We are often asked to provide preliminary estimates for building and renovation projects, prior to the development of clear and definitive plans and specifications. Estimates are, of course, more accurate, with a fully realized set of construction documents. But we know that preliminary estimates are a good way for architects and owners to get a rough idea of the cost of projects before fully committing to a design. Sometimes, preliminary plans have enough information to provide fairly accurate pricing, but in some cases, by necessity, estimates are more like guesstimates. In these situations, numbers will be based on our experience and whatever information we can gather from the architect and owner, regarding the level of finishes.
Many owners and architects recognize the value of forming a project team (owner, architect, and contractor) early in the process. It allows owners to understand pricing as the plans evolve. Typically, an owner chooses an architect, and the architect creates preliminary drawings. The architect will then ask for preliminary estimates from contractors. Next, the owner and contractor meet to discuss the estimate, the way the contractor works, and their plan for executing the project. This also gives both the owner and the contractor an opportunity to size each other up and see if the fit feels right. The fit, the interview, a contractor’s references, and resume, as well as the estimate, will be the deciding factors in bringing the contractor onto the team.
The estimate should be evaluated for cost, of course, but also examined for how well it is prepared and how much has been anticipated that, perhaps, is not yet apparent from the plans. We tend to over-anticipate when doing preliminary estimates, not to over-inflate the price, but to include reasonable placeholders in the budget for tasks that may, or may not, be apparent or inferred by the preliminary plans.
As much as we say that our initial estimate is a ballpark best guess, owners often get that number stuck in their heads. That is why we try our best to think through every possible eventuality and include that in our proposal. Sometimes contractors come in with a low bid based on vague plans, get their foot in the door, and then try to make up for it with change orders down the line. We reject this approach because it is harmful in the long term. We like our customers to be happy at the end of the project, not just at the beginning.
Of course, there will be changes in scope as the drawings and specs become more refined and decisions on materials and finishes are finalized, but we feel that it is in everyone’s best interest to look at an outline set of documents and fill in the blanks as well as possible. This sometimes does not get us a seat at the table, but we would rather surprise the customer in a good way, by coming in at or below budget, than arriving at the end of the job significantly higher. Our hope is that the thoroughness we show in preparing a realistic preliminary estimate will help to indicate to both the architect and the owner that we have the abilities necessary to produce a high-quality product, and control costs.