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Contrary to most perceptions there is no clear cut answer to this question. By outsourcing estimating you have lower fixed costs and lower overall running costs, but this may not necessarily be more or less than what you get charged.
Fixed Costs of in house estimating team include the fact that you have to pay salaries, electricity and other overheads whether or not you have work. You have reduced flexibility in terms of scaling up or down according to the market. So in a dull market an in house estimating team will probably be costing you more than if you did all your estimating by outsourcing it. On the other hand if you operating near full capacity then your operational efficiency is high and costs per job low.
Outsourcing on the other hand will give you greater flexibility. It basically transfers all the risk associated with the ups and downs in the market to the person you outsource to. You pay per job and don't have to worry about anything else.
However, its difficult to judge in a short time which is the more cost effective option. You need to evaluate your average estimating costs per job over a whole business cycle and then compare it to what you are or will pay if you were outsourcing instead.
But this itself is not enough. You also need to look the value of the service that is being offered. Is the quality comparable to what you achieve in house. Is it better or worse? After all if you have more business you can afford to pay more and vice-versa.
30 January 2010
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