We are independent & ad-supported. We may earn a commission for purchases made through our links.
Advertiser Disclosure
Our website is an independent, advertising-supported platform. We provide our content free of charge to our readers, and to keep it that way, we rely on revenue generated through advertisements and affiliate partnerships. This means that when you click on certain links on our site and make a purchase, we may earn a commission. Learn more.
How We Make Money
We sustain our operations through affiliate commissions and advertising. If you click on an affiliate link and make a purchase, we may receive a commission from the merchant at no additional cost to you. We also display advertisements on our website, which help generate revenue to support our work and keep our content free for readers. Our editorial team operates independently of our advertising and affiliate partnerships to ensure that our content remains unbiased and focused on providing you with the best information and recommendations based on thorough research and honest evaluations. To remain transparent, we’ve provided a list of our current affiliate partners here.
Finance

Our Promise to you

Founded in 2002, our company has been a trusted resource for readers seeking informative and engaging content. Our dedication to quality remains unwavering—and will never change. We follow a strict editorial policy, ensuring that our content is authored by highly qualified professionals and edited by subject matter experts. This guarantees that everything we publish is objective, accurate, and trustworthy.

Over the years, we've refined our approach to cover a wide range of topics, providing readers with reliable and practical advice to enhance their knowledge and skills. That's why millions of readers turn to us each year. Join us in celebrating the joy of learning, guided by standards you can trust.

What Is an Estimating Technique?

Mary McMahon
By
Updated: May 17, 2024
Views: 3,907
Share

An estimating technique is an approach to predicting cost or revenue. Using a consistent methodology is important to achieve reliable and comparable results. Firms may have specific policies their personnel have to follow when making estimates to ensure that the approach will be similar no matter who prepares the estimate. This can help reduce problems associated with variances in methodology, like an offer from one mechanic in a shop of a very low price for service while another indicates the cost of a job will be much higher.

When preparing estimates, people can broadly divide them into detailed and approximate types. Approximate estimates offer a rough guess of the cost, based on similar projects, experience, and quick research. They can be helpful for getting a general idea of expenses before proceeding with a more detailed estimate. For people soliciting estimates, they can’t be quoted as firm bids, but may provide a frame of reference. A homeowner looking for a new roof, for example, could ask for an approximate estimate from several contractors to learn more about the range of possible prices.

Detailed estimates require more care in their preparation, because they should be as accurate as possible. They typically include the results of research to determine costs for materials, labor, and overhead. In this estimating technique, the goal is to provide information about real costs for the client. It can become the basis of a bid, in which case the client may be able to lock in the price with a contract. If the project exceeds this price, the client may be entitled to the original bid under the terms of the agreement.

In the preparation of estimates, people can use a variety of techniques. They may compare projects on an order of magnitude to get an approximate estimate. It’s also possible to use formulas in some industries where prices tend to be stable. A detailed case study may be necessary to determine how much work needs to be done and what it might involve. The type of project is also a consideration with estimating technique; calculating costs for new home construction is different than discussing how much is might cost to build a shed, for instance.

Some workplaces with standard estimating technique requirements may have a manual. Personnel can consult it in the course of preparing estimates to make sure they follow procedure and yield accurate, precise, and useful information. Customers can ask about the estimating technique used if they are curious or want a basis for comparison with other estimates for the same job.

Share
WiseGeek is dedicated to providing accurate and trustworthy information. We carefully select reputable sources and employ a rigorous fact-checking process to maintain the highest standards. To learn more about our commitment to accuracy, read our editorial process.
Mary McMahon
By Mary McMahon

Ever since she began contributing to the site several years ago, Mary has embraced the exciting challenge of being a WiseGeek researcher and writer. Mary has a liberal arts degree from Goddard College and spends her free time reading, cooking, and exploring the great outdoors.

Editors' Picks

Discussion Comments
Mary McMahon
Mary McMahon

Ever since she began contributing to the site several years ago, Mary has embraced the exciting challenge of being a...

Learn more
Share
https://www.wisegeek.net/what-is-an-estimating-technique.htm
Copy this link
WiseGeek, in your inbox

Our latest articles, guides, and more, delivered daily.

WiseGeek, in your inbox

Our latest articles, guides, and more, delivered daily.