What Does A Cost Estimator Do?
Cost estimators play a very integral role in keeping businesses afloat and maximizing their profitability because they crunch the numbers to see if undertaking a project is financially practical or not. They are the professionals who gather the necessary data on the projected cost of labor and materials as well as the expected time frame for the completion of a particular endeavor.
The millions and even billions of dollars involved in making structures like bridges, highways, buildings, shopping centers and other edifices have to be computed vis-à-vis the expected returns to help management decide if these are worth the company’s time and resources. Because of their estimates, contractors are able to decide if a particular project is worth bidding for or not.
The specific tasks of a cost estimator depend on which industry he works for. Construction cost estimators typically start their estimates by looking at the technical drawings that are presented to them to check the project’s specifications and materials that will be needed. They will then go to the proposed construction site to scrutinize the lay of the land and the availability of services like electricity and water. Once they have all the information they need in their hands, the number crunching begins.
Cost estimators then finalize the kind of materials that will be needed, their measurements and how much they will cost and place these data into standard cost estimating forms so they can make the calculations. They will also take into consideration the kind of equipment that will be needed to carry out the work, how many laborers will be required and the limitations posed by the site that could potentially increase costs.
For example, if the construction site for a mountain resort development still does not have a clear road, the delivery of materials could get delayed which could lead costs to escalate. Taxes and other considerations, such as potential delays in the shipping, will also be included in the cost summary. They will then prepare the summary and then the final report which will be submitted to the management team of the firm who will make the final decision to proceed with the project or continue to join the bidding or not.
If cost estimators work in the manufacturing industry, their work will revolve around estimating how much a product redesign or new product development would cost. If company management wishes to know if manufacturing a new product would be in the best interest of the company, the cost estimator will first work with the members of the design and engineering team to determine the materials, tools and other equipment that will be used in the development process.
They will then ask suppliers about pricing costs for the materials that will be needed by the development of the product. This information will help the cost estimator recommend if it is more cost-effective to buy each of the materials or make them on their own.
Cost estimators will then analyze all the data on hand and plot a chart that would show how long each phase of production process would be. These processes would include the design of the product, making of the parts, putting the parts together and testing them for errors. They will also determine how long the learning curve is going to be to make the product.
This is an important part of their estimates because many of the issues associated with the manufacturing of a new product eventually go away as production ramps up since workers eventually gain expertise in producing them. This would result to a reduction in the cost of each item. The estimator then computes the length of time that it would take to get a particular number of the new product to be produced and turns these into monetary equivalents. By taking into consideration the other production expenses and profits, the estimator would be able to give an approximation of the selling price of the item as well as his analysis on it—that is, if the price point given is going to be within the reach of the product’s intended customers.
To be able to perform their work efficiently and meet deadlines, cost estimators these days now rely on computer cost estimating software to perform their calculations and reduce error. As their time gets freed up because of these software programs, cost estimators are able to give more of their time to analysis and less to rote computations. This greatly improves the quality of their work and makes their estimates more reliable.