Estimating from First Principles

Step 1

Define the scope, in detail

You can't price what you haven't defined.

Most estimates that go bad do so because of something that was never in the scope, rather than a math error. The job of this step is to know exactly what you are agreeing to build, and exactly what you are not.

• Read everything. Drawings, specifications, addenda, reports on existing conditions and the contract itself. Division 01 and the general requirements carry obligations that never show up on a drawing: submittals, mockups, testing, warranties, closeout documents, working hours.
• Write the scope in your own words, item by item. If you can't describe a piece of work in a sentence, you can't price it yet.
• Write exclusions and assumptions just as carefully. They are part of the price. Anything you assume (existing conditions match the drawings, one mobilization, work during normal hours) belongs on paper and goes out with the bid.
• Mark the boundaries with other trades. Who furnishes the blocking, who cuts and patches, who cleans up after. Gaps and overlaps between trades are where money disappears.
• See the site if you can. Access, overhead obstructions, what is actually under the existing finish, how occupied the building is.
• Ask early. Send RFIs while there is time for answers. When an answer won't come before bid day, carry a stated assumption.

Test: could someone else in your office build the job from your scope sheet without calling you?

Step 2

Consider and quantify logistics

How material, people and equipment get to the work, and how waste leaves.

Logistics is the difference between the job on paper and the job on the site. Considering it is not enough. Every logistics problem has to become a number, because those numbers feed labor and general conditions later.

• Access. Gates, working hours, badging, escorts, parking, and the distance from where the truck stops to where the work is. Federal and secure sites can add real time to every day.
• Staging and laydown. Where material sits, how much fits there, and how many deliveries that forces.
• Moving material to the point of install. Crane, hoist, forklift, lift, elevator, stairs, or by hand. Trace one pallet from the truck to where it gets installed.
• Phasing. Occupied buildings, tenant sequencing and owner shutdowns all set how many times you mobilize.
• Constraints. Noise windows, weather season, height, protection of finished work and lead times.

Each item should end up as a quantity you can carry: number of deliveries, crane days, hours lost per day, number of mobilizations.

Step 3

Quantity takeoff

Measure what the scope says you are building.

The quantity takeoff (QTO) turns drawings into numbers. It should measure two things: how much work there is, and how hard it is.

• Verify the scale. Check it against a known dimension on every sheet before you measure anything. Reduced prints and details drawn "NTS" are traps.
• Organize the takeoff the way the work gets built. Break it out by area, system or phase, so it lines up with the labor chunks you will plan in Step 5.
• Measure net quantities and keep waste separate. Waste gets applied in the materials list, by item, where you can see it. Waste buried in a measurement can't be checked.
• Measure difficulty, too. Count openings, corners, transitions, small areas, changes in level and work at height. Ten thousand square feet of open, repetitive work and ten thousand square feet broken into small rooms with odd conditions are different jobs.
• Keep it auditable. Label every measurement and keep a marked-up set, so someone else can check it and you can find it again when the change order comes.
• Sanity-check the totals. Compare against the building footprint, a previous similar job, or a quick rough-order measurement.

Step 4

Materials list

Turn quantities into something you can actually buy.

• Convert to purchasable units. Sheets, sticks, rolls, boards, bags, boxes, pails, yards. Round up to whole units and full packages.
• Apply waste by item, explicitly. Laps, cuts, trim and breakage differ from one material to the next. One blanket percentage is too high on some items and too low on others.
• Include accessories and consumables. Fasteners, plates, adhesives, primers, sealants, tapes, blades. Each is small and together they are not.
• Get real quotes for the major items. Note the quote date, how long it is good for, and the lead time. If the job starts months out, carry escalation.
• Price the costs around the material. Freight, delivery and minimum-order charges, sales tax, and restocking fees on returns.
• Flag long-lead items so they show up in the schedule and the submittal plan.

Step 5

Labor planning

Build labor from crews and days, not from a unit rate you can't explain.

Labor carries the most risk in most estimates because it is the part you control least. Planning it means picturing the job being built, day by day, by real people.

Mobilization and prep

Getting on site and getting ready to work: travel, unloading, setting up staging and protection, safety setup, layout and pre-task planning. It is real labor that installs nothing. Price it every time you mobilize. A job phased into three mobilizations carries this cost three times.

Break the work into definable chunks, then apply labor

A chunk is a piece of work with a clear start and finish that one crew can do: demolition, layout, rough-in, installation, trim-out, testing. For each one, divide the quantity by a realistic daily production rate to get crew-days. The best production rates come from your own finished jobs.

Consider crew size, increment size and time

Pick the crew size first. Adding people does not add output in a straight line; past a point they get in each other's way or wait on material.

Then look at the increment the work actually happens in. Labor gets paid in days and half-days, so a task that calculates to 1.2 days often costs 2 if nothing else can fill the rest of that second day. Some work also has a natural daily unit, such as what you can open up and close back in before the end of the shift, or what one pour or one lift can cover. That unit sets the pace. Account for the parts of the day that aren't production, too: start-up, breaks, material handling and end-of-day cleanup.

Man-hours = crew × days × 8. The production rates are made up for illustration; use your own. Note the framing and doors rounding up to full days.

Demobilize

Getting off the job: final cleanup, striking staging and protection, loading out, and the return trips for punch list and closeout that almost always happen. Price each demobilization the same way you priced each mobilization.

Step 6

General conditions

Everything that supports the work without being the work.

Most general conditions scale with time, which is why they come after labor planning. Price them as a duration times a rate, using the schedule you just built, rather than as a percentage of the job.

• Equipment. Lifts, forklifts, generators, welders, scaffolding, trucks. Rent for the schedule duration, not for the hours of the tasks that use it. Add delivery and pickup charges, fuel and operators.
• Hoisting. Crane or hoist days, setup, operator, lift plan, permits and street or lane closures. The number of picks comes straight from your logistics quantities.
• Trash. Dumpster count from the volume of demolition and packaging, haul and disposal fees, chutes, and separate handling for any regulated or hazardous material.
• Safety. Fall protection (guardrail, warning lines, anchors), PPE, a safety monitor or competent person, site-specific safety plans and training. Read the spec; federal and owner programs often require dedicated safety staff and paperwork with real cost.

Other common lines: supervision, temporary facilities, permits, small tools, project management time, bonds and insurance.