It is often the case where an estimate is put together without documenting the basis
for it. The Basis of Estimate (BOE) is an important document that is needed as a
reference to support the actual estimate, both during the actual presentation of
the estimate and for future reviews (especially helpful when the people originally
involved are no longer available or past history becomes hazy and the “amnesia syndrome”
starts to set in).
While a lot of the information making up the estimate report itself is self evident
with no further need for clarification (for example the data comprised of columns
showing the quantity, unit price and the resulting extended price) other information
including critical information - which might have important cost and schedule aspects
- may not. Adding notes to the estimate, whether done via the estimating software
itself or in the spreadsheet, while helpful, still can not substitute the need to
have a formal Basis of Estimate document.
So what exactly do we want to document in the Basis of Estimate? While the contents
should be tailored to the needs of the interested parties a basic Basis of Estimate
could cover the following:
For whom is the estimate prepared for and end usage, who is the client and listing
of point of contacts for future reference.
- Project scope.
Details of what the project entails, including project metrics where relevant (such
as size, volume, capacity, weight), purpose/ application of project, location of
project, etc. Also worthwhile mentioning the type of contract, weather firm fixed
price/ lump sum, fixed price/ unit price, cost reimbursable, or target.
- Period of Performance.
What is the expected award date, project construction start, project duration.
What estimating method was primarily used (e.g. capacity factor, parametric model,
equipment factored, semi-detailed or detailed). What was the data source (e.g. published
cost database, proprietary purchase database, historical projects).
- Execution plan and resource usage.
Brief summary of how the project is planned to be executed with particular focus
on factors affecting cost and schedule including specifying workweek, resources and
equipment availability and composition, use of overtime or double shifts, etc.
-Risks and project unique factors.
Summary of risks with emphasis on items affecting cost and schedule, as well as listing
project unique factors such as project location specific market and geographic conditions
including site access, labour availability, weather, time of year, previous experience
with similar projects, complexity of project.
Who was involved in the estimate and what roles did they play and what data and assumptions
did they contribute.