Anyone that is involved with project management can attest to the frequent disconnect between deliverables and estimated cost. You know the routine: A project is estimated at a specific value. Then, a firm agrees to take on the project at that estimated cost. After that, said contracting firm returns to the table with the news that it is impossible to complete the project within that estimated cost.
The frequency of this situation is so regular we can set a figurative project management stopwatch to it. It begs the question: Why does this happen?
Is It a skilled workforce problem?
Estimating is a highly skilled profession that depends on years of experience, specific personal attributes, and a particular base-level skillset. A competent estimator needs an arsenal of both soft and hard skills to be capable. A study published on CII identified 23 competencies required to be a useful estimator. The competencies needed are a mix of soft and hard skills, such as listening, multidisciplinary thinking, and patience, but also data analysis and math. That means experienced estimators are required to not only have the hard skills to be able to perform the job, but to be successful; they need soft skills too!
The study suggests that there has been a high level of experienced estimators retiring over the last decade, which makes sense when we consider the boomer generation. That creates a potential situation where inexperienced estimators have large boots to fill stepping into a role of an experienced veteran when it is probable they don’t have the years of experience to back up the position. Clearly this gap of experience from newbies to retirees in the workforce is a problem if there is no one left to step up. However, there must be something we can do to fill the void. We can’t possibly be resigned to a future of completely off the mark project estimations because of a retiring workforce.
Companies will need to hold on to their highly skilled estimators and foster an environment of mentorship. It is essential. As the workforce changes, that becomes increasingly difficult. There are recommended, and apparent methods companies can employ to attract and retain good estimators. Compensation, diversity of work, and recognition are all supported and obvious tactics.
Training of a newer workforce becomes imperative to sustain successful estimating. Recruitment from college graduates and interns, then subsequent promotion from within, can help build a stable estimating team that can be sustainable with impending retirements, as long as the information is free-flowing between a senior and a more junior level.
On the other side of the fence, it is the responsibility of construction and engineering firms to ensure they trust their estimate. Assembling a capable team and ensuring project scope is wholly defined is not only necessary, but it is also crucial. Scope creep and unforeseen circumstances can make a project go sideways quickly, so identifying and being completely aware cannot be downplayed. Lack of identifying unexpected events and scope is one of the main reasons firms cannot complete work on time and on budget.
Other factors that contribute to project estimation and cost not lining up are the quality of plans and design documents, project size, project complication (is it a P3 with multiple stakeholders?), market conditions, project location, and construction knowledge. If even one of these factors is missed, chaos is likely to ensue, and contracting firms could come back with the metaphorical hand out, looking for more. It is just as crucial for experience on the engineering and construction sides.
We must think long and hard about the estimates we are reviewing. Think of a microscope, not a magnifying glass, on the details. Rate the estimator’s competencies and skillset, make sure effort spent on the estimate is reasonable for the complexity of the project and stage gate. Look for experience on the estimating team, research similarly situated projects, and always get an independent third party review.
With a mix of experience, assessment, and responsibility on both sides, we can get closer to the mark.