Construction Dispute Involving Top Down cost estimating
Steve Holloway and Holloway Consulting recently represented the Claimant electrical contractor in a dispute involving Top Down cost estimating. The Defendant General Contractor was unreasonably critical of our Plaintiff Client’s Top-Down cost estimating methods, which had served our client for 30+ years.
This was a unique construction dispute involving Top Down cost estimating. The electrical contractor’s estimating method combined Quantity Take-Off and parametric estimating. For example, the electrical contractor sent the contract documents to its vetted and reliable electrical equipment suppliers for a Request for Quote (RFQ). These suppliers then performed QTOs and pricing for the quoted equipment for the building’s systems. These included lighting, power distribution, monitoring, and structured cabling, including security and audio-visual cabling. The electrical contractor also used QTO for determining the price for their site work, and it used QTO for their change orders.
Top-Down Cost Estimating
The estimating method used by our electrical contractor client is also often called a “top-down” estimation method. The commercial construction industry uses this method. For example, big box stores and warehouses utilize similar electrical construction techniques. As a result, the factors for one of these facilities will be consistent with other projects of the same type and general geographic vicinity. Our electrical contractor client informed Holloway that they had successfully used the top-down estimating approach for decades. The electrical contractor’s home office overhead allocation, profit, and bond allocations appeared reasonable based on Holloway’s experience with specialty contractors.
Top-Down cost estimating and all cost estimating methods can be described as parametric because they use construction cost parameters. However, the term “parametric estimating” is understood to mean the technique of developing cost estimates based on a limited number of critical features that are the major cost drivers of an estimate.
Parametric estimating is most applicable to standard facilities since the starting point is a database containing detailed costs from various similar and specific facilities. The premise underlying parametric estimating is that the price of the facilities in the data will vary as a function of specific key parameters. The significant advantage is that it provides detailed cost breakdowns quickly and at low staff cost with limited facility analysis. Thus, budget estimates will include details similar to working drawing estimates.
Contact Info
J. Steve Holloway, GC
The Holloway Consulting Group, LLC
10885 W. Beloit Pl.
Lakewood, CO 80227
Tel: 1-303-984-1941
Email: hollowayconsultinggroup@gmail.com