What is the Rule of Thumb method?

We all have been using the Rule of Thumb estimating one way or another.

When we are buying a home, starting a new business, or investing in stocks, we often look for a rough and ready calculation that is good enough to make our initial decisions. To find our affordability before buying a home, to know the return on investment before starting a business, or to calculate how much our money will grow before investing in stocks, and for many other things, we use some rules of thumb. Thumb rules are useful to us during the initial stages of any activity.

Just as in other fields, thumb rules are also used in preliminary designs as well as in conceptual cost estimating

A rule of thumb method in cost estimating is drawn from design or practical experience and it provides a rough guide to come up with quantities during the initial stages of design like the concept or schematic phases.

The rule of thumb is a method for developing quick approximate estimates of costs.

Examples of the application of the rule of thumb allowances are:

• pounds per square foot for structural steel framing,
• pounds per cubic yard of concrete for rebar quantities, and
• the number of sprinklers required per 100 square feet of floor space, etc.

Used correctly, the rules of thumb method in cost estimating can assist significantly in developing cost estimates, particularly during the early stages of design.

This post describes the Rule of Thumb method in cost estimating used for quantity calculations in cost estimates.

   

Using the Rule of Thumb Method in Cost Estimating

Remember, “Rule of thumbs are approximations.“

Cost Estimators may refer to published handbooks, conceptual drawings, or other resources as well as in-house data, if available, for the Rule of Thumb method in cost estimating.

Before the usage, a few of the rules may require confirmation with the design team or the Architect. Developing familiarity with the usage will be handy for estimators to calculate approximate quantities.

When Preparing Conceptual Estimates

When preparing new estimates, quantities of some of the estimate line items may be arrived at using Rule of Thumb. For instance, the total quantity of structural steel for a building may be calculated by multiplying the GSF (Gross Square Foot) by the assumed steel pounds per Square Foot.

Example – The total quantity of structural steel will be 1,200,000 pounds, for a building with a Gross Square area of 100,000 SF, if 12 pounds per square foot is assumed.

When Reviewing Quantity Take-offs in an Estimate

Conversely, the steel quantity (pounds) per square foot of the building area could be checked to see if it falls within the thumb rule range for a building. The estimator may perform the actual quantity take-off for structural steel framing and divide the total pounds by the Gross area, to check pound per square foot validity of Structural Steel quantity. Any value below 8 pounds per square foot or greater than 15 pounds per square foot may prompt the estimator to re-check quantity take-off and correct any errors.

Similarly, the estimator may calculate ratio of exterior wall area to gross floor area and check if it is within a certain percentage. The estimator may be able to explain higher building square footage costs to the owner if this ratio is more than the commonly observed thumb rule value

Other examples are checking the area of windows against the gross wall area and check if it is within a certain percentage, checking Linear Foot (LF) of partitions against Gross area, checking door counts against Gross area, etc.

Cost Estimators should also remember to document any explanations about any rules of thumb used in the estimate in the Basis of Estimate (BOE). This will aid in future estimate reviews and reconciliations.

Documenting Commonly Used Rules of Credit

Documenting and keeping a list of commonly used rules of thumb will help an estimator for future reference. The cost estimator may group the available thumb rule items according to the CSI (Construction Specifications Institute) divisions or other preferred WBS (Work Breakdown Structure), for easy understanding and quick reference.

Design Build (DB) and Construction Management (CM)

In recent times, an increasing number of projects are being done through the Design-Build (DB) and Construction Management (CM) procurement method. Mostly Design-Build projects progress up to the 30% design at which stage full quantity take-off may not be possible and thumb rules come in handy to the estimator. In a Construction Management project, thumb rules are helpful to quantify those items for which design is not fully developed. 

Optimal Use of Thumb Rules = Effective Cost Estimation

The cost estimating method you take should make the estimating effort more efficient and make the estimated cost more meaningful and acceptable.

During early design stages, just applying lump-sum allowances or estimating using other methods may not provide clarity to the estimated numbers. Thumb rules help to quantify items and the estimator will be able to explain to the owner the approximate quantities involved behind the estimated dollars during concept design or describe any variance using thumb rule checks in the later design stage.

In addition to those commonly applied, it is also possible to develop new rules of thumb based on data gathered from past projects, initial design guidelines, the basis of design, etc. By being conversant with thumb rules, estimators can bring value to their estimating approach.  

In Conclusion

Rules of thumb are handy for many reasons, whether it is for preparing ballpark estimates or making a sanity check of an estimate already prepared. Even though the design may be in its initial stages, they make it easy for the estimator to quantify many items and make the owner understand the volume, area, and other quantities behind the estimated dollars. Having familiarity with the rules will be immensely helpful for any estimator and the more familiar the estimators are with the rules of thumb and their usage, the more they will appreciate it.

About the Author, Ramani Sundaram

Ramani Sundaram, CCP, CEP, MRICS, PMP, is an experienced Project Management and Cost Professional with specialization in Cost Management and Cost Estimating. With an overall experience of 25+ years in the construction field, for the past 17 years, he has worked as ‘Senior Estimator’ and ‘Senior consultant’ in many cost consulting and construction management firms, performing cost estimating cost management and project control functions.

He has published an article in AACEI’s Cost Engineering Journal and has written many technical articles on the LinkedIn pulse and on other platforms. His prize-winning blog is posted on Project Control Academy’s website.

Ramani is a Board member and Vice President in AACEI’s NJ section. He is a Certified Cost Professional (CCP), Certified Estimating Professional (CEP), Project Management Professional (PMP) and a Member of RICS (MRICS).

He can be reached at his LinkedIn Profile.