An Owner's Estimator

Ramani Sundaram
Any project begins with a budget and the owner’s conceptual estimator plays a key role in predicting the right number.

Although it is not a firm number, it can make or break a project. The owner’s estimator is responsible for calculating the right cost that will take a project from the feasibility stage to the bid stage and later to the construction stage. If the estimate is significantly lower than the low bid, the budget may be insufficient and it could result in the cancellation of the project. Sometimes it may even lead the owner to do a re-design and go for a re-bid.

Working for the owner, the estimator’s job involves some challenges, but it also provides a sense of engagement with the project and fulfillment of the effort.

If it's too high compared to the low bid value, the owner has to find new work to spend the allocated budget or transfer funds elsewhere. The owner’s estimator may be either in-house or an outside estimating consultant. They become a part of the pre-construction team comprised of the owner, architect and / or the construction manager and play a key role during various stages of design development.

Working for the owner, the estimator’s job involves some challenges, but it also provides a sense of engagement with the project and fulfillment of the effort. 

Challenges for the Estimator

You start with the feasibility study or Order of Magnitude estimate with limited information, basing it on sketches, narratives, meeting minutes, etc. As the design progresses to concept, schematic (SD), design development (DD) and construction document stage (CD), the estimator has to capture the right scope, make allowances for the incomplete items, and add contingencies to account for the unknowns. 

With limited information, estimating becomes an art as well as science to the estimator. 

With limited information, estimating becomes an art as well as science to the estimator. The first estimate, given to the owner during the concept stage, becomes ingrained in the mind of the owner; any change to the total estimate during the later stages of design requires the architect as well as the estimator to convince the owner with valid reasons. The increase or decrease allows the owner to rethink the size, quality or some functional needs. This number is critical, as psychologically, any owner may not be comfortable hearing a higher number during the later stages of the design that is far off from the original.

For pricing, the estimator has to rely on experience and historical data unlike a contractor’s estimator who has the actual price from the subcontractors and vendors. Even if the estimator requests pricing from a likely subcontractor or vendor, the vendor may not be interested to give the price for various reasons. The subcontractor may not bid later or cannot give the right price with limited information that may change later.

Unless the estimator is experienced, it is difficult to assume means and methods especially with a complicated project.

During the different stages, the architect may have design milestones for submitting all design deliverables to the owner including the estimate for that stage. The estimator may be working in parallel with the design team. Sometimes the architect issues preliminary documents for that stage to the estimator and may fail to notify any changes done during that short window. In such a case, the estimate submitted may not reflect changes made. This is very essential during the CD stage when addendums are issued and the estimator is not notified. The estimator has to keep a constant watch to make sure there are no scope omissions.

Unless the estimator is experienced, it is difficult to assume means and methods especially with a complicated project. Though in reality, it is not a bid, during the CD stage, the estimator has to price as if he is bidding for the job so that the variance is within 5-10% to the award.

Adding Value

Though fraught with some challenges, the estimating effort also brings a sense of pride and satisfaction:

  • We are behind the owner’s 'yes' or 'no' decision making.
  • We will be able to price and guide the design team and the owner for specifying materials, equipment and systems. 
  • We help the owner or architect to pick the right alternative when there are different options to be priced.
  • When there is a value engineering (VE) effort, we play a key role with the design team in pricing the VE items. The owner relies on this price to choose the right VE option that will meet the functional need as well as lower the cost.
  • If involved in constructability review, we may be able to come out with a price for change orders beforehand. 
  • If we are an estimating consultant and the estimate is within the acceptable variance, we gain the confidence of the owner and pave way for repeated business.
  • We become a source to the owner, for reviewing estimates for other projects.

A contractor’s estimator may be responsible for the contractor to win a bid and later on, it may be left to the project manager to make a profit. Being with the owner, estimator's are able to actively influence a project and assist with decision making.