Having spent many years estimating and submitting tenders for some of the largest projects in this country, I am well aware of the stress associated with the job. Coupled with that, is the additional stress with comments from site staff who can always tell you (months into the construction program) what you had left out or where you could have saved money.

To the uninitiated, the estimator sits in his air-conditioned office, feeds figures into a computerised estimating program and produces a price. No doubt, superior quality estimating software is a great tool for the estimator, but it is not the be-all and end-all.

While the count and measurement of material is not an arduous task for an estimator, the variety of risks in applying the labour component certainly are. Factors that need to be addressed include labour, materials, location, duration, special equipment, regulations, site conditions, type of building and contractor’s ability to perform.

Estimators complain there is never enough time between receipt of contract documents and tender closing date. With maybe two to three weeks to estimate a multi-million-dollar project can be incredibly stressful and the pressure to produce profitable, successful estimates can be devastating.

Forecasting the likely cost of electrical construction work before tendering is a hazardous task. Underestimates and overestimates present problems to both clients and contractors. Estimating decisions have a pivotal role in success and can have significant impacts on a project or organisation’s project management and financial outcomes. The pressure to make accurate estimates and control costs can be intense and a common mistake in construction estimation is failing to clearly define requirements. Without a clear understanding of the project scope, it is impossible to accurately estimate the budget, timeline and resources required. Accurate estimates ensure that the right resources are available at the right time and in the right quantity.

Estimating practices are precarious, errors during the take-off process, with an incomplete count and measure, poor scope definition, insufficient project time, material pricing errors, labour availability, and variation orders can have a significant impact on the profitability of the job.

Major risk factors:

• Failure to visit the site: Every construction site is unique and without visiting it, contractors may miss crucial details such as soil conditions, environmental factors or logistical constraints.
  Site visits enable contractors to identify potential risks such as physical environment, safety hazards, unstable structures, regulatory requirements or access constraints. Ignoring these factors can lead to delays, accidents or legal liabilities during construction.

• Contract conditions: The type of contract has a bearing on how contractors price risk including:
  • Site access
  • Availability of labour
  • Material and equipment
  • Subcontractor/supplier’s ability
  • Bad weather
  • Site safety requirements
• Underestimating overheads: While you may have your business overheads calculated and maintained, overheads specifically related to the job must be addressed. These include, but are not limited to, site sheds, specific insurance, equipment expenses and material storage costs.
• Underestimating labour: Consider the time it takes to move from the site shed to the work- face. On large work sites and multi-storey buildings, this can be considerable. Poor weather conditions if substantial portions of the work are outdoors. Relocating materials when they are unable to be stored on-site close to the workface. Relocating equipment, ladders, steps and scaffolds between work areas.
• Failure to assess risk and make contingency plans: This can result in financial losses, damage to reputation and even business failure. Additionally, it can lead to project delays, budget overruns and quality issues.
  Estimators need to identify potential risks early on, analyse their potential impact and develop strategies to mitigate or manage them effectively. They must prioritise risks based on their likelihood to focus resources on managing the most critical ones.
• Making educated guesses: Thoroughly review the project plans, specifications and any other relevant documents to understand the scope of work. Look at similar projects your company have completed in the past and review the costs associated with those projects to gain insights into potential costs for the current project. Both labour and material costs can significantly vary depending on location. Consider factors such as local labour rates, material costs, regulations and market conditions.
• Climate and terrain: Environmental factors such as extreme weather conditions or challenging terrain can affect electrical installation costs. Building in areas prone to hurricanes, earthquakes or floods may require additional measures for structural integrity, which can increase expenses.

• Neglecting to review your estimate: Reviewing the estimate and site visits to understand and assess the regulatory requirements specific to the project location and site hazards. By recognising these hazards early on, estimators can develop appropriate safety protocols, priced before tender.
• Staff expertise: In these days of high specialisation, there may be expert technicians to complete the job. If this expertise isn’t available among your workforce, they may be costly to deal with.
• Pre-tender site visits: These play a critical role in risk managing the estimate by identifying and addressing potential risks and successful outcomes. To help the estimator cope with these risk factors it means prioritising the order of events and staying with that schedule throughout the tender period.
  Identify all tasks and events necessary for the tender process. Identify all tasks and events necessary for the tender process. This includes activities such as preparing documents, reviewing submissions, conducting evaluations and making decisions.

Through due diligence, estimators can identify and assess various risks associated with the tendering process. This includes financial risks, operational risks, legal risks and reputational risks.

Identifying these risks upfront enables organisations to develop strategies to mitigate or manage them effectively. Electrical construction is continually evolving with new materials and technologies, many with innovative solutions that may reduce labour and make a significant difference to the final price.

By keeping good relationships with suppliers, their expertise and knowledge are invaluable when it comes to estimating potential costs. Professionals with deep experience in a particular field are often able to foresee potential expenses, identify cost-saving opportunities and provide accurate estimates based on their understanding of the project or situation.

Whether it is in construction, engineering, finance or any other industry, having access to individuals with specialised knowledge can significantly enhance the accuracy and reliability of cost projections. These insights can help estimators make informed decisions, allocate resources effectively, and mitigate financial risks.

Education in estimating is a continuous process to stay updated on best practices, emerging technologies, and regulatory changes. Clients’ needs and expectations evolve. Keeping up with industry trends and client preferences allows estimators to tailor their estimates to meet the specific requirements of each project.