Estimates to complete

An examplePrepared for Hayles and Howe, Inc. Joselin R Martin Financial Manager

 Calculation: Subtract the actual to date from the budget Benefit: Easy Drawback: May or may not have any relationship to the amount of work actually performed to date All rights reserved 07/26/2012 3

Original Estimate Method 1: Budget - ActualValue of contract $3,500 $3,500Estimated budget mandays 12 12Estimated budget manday rate $200 $200Actual mandays incurred 5ETC: Est - Actual 7Estimated total cost $2,400 $2,400 (12*200)Estimated profit $1,100 $1,100Estimated profit % 31% 31% All rights reserved 07/26/2012 4

 Calculation: Conduct physical evaluation of manday to complete each phase Benefit: 1. Better reflection of remaining work 2. Makes clear just how to schedule work 3. Allows identification of overages (change?) Drawback: Requires understanding of scope and ability to evaluate how much work remains All rights reserved 07/26/2012 5

Original Estimate Method 2: Physical EvaluationValue of contract $3,500 $3,500Estimated budget mandays 12 12Estimated budget manday rate $200 $200Actual mandays incurred 5ETC: Physical review 10Estimated total cost $2,400 $3,000 (15*200)Estimated profit $1,100 $500Estimated profit % 31% 14% All rights reserved 07/26/2012 6

Method 1: Budget - Method 2: Physical Original Estimate Actual EvaluationValue of contract $3,500 $3,500 $3,500Estimated budget mandays 12 12 12Estimated budget manday rate $200 $200 $200Actual mandays incurred 5 5ETC 7 10Estimated total cost $2,400 $2,400 (12*200) $3,000 (15*200)Estimated profit $1,100 $1,100 $500Estimated profit % 31% 31% 14% All rights reserved 07/26/2012 7

 Physical evaluations of mandays to complete (by phase) are important to effective job cost control and management PM should periodically walk job with Superintendent to ensure estimates properly reflect ETC Unexpected variances should be investigated promptly for causes and potential remediation. Possible explanations: • Change orders need to be priced • Productivity issues on site • Problems with original estimate Failure to get good ETC information makes remediation difficult, if not impossible! and perhaps…. All rights reserved 07/26/2012 8

Estimates to complete

by Joselin Martin on Aug 09, 2012

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