picture of how much the project costs. It, therefore, acts as the first check against the budget.
It guides you in making design decisions
As a check against the budget, conceptual estimating allows you to make crucial decisions that impact your building. An estimator looks at all the factors that influence costs, and as a builder, you can refine your budget to fit the requisite needs.
Cons of conceptual estimating
The first recognized disadvantage of conceptual estimating, like other estimating methods, is the inexactness of the process.
With the absence of data, there is no other way to evaluate the process other than using opinion.
Below are some of the cons associated with conceptual estimating.
It is resource-restricted
Conceptual estimating is a resource-restricted activity. The primary resources are time, cost, and information. As conceptual estimating is performed early in the project, the information is restricted in detail and precision. Therefore, as much as the estimate is essential, it can’t be accorded much time and resources.
It’s dependant on the validity of the scope
The accuracy and validity of the estimates are dependent on the information provided by the project scope.
A clearly defined scope is crucial in the formulation of a reliable cost estimate.
Below are answers to some of the frequently asked questions concerning conceptual estimation.
What are the estimation methods used in conceptual estimation?
The most common methods used in conceptual estimation are order of magnitude, top-down and analogous estimation methods. The accuracy of a conceptual estimate, however, can only be determined after project completion.
What is the most crucial factor needed when computing a conceptual estimate?
Conceptual estimating relies majorly on the scope of work. The clearer the scope of work is, the better a conceptual estimate will be.
Conceptual estimation is critical for big projects as it determines a project’s feasibility early in the project’s stages. As the estimates are compiled with little knowledge available on the scope, it is essential to use experienced estimators that will leverage their industry expertise and knowledge.