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Kevin McClod on Self Build


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1 hour ago, SteamyTea said:

He thinks it is always worth paying for a professional.  Then he goes on to relate a story about an estimator adding 20%, passing it onto the boss, who adds another 20%.

Says it then comes in on budget.

Yes some one I know who ran a software business would always double the figure he was given by his software engineering team before send out the tender - needless to say he retired happy and rich!

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What he described in that podcast was a phenomenon that was recognised in major military projects years ago.  We gave it the name "optimism bias".  There's even a formula used when looking at project costings for military projects that works out how much needs to be added in order to come up with a reasonable project cost. 

 

I strongly suspect that self-builders are very prone to "optimism bias", for a few reasons.  Few self-builders have much experience of the way that houses are built, and a lack of knowledge can add a lot of cost.  Similarly, few self-builders have experience of quantity surveying, so most probably leave out some elements (by oversight) and assign optimistic costs to other elements.  Finally, I suspect that "mission creep" happens a fair bit, where the spec gets enhanced during the build, with a corresponding increase in the cost.

 

Looking around here, it's noticeable that those with previous building experience tend to have come in at significantly lower costs per metre² then those that have little experience.  Although the sample size is small, I suspect this holds true in general.

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8 minutes ago, JSHarris said:

[...]

We gave it the name "optimism bias". 

[...]

Looking around here, it's noticeable that those with previous building experience tend to have come in at significantly lower costs per metre² then those that have little experience.  Although the sample size is small, I suspect this holds true in general.

 

Guilty as charged.

Knackered, broke, learning hand over fist, stressed and very happy.

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Optimism bias is now also well recognised within all major civil engineering projects. When looking at costing flood schemes (as an example), the optimism bias allowance slowly reduces the more detailed the scheme design gets as more unknowns are removed.

 

Its something all self-builders could consider in a basic manner( and it has helped us). While we're employing help for certain aspects on our build, we are buying in all the materials. At the beginning it was quite difficult to figure out an end cost, so we added large contingencies on to the more uncertain aspects. Now we have a more detailed design (and better understanding of how it will be built!) and we're getting quotes, we're able to reduce contingency a bit as we're more certain of the end point.

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It's a definite thing in my business, to the continual frustration of my colleague. We now routinely round up estimates to allow for it, except then I get optimistic about having such a big contingency and underestimate the actual work even more ?

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On 09/08/2019 at 15:02, MikeSharp01 said:

Yes some one I know who ran a software business would always double the figure he was given by his software engineering team before send out the tender - needless to say he retired happy and rich!

 

Is that not what GPs are rumoured to do with alcohol consumption self-estimates?

 

Hands up anybody who halves it first ?

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On 09/08/2019 at 15:29, JSHarris said:

What he described in that podcast was a phenomenon that was recognised in major military projects years ago.  We gave it the name "optimism bias".  There's even a formula used when looking at project costings for military projects that works out how much needs to be added in order to come up with a reasonable project cost. 

 

I strongly suspect that self-builders are very prone to "optimism bias", for a few reasons.  Few self-builders have much experience of the way that houses are built, and a lack of knowledge can add a lot of cost.  Similarly, few self-builders have experience of quantity surveying, so most probably leave out some elements (by oversight) and assign optimistic costs to other elements.  Finally, I suspect that "mission creep" happens a fair bit, where the spec gets enhanced during the build, with a corresponding increase in the cost.

 

Looking around here, it's noticeable that those with previous building experience tend to have come in at significantly lower costs per metre² then those that have little experience.  Although the sample size is small, I suspect this holds true in general.

 

Two to add to that list.

 

"Unknown unknowns - o feck skippy felll down the mineshaft we just discovered."

"Planner requirements, which may be justified - you shall reopen that quarry in order to get the matching stone" , and so on.

 

I wonder if there is also the "once we have started they cannot go back" thing, that happens in politics.

 

F

Edited by Ferdinand
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