First Principles Estimation is the process whereby an estimator considers and collates the individual costs of every resource needed to complete a project successfully. In doing so, they not only determine an accurate total cost of all the resources needed but also gain a thorough understanding of the requirements for a build—regardless of the stage of the project.
Combined with a bill of quantities (BOQ), an itemised list of all required materials obtained by analysing a project’s architectural plans, an estimator can price their resources to produce an overall budget. Through this process, they ensure tender accuracy by generating an all-inclusive net or cost rate for every item on the BOQ. In comparison, by applying a standard rate to these resources only—which does not factor in project specifics — this accuracy is lost.
In summary, First Principles Estimation is the answer to the question, ‘What do I need to get the job done and how much will it cost?’
THE BENEFITS OF FIRST PRINCIPLES ESTIMATION
By embracing First Principles Estimating, construction companies can accurately forecast the cost of a project, anticipate and troubleshoot problems before they occur, identify the best suppliers for the job, determine whether a build task will be completed in-house or outsourced to subcontractors, and avoid both over- and under-spending.
To win tenders, estimators need to have a clear understanding of their direct costs so they can price resources accurately and compete effectively against other companies. By working out the precise amount of materials needed for each item or resource, they guarantee this accuracy which goes a long way to winning jobs. Knowing these direct costs, for example, gives estimators the ability to adjust overhead and profit amounts to ensure their bid is as competitive as possible.
FIRST PRINCIPLES & CCS CANDY
Designed to incorporate First Principles Estimation at its core, Candy allows estimators to price and tender precisely using resource-based principles, free-format rate sheets and a range of cutting-edge features. Whether it’s pricing items manually or via import from Excel, applying predefined formulas, analysing resource usage and wastage in real time, or repurposing project data from a previous project for use in a new one; CCS Candy takes project tendering and estimation to a whole new level.
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