Cost estimates are an important piece of how TCDI’s Military Spouse Managed Review team (MSMR) communicates with our clients. By sharing a document review cost estimate with clients, we can help them to understand the scope of the project, the timeline, and the budget. This can help to avoid surprises later on and ensure that everyone is on the same page. A cost estimate is important for a number of reasons.
Providing a document review cost estimate helps to:
- Determine the feasibility of a project.
By estimating the costs involved up front, our clients can decide whether or not the project is within budget. - Plan for the future.
Once they have a cost estimate, clients can plan how to pay for the project. - Track progress.
As the project progresses, clients compare actual costs to the estimated costs along the way. - Prevent cost overruns.
By estimating the costs involved, clients can take steps to avoid unexpected expenses.
How To Create a Cost Estimate
Here are the steps the MSMR team at TCDI uses to create a cost estimate:
- Define the scope of the project.
What work needs to be done? What are the deliverables? For document review, we need to know: the volume of documents, the deadline, and the complexity (type of review). We always assume a simple review (10 issue codes or less) unless directed otherwise. - Identify the resources required.
Which people, equipment, and materials will be needed? Once we know the scope, we can estimate documents per hour and number of people needed. - Add up the costs of the resources.
This gives you the total cost estimate for the project. We add three simple numbers to get to a beginning estimate: First Pass Review, QC, and Project Management hours. - Get approval from stakeholders.
Once we have a beginning cost estimate, we send to the client for approval.
Creating a document review cost estimate can be a complex process, but it is important to do it accurately and realistically. Many factors impact our estimates. And clients often ask us to provide an estimate before we have seen a Review Protocol or a single document. This means we can only be so accurate in our beginning estimate.
What is the Margin of Error on a Cost Estimate?
The margin of error on a cost estimate is the amount of uncertainty inherent in any estimate. It is affected by a number of factors, including the complexity of the project and the accuracy of the data used to make the estimate (expected pace, amount of QC, etc.). A good rule of thumb is to allow for a margin of error of 10 – 20% on our cost estimates, which is what the Project Management Institute recommends. This helps avoid surprises down the road and ensures there is enough money to complete the project.
TCDI tries to reduce the margin of error on our cost estimates:
- Get accurate starting information.
Making sure we have a good understanding of the scope of the project and the resources that will be required is key. If we scope the project to be a simple review, but it turns out to be a claims matter or a patent infringement case (complex matter), our estimate will be off. Additionally, we assume in our estimates that we can follow our own best practices for workflow and product usage. If we are asked to use a review platform that we haven’t used before or follow Outside Counsel’s review workflow instead of our own, our estimate will be off. - Be conservative, but realistic.
When making our estimates, we do our best to balance being conservative in our estimate (to avoid overages) with being realistic with expectations. We aim to not over-estimate and in order to remain competitive in terms of timeline and cost. It is a fine line, and we do our best to provide accurate estimates that allow for some buffer. - Be prepared to adjust the estimates.
As we progress through the project, we may need to adjust our estimates based on the realities of the project. If we estimated originally based on a 55 documents-an-hour pace, but in practice, the best team members are only doing 40 document an hour, we need to realign expectations. So, we would do a new estimate based on 40 documents an hour. It doesn’t mean our estimate was wrong, it means our original assumptions were flawed. Once we have all of the information, we would update the estimate. We do this as early as possible into the review. But it does take a few weeks to get up to optimal speed to know the pace and QC needs for each individual project.
Cost Estimation: Art, Not a Science
A cost estimate is TCDI’s best guess of what the costs of a project will be. We always base them on the best available information we have at the time and our prior experience with similar cases. It is possible, sometimes likely, that the actual costs of a project or service will be higher or lower than the estimate. So, we always try to update estimates as frequently as possible when assumptions turn into known quantities. Also, throughout the process, our Project Managers often suggest ways to reduce the costs of review, like reviewers performing less tagging or implementing streamlined workflows.
Estimating the costs of a project is an art, not a science, which is why we strive to update cost estimates throughout the life of a project – to help our clients make sound decisions about managing a project, early and often.
