The estimate was accurate on average. The jobs you won were not.

Unbiased estimating can still produce a portfolio of loss-making work, because winning a quote is not a random draw from your estimates.

By Steve 5 min read
Abstract bridge artwork for The estimate was accurate on average. The jobs you won were not.

A firm audits its estimating. It pulls two years of completed jobs, compares quoted hours against actual hours, and finds the average variance is close to zero. Some jobs ran over, some ran under, the errors cancel. The estimators are, in the statistical sense, unbiased. And yet gross margin on delivered work sits several points below the margin assumed at quote, and nobody can point to where it went. This is one of the more common and least-diagnosed problems in any business that prices work before it does it. The…

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Important: General information only. Rialto Bridge articles describe patterns and considerations that may apply to a business; they are not financial, legal, tax or accounting advice, and they take no account of your particular circumstances. Consider your own situation and seek advice from a qualified professional before acting.

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