Dr. Dawit Senbet
Type of Resources
The continued success and operation of a business requires that there be steady streams of income and that those incomes are greater than the business’s expenses. In the asbestos abatement industry, companies must provide accurate estimations of the price associated with a job in order to receive the contract to complete the work and maintain a profitable margin of invoiceable amount over labor and supply costs. Overestimating prices can result in lost work and underestimation can decrease or eliminate profit margins. For this reason, accuracy is extremely important. This is especially true for small businesses where profit margins are already quite tight. In these companies, a full schedule of work is required to keep the company running. Estimations are generally completed by human estimators drawing on personal field experience. This applied research project attempts to streamline this process by utilizing econometric analysis to develop a model to estimate these costs. Data for this project has been obtained by collecting information from 210 different jobs completed by a single firm located in the state of Colorado. The data has been run through estimation software and a model has been created using econometrics based linear regressions. This new model will be tested for statistical significance. The accuracy of the final model will be tested by comparing the model’s results with those of an estimating technique already in use at the firm. It is intended that the resulting model will be able to accurately estimate costs early on in the project process, thereby helping to improve consistency of profit margins and uniformity of estimations across human estimators.