Tips for Improving Cost Estimation Accuracy

I have some solid advice for those of you just starting in construction. Over 20 years ago I started a binder as you can see in the attached picture. It probably has over 500 activities/operations that I documented. When I was in the field, whenever we kicked off a new operation, I made sure to jot down everything. I was dead set on never forgetting what went down and making sure I knew the drill for next time, no reminders were needed from my supervisors! I figured this info would be gold when I was running my own projects someday (and it was). And funny enough, I kind of got a kick out of estimating, so this binder helped me even more with my confidence in creating budgets (I've estimated over $10 Billion and this was a huge help!!). Below is a list of things I documented for each operation which has helped me a lot in my career. Attach each of the below to each operation documented. 1) Take photos of the operation 2) Plans/sections of the scope of work 3) Crew Size - put a cost to it 4) Materials needed - put a cost to it 5) Equipment needed - put a cost to it 6) Productions - I would take an average of 3-5 days. I like to work in units per shift. Some prefer units per MH or MH per unit. Come up with a Unit Cost. 7) What can go wrong 8) What to watch out for and some things to consider with the next operation (I'm very big with predicting what can go wrong and always having a plan B) 9) Weather and site logistics and means of egress 10) Safety concerns 11) Description of the overall operation, explaining step by step in as much detail as possible. In addition, explain the environment, objections that were made, equipment breakdowns, etc.. 12) Potential offsite support needed (this can be a huge cost) You need to understand that times change and that must be kept into consideration when looking back many years later. My first documented operation in this binder is from 2004 so I know I need to keep that into consideration when looking at one of those operations. I also feel all estimators should go to the field at least once per month and come up with the above on their own to keep their minds fresh. #betterproductions #operationalexcellence #estimating #personaldevelopment #proaccel

Only 0.5% of mega projects deliver the expected outcomes or better, on time or shorter, and on budget or cheaper. Megaproject Heuristics Checklist This checklist is based on Bent Flyvbjerg’s *How Big Things Get Done* and summarizes key heuristics that improve the odds of delivering large, complex projects on time and on budget. ● Think Slow, Act Fast – Spend time upfront in planning; execution should be rapid. ● Reference Class Forecasting – Compare against similar past projects to calibrate cost, schedule, and risk. ● Take the Outside View – Avoid optimism bias; ask what happened in comparable efforts. ● Keep It Simple & Modular – Favor repeatable, proven components over one-off complexity. ● Check Optimism & Misrepresentation – Guard against deliberate or unconscious underestimation. ● Align Incentives – Ensure contracts and governance tie outcomes to performance. ● Front-End Loading (FEL) – Lock in scope, design, and contingencies early. ● Use Probabilistic Planning – Model ranges and distributions, not single-point estimates. ● Learn from Failure & Success – Document, benchmark, and apply lessons systematically. ● Build for Real Users – Ensure design reflects actual needs and usage patterns.

📣 Calling All Project Managers and Enthusiasts! 🌟 Topic of the Day: Mastering Budget Estimation for IT Projects 🌟 As we embark on new IT projects, one of the most pivotal stages is the budget estimation. It's an art and a science, balancing precision and pragmatism. 1️⃣ **Understand the Scope Thoroughly:** Before diving into numbers, ensure you have a crystal-clear understanding of the project scope. Ambiguities can lead to costly adjustments later. 2️⃣**Break It Down:** Segment your project into smaller components. This breakdown makes it easier to assign costs to specific tasks or phases, leading to a more accurate overall estimate. 3️⃣**Past Projects as a Beacon:** Utilize data from past projects as a benchmark. This historical insight is invaluable, especially when dealing with similar technologies or domains. 4️⃣**Factor in the Unknowns:** Always allocate a portion of your budget for contingencies. IT projects are prone to unforeseen challenges, and it's wise to be prepared. 5️⃣**Regular Review and Adjustment:** Budgeting isn’t a one-time task. Regularly review and adjust your estimates as the project evolves. Flexibility is key. 6️⃣**Communication is Crucial:** Ensure there's a clear line of communication with all stakeholders about the budget. Transparency helps manage expectations and facilitates smoother project execution. 7️⃣**Quality over Cost-Cutting:** While it's tempting to opt for lower costs, never compromise on quality. Short-term savings might lead to long-term expenses. 8️⃣**Utilize Technology:** Leverage project management tools for more accurate estimates. These tools can offer insights based on data analytics and help keep track of spending in real-time. 9️⃣**Training and Development:** Don’t forget to allocate budget for team training. Up-to-date skills can increase efficiency and reduce project duration, indirectly affecting the budget. 🔟**Legal and Administrative Costs:** These are often overlooked. Ensure you factor in legal, administrative, and other indirect costs into your budget. Remember, the goal is not just to stay within budget but to deliver value. A well-estimated budget is a roadmap to a successful project. 💡 I'd love to hear your experiences and strategies on budget estimation. Share your stories and let's learn together! #ProjectManagement #Budgeting #ITProjects #CostEstimation #TeamworkMakesTheDreamWork 🔗 Feel free to connect for more insights and discussions on IT project management. Let's build a community of knowledge-sharing! 🌐