Accurately forecasting the scope, cost, and duration of future projects is vital to the survival of any business. Cost estimators develop the cost information that business owners or managers need to make a bid for a contract or to decide on the profitability of a proposed new product or project. They also determine which endeavors are making a profit.

Regardless of the industry in which they work, estimators compile and analyze data on all of the factors that can influence costs, such as materials, labor, location, duration of the project, and special machinery requirements, including computer hardware and software. Job duties vary widely depending on the type and size of the project.

The methods for estimating costs can differ greatly by industry. On a construction project, for example, the estimating process begins with the decision to submit a bid. After reviewing various preliminary drawings and specifications, the estimator visits the site of the proposed project. The estimator needs to gather information on access to the site; the availability of electricity, water, and other services; and surface topography and drainage. The estimator usually records this information in a signed report that is included in the final project estimate.

After the site visit, the estimator determines the quantity of materials and labor the firm will need to furnish. This process, called the quantity survey or "takeoff," involves completing standard estimating forms, filling in dimensions, numbers of units, and other information. A cost estimator working for a general contractor, for example, estimates the costs of all of the items that the contractor must provide. Although subcontractors estimate their costs as part of their own bidding process, the general contractor's cost estimator often analyzes bids made by subcontractors. Also during the takeoff process, the estimator must make decisions concerning equipment needs, the sequence of operations, the size of the crew required, and physical constraints at the site. Allowances for wasted materials, inclement weather, shipping delays, and other factors that may increase costs also must be incorporated in the estimate.

After completing the quantity surveys, the estimator prepares a cost summary for the entire project, including the costs of labor, equipment, materials, subcontracts, overhead, taxes, insurance, markup, and any other costs that may affect the project. The chief estimator then prepares the bid proposal for submission to the owner.

Construction cost estimators also may be employed by the project's architect or owner to estimate costs or to track actual costs relative to bid specifications as the project develops. Estimators often specialize in large construction companies employing more than one estimator. For example, one may estimate only electrical work and another may concentrate on excavation, concrete, and forms.

In manufacturing and other firms, cost estimators usually are assigned to the engineering, cost, or pricing department. The estimator's goal is to accurately estimate the costs associated with making products. The job may begin when management requests an estimate of the costs associated with a major redesign of an existing product or the development of a new product or production process. When estimating the cost of developing a new product, for example, the estimator works with engineers, first reviewing blueprints or conceptual drawings to determine the machining operations, tools, gauges, and materials that would be required. The estimator then prepares a parts list and determines whether it is more efficient to produce or to purchase the parts. To do this, the estimator asks for price information from potential suppliers. The next step is to determine the cost of manufacturing each component of the product. Some high-technology products require a considerable amount of computer programming during the design phase. The cost of software development is one of the fastest growing and most difficult activities to estimate. As a result, some cost estimators now specialize in estimating only computer software development and related costs.

The cost estimator then prepares time-phase charts and learning curves. Time-phase charts indicate the time required for tool design and fabrication, tool "debugging"—finding and correcting all problems—manufacturing of parts, assembly, and testing. Learning curves graphically represent the rate at which the performance of workers producing parts for the new product improves with practice. These curves are commonly called "cost reduction" curves, because many problems—such as engineering changes, rework, shortages of parts, and lack of operator skills—diminish as the number of units produced increases, resulting in lower unit costs.

Using all of this information, the estimator then calculates the standard labor hours necessary to produce a specified number of units. Standard labor hours are then converted to dollar values, to which are added factors for waste, overhead, and profit to yield the unit cost in dollars. The estimator then compares the cost of purchasing parts with the firm's estimated cost of manufacturing them to determine which is cheaper.

Computers play an integral role in cost estimation because estimating often involves complex mathematical calculations and requires advanced mathematical techniques. For example, to undertake a parametric analysis (a process used to estimate costs per unit based on square footage or other specific requirements of a project), cost estimators use a computer database containing information on the costs and conditions of many other similar projects. Although computers cannot be used for the entire estimating process, they can relieve estimators of much of the drudgery associated with routine, repetitive, and time-consuming calculations. New and improved cost estimating software has lead to more efficient computations, leaving estimators greater time to visit and analyze projects.

Operations research, production control, cost, and price analysts who work for government agencies may do significant amounts of cost estimating in the course of their regular duties. In addition, the duties of construction managers may include estimating costs.

Work environment. Although estimators spend most of their time in a comfortable office, construction estimators also visit worksites that can be dusty, dirty, and occasionally hazardous. Likewise, estimators in manufacturing spend time on the factory floor, where it also can be noisy and dirty. In some industries, frequent travel between a firm's headquarters and its subsidiaries or subcontractors may be required.

Estimators normally work a 40-hour week, but overtime is common. Cost estimators often work under pressure and stress, especially when facing bid deadlines. Inaccurate estimating can cause a firm to lose a bid or to lose money on a job that was not accurately estimated.