Ballpark Estimates

by Levitch Associates

We develop our ballpark estimates from our experience with similar projects. Some projects are more difficult to estimate than others given the complexity or relative unknowns. We try to be conservative (higher rather than lower) at the risk of dissuading potential clients from embarking upon the Preliminary Design with us.

A ballpark estimate is a term used to identify an approximation of an outcome that is based on the information that is readily available to the person or group who is making the estimate. Unlike a guess, a ballpark estimate takes into consideration data that can be verified with relative ease and employs expertise in making rational projections based on that data, coming up with an answer that is reasonable in light of all known factors.

By contrast, a guess is tends to rely more on subjective understandings and less on verifiable data.

The fanciful name for the ballpark estimate alludes to many types of sports that are played in a ballpark. The concept has to do with coming up with an estimate that, like the ball that is struck with a bat and lands somewhere within the facility, is within reasonable distance from the goal. While not considered an actual quotation or covenant, the estimate serves as a guideline for determining whether to move forward with a project, or to abandon it in favor of some other activity.

With a ballpark estimate, the data available for analysis and consideration in forming the estimate provides the essential range of values necessary to come up with a reasonable answer. Within the scope of that estimate, it is understood that should other relevant information appear during the project, the outcome could be changed in some manner.

For example, a car insurance agent may present a ballpark estimate to a potential client, based on the known details about the customer. If the agent finds out later that the customer has several tickets over the last couple of years and an accident or two that was not reported at the time the estimate was requested, this will make an impact on the final premium that the agent extends to that client.

While a ballpark estimate is not the final word, it will take into consideration enough information to make a reasonable guess at the final outcome. In actual practice, an estimate of this type may be very close to the outcome; especially if no previously unknown factors arise that have any real bearing on the result. At other times, the appearance of a significant amount of information that was not taken into consideration previously can render the estimate more or less useless. Typically, a ballpark estimate is not considered binding and serves only as a guideline until it is possible to determine the outcome more precisely.