Estimating Methods and Techniques
Choosing a method
Estimating methods form a spectrum from top-down to bottom-up. Know capacity factoring (scaling cost by a capacity ratio raised to an exponent), parametric and cost-estimating-relationship (CER) models, analogy, equipment-factored and lang-factor estimates, unit-rate methods, and detailed quantity takeoff with resource build-up. Selection depends on available definition, data quality, and the decision the estimate supports.
The six-tenths rule and scaling
Capacity scaling uses Cost₂ = Cost₁ × (Capacity₂/Capacity₁)^n, where n is commonly near 0.6 for process capacity but varies by equipment type. Candidates must apply the exponent correctly and recognize that scaling is only valid within a reasonable capacity range; outside it, extrapolation error grows.
Productivity and learning
Labor hours depend on productivity factors, crew mix, site conditions, and learning-curve improvement. The learning curve reduces cumulative average or unit hours by a constant percentage each time cumulative quantity doubles. Distinguish unit-curve from cumulative-average-curve conventions.
Traps
Watch for: applying an exponent to the wrong ratio (inverted); forgetting to adjust for time and location; mixing currencies or units; treating a parametric output as precise; and using analogy data whose scope or conditions differ materially without adjustment.
Worked example
A plant costing $10M at 100 units is scaled to 200 units with n=0.6: $10M × (200/100)^0.6 = $10M × 1.516 ≈ $15.2M, before location and time adjustments.