# Estimating When You Just Don't Know



## Texas Wax (Jan 16, 2012)

Hdavis,

LOL you sound like Oconomowc

I happen to agree and have used variations of those formulas for many years, for the new or unknown kind of jobs. They tend to weight to the expensive side in competitive bidding. However the best jobs are frequently the ones you didn't get - aka would have lost the farm on.

Now trying to get most others (especially contractors) to understand how it works and the value of systems like it - good fricken luck :laughing: leave the non drinking horses to die of dehydration, at the well.


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## hdavis (Feb 14, 2012)

pcplumber said:


> Sounds like too much thinking to me!
> 
> I get the point regarding using some sort of mathematical equation. This reminds me of the era when I read every book about gambling and I thought I invent a system that could make me rich. It took me about 3 months to realize that regardless of the math you use when you throw the dice knowing the math does not change the risk.
> 
> ...


This actually bring up another topic that I won't get into too deep, other than to say it's the gambler's ruin problem. You can, on average, make money on every hand, and still go broke. That's all old school math, these days monte carlo methods are used for the equivalent business situation. I don't think average contractors are going to get that fancy.


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## hdavis (Feb 14, 2012)

Texas Wax said:


> Hdavis,
> 
> LOL you sound like Oconomowc
> 
> ...


I actually think it's the ones just starting out with little clue that could benefit the most. If they can get a task list together, they can get decent estimates. My view is they tend towrd the expnsive side if you don't have a lot of experience with similar estimates. That's pretty much as it should be - you don't want to lose by winning a bid:blink:

As for Ocowonoc, maybe it would have been easier to digest with a chart:whistling


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## hdavis (Feb 14, 2012)

Here's a gambler's ruin chart:

http://books.google.com/books?id=Q9...epage&q=eudaemonic pie gambler's ruin&f=false

Basically, for a given size bet with a certain expected profit, it tells you how big a bankroll you need to have less than X% chance of going bust. 

That's real business.


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## Texas Wax (Jan 16, 2012)

hdavis said:


> As for Ocowonoc, maybe it would have been easier to digest with a chart:whistling


...and video :whistling


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