Conceptual Estimating—The Early Warning System for Client and Contractor Alignment


Early stage insights promote informed decisions

Construction managers carry the responsibility--and in many cases, the risk—for delivering a client or owner’s vision in the form of a completed project.  Many factors can determine whether the process also meets budget and schedule objectives, and various checks and balances along the way will raise those issues to the surface.  Realistically, no one—client or contractor—can afford to waste time getting to that point of consensus. 


Conceptual estimating is the process of quantifying that vision in broad terms at the earliest possible stage, without the level of detail required in a formal estimate prepared for a contractual agreement.  It helps to set or reset direction, and places a responsibility on the client as well as the contractor:
    •  The client provides a clear outline of scope and objectives.
            o  Client Checklist:
                   •  Site ownership or acquisition plan
                   •  Access requirements
                   •  Building type and function
                   •  Initial vs. projected capacity needs
                   •  Equipment
                   •  Special requirements, such as LEED® certification
                   •  Desired level of aesthetics and design
                   •  Schedule
                   •  Budget
                   •  Funding
    •  The contractor contributes the experience and knowledge of current market conditions to determine what is possible.
            o  Contractor Checklist:
                   •  Material availability and cost
                   •  Permitting processes
                   •  Qualified subcontractor access and interest
                   •  Comparative costs from similar previous projects
                   •  A set of assumptions that will frame the estimate
                   •  A range of options that will define alternatives, as applicable

The next step is an abbreviated version of the estimating process, in which the contractor will employ knowledge and tools to establish a figure or range.  This process may include:
    •  Syndicated or proprietary cost database information
    •  Takeoff software to interpret quantities from digital drawings and documents
    •  Estimating software to distill the elements
    •  An “experience factor” or reality check based on similar building types
    •  A “qualification factor” based on what the client is seeking to acheive

In many cases, the numbers will meet client expectations.  In other cases, any disconnect will quickly become apparent.  What next?  Open, honest communication can clear a path forward.  If the estimate does reveal a budget shortfall, next steps can include:
    •  Resetting the design process with a new set of objectives
    •  Exploring site options if feasible
    •  Value-engineering materials and other variables
    •  Investigating the potential to secure location incentives or tax credits to close a gap
    •  Staying engaged

This is a positive, constructive process that can save valuable time for both parties.  However, conceptual estimates are only as good as the information and experience that both parties contribute.  Quality inputs can help accelerate projects for clients, and allocate resources to projects with real potential for contractors. 

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About the author:  Harrison, Walker & Harper (HWH) has made robust conceptual estimating a critical success factor in the planning, site selection and construction services it provides.  HWH works with national clients and builds primarily in a four state region of Texas, Oklahoma, Arkansas and Louisiana, on either side of the I-35 corridor.