Construction Estimating: the Odd Numbers game

As a design professional, you have likely seen your share of construction estimates.  You may be in charge of evaluating bid proposals and/or in reviewing projects for value engineering possibilities.  Of course, you are almost certainly involved in submitting your own proposal estimates for architectural or engineering services on a project.

I saw a recent blog discussion on construction estimates, and how owners view them.  In the situation discussed, a contractor was losing business because his estimates were in nice round numbers, creating the suspicion in the owner’s mind that the numbers were not carefully put together.

One commentator, a civil engineer, said:

As a Professional Civil Engineer and owner’s representative, I am very leery of proposals received that are round (up or down) unless I’ve done business with this group before and am aware of it. I agree with the other comments that it appears as if the bidder has not put much effort into their proposal.

What do you think? Are you leery of an estimate that is a nice round number? Do you round your own estimates? Does an estimate of $21,975 look more legitimate than an estimate of $22,000?  Share your thoughts, and your practice, below.

 

tall building

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Photo credit: Håkan Dahlström.

Add a comment »6 comments to this article

  1. Very nice post. I just stumbled upon your blog and wanted to say that I’ve really enjoyed browsing your blog posts. In any case I’ll be subscribing to your feed and I hope you write again soon!

    Reply

  2. Hi Melissa! Your latest entry brings up a very interesting point that really shows the difference between the actual to the psychological. Marketers tell us repeatedly that pricing an item at $9.99 is more attractive than selling the same widget for $10.00; thus, if I were estimating a construction project, I’d suggest getting the actual figure, round up, then take off $5.00 or $35.00. Thanks!

    Reply

    • Hi Mark, and thanks for the comment. Yes, your suggested approach sounds like it would work. It shouldn’t make a difference, but there you go!

      Reply

  3. Citizens want their politicians to assure them that their future is secure under the guidance of the politicians’ chosen world view and political skill and won’t go to ruin due to war, famine, or pestilence. Facility owners want their design and construction professionals to assure them that their project is secure under the guidance of the professionals’ technical and administrative skill and will not go bankrupt due to poor cost estimating, technical deficiencies, or lack of project management.

    But there’s risk in living, and there’s risk in building projects, and we all know that no one can make all the risk go away. But just as politicians can help citizens pretend that all will be well and perfectly under control, so can we help our owners pretend the same, apparently, by adding some single digits on the end of our cost estimate line items as if we really know what the structural steel market conditions will be six months from now when that particular purchase is made.

    Never thought of that!

    Reply

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