Parallel Estimates as a Money-Saving Practice
Posted: November 7, 2016 | Project Management
A new trend in major construction projects is to utilize the Construction Manager (CM) method of project delivery. Simultaneously with this trend, independent cost estimating consultants are often called on to develop an independent cost estimate concurrently prepared with, and theoretically in alignment with, the CM’s estimate. This is conveniently referred to as the “Parallel Estimate.”
This usually begins in the early stages of the design process, with the independent cost estimator, acting as a consultant, providing a detailed breakdown for each CSI Division based on the limited design criteria from the design architect.
In estimating construction, the tendency of the CM is often to revert back to their general contracting ways of negotiating projects – consisting of lump sum preliminary sub-bids prepared by subcontractors and inserted into the CM’s breakdown. When this does occur, the independent cost estimator is prepared to provide the owner and architect an instrument that will – like a mirror – reflect the design back, in terms of actual real dollars. These dollars are broken down to the quantities designed, along with anticipated items not designed.
The way it works is simple: when the design architect is at the schematic design level – AIA LOD 200 point of design – both the independent cost estimator and CM are each issued the documents to start the due diligence necessary to complete their respective cost estimates. From our experience, it works best if the independent cost estimator and the CM do not communicate during this stage of estimating, in order to avoid prejudicing their thoughts or pricing.
When the two firms are almost done with their estimates, it’s the perfect time to have an all-day working session (or more or more than one day, depending on the complexity of the project), with representatives of the design architect, Construction Manager, and independent estimator. These sessions can be spent productively reconciling the estimates with one another regarding scope, quantities, materials, staging, and schedule. In fact, we have received comments from architects telling us this is a good Q&A time for them, and helps them discover information that may be lacking in their documents.
If the reconciled estimates have bottom lines in excess of the owner’s known budget, this is a good time to discuss opportunities for value engineering. This can arise from ideas generated by any, or all, of the team members participating in the cost estimate reconciliation process.
Now it's Time to Meet with the Owner
At this point, the team has prepared multiple versions of the cost estimate for the original design, along with some new possible money-saving ideas. Now the owner will have the information and ideas necessary to make good decisions regarding the construction budget, and possible design revisions that will help fit the project into the available funding.
The benefits of this process allow owners and their design consultants to identify line items that may or may not be required for the final design. This approach provides an independent opinion that reinforces decisions to move forward by the interested parties.
It also identifies “budget busting” issues by providing an early breakdown before plans fully develop – protecting against costly modifications to the design and delays to the owner’s schedule. In turn, the process allows an owner a greater comfort level with their CM. This is why we refer to the parallel estimate as a valuable decision-making tool that provides beneficial information throughout the entire design process.
CERT (Consulting Estimators Round Table) recommends the use of independent estimators for purposes of performing parallel estimates and suggests that they, as consultants, are indeed an integral component of the entire design process. It is our hope that owners and their design consultants see this value too, and regularly incorporate these independent opinions of cost into their design and planning practices.
About the author: David Battle developed Pre Construction Services, Inc. when he saw an increasing need for architects to have an independent cost analysis of their designs. Working with architects throughout all design phases of a single project has lead to the satisfaction of owners and architects alike. Over the years, clients continue to depend on Pre Construction Services, Inc. to provide cost effective design balance to the owner's budget. To find out more, visit www.preconstructionservices.com.