What Does it Take to Run a Successful Business?
Are you Estimating or Guess-timating?
We all do it—when business is slow we get really picky about how we do things in construction. Perhaps it’s because we have time to do estimating the ‘right’ way or perhaps it’s because we aren’t distracted by the chaos of things going on around us. Either way we contractors know that there are good ways and bad ways; a best practices way and a get-it-done way to do takeoff and estimating. And most of the time it all centers on having the adequate amount of time to be a good estimator.
When the recession hit and staffing levels were reduced, contractors kept the A-players. And A-players have top notch practices on how to do takeoff and estimating, especially when they have time to do a thorough job. In fact, manual processes might even be tolerable when things are slow.
So what are some of those best practices that we develop when time permits? Here is a short list of best practices that can be found when the number of contractors and the hours of available work time are less than or equal to the volume of projects to bid.
- The estimator does both a preliminary and final takeoff before bidding.
- The project manager does a takeoff after winning the bid to ensure that nothing has changed.
- There is collaboration across the field and office teams.
These Three Practices
An estimator’s responsibility is really that of sales. The takeoff and pricing completed by the estimator are intended to cover all of the known costs for the sole purpose of securing the contract. Generally speaking there is a very short amount of time to gather all of the necessary information available and complete the work to put together a winning bid. Experience shows that almost never, no let’s be honest, never is all of the information for the project available to the estimator during the initial takeoff and bid estimation. So not only is it critical to do the preliminary takeoff but also a final pass to ensure that all change orders have been included and have not been missed. Checking the work is key for the estimator and this best practice is resurrected when time permits.
A takeoff and bid used to sell the work is not the same as a takeoff and budget used to build the job. It is not uncommon to have a significant amount of time pass between winning the bid and starting the project. Project managers should complete their own analysis of the project. After winning the contract, at a minimum a thorough review of the quantity takeoff as well as the material and labor budget should be conducted. The best practice is for the project manager to deploy value engineering to save on materials, labor and equipment.
Getting Information into the Right Hands
It isn’t always easy to get the right information into the right hands of the right people at the right time. Construction corporate structures are not single location entities. Whether at the jobsite, in the office or in-transit between locations, contractors need access to the most up-to-date data. They also need the ability to collaborate locally, regionally and globally. Data integrity and consistency is a must for quantitative measurements and bid submittals. Tracking labor costs and margin controls is essential. A takeoff in the U.S. must have the same timely access to information for a counterpart located half way around the world in Australia. Communications, RFIs, change orders—everything needs to be real time and mobile. Collaboration—effective collaboration—is critical to the success of any construction company regardless of size. Contractors have a tendency to talk more when time allows these conversations to happen.
But as the recession is clearing out and projects are starting to pick up there is both a positive and a negative effect. Contractors are trying to do more work with less people and in less time. When people hurry error rates go up, accuracy slips and collaboration goes out the window. All those good habits that took months and years to build are within a short span of time gone. How quickly we forget the value-add of good habits and best practices.
What’s a Contractor to Do?
The easy thing to do is let it all slip by the way and just hope you win the profitable jobs and count on your best people to make as few mistakes as possible. But there has to be more to it than that so what options are there for companies? Let’s start with the basics: Does everyone on your team use the same general process for estimating or does everyone have their own way? If something happened and one guy was out for a week could the next estimator available pick up right where he left off? Is it clear where he left off?
Technology at all steps in the construction lifecycle is essential for contractors to stay lean while staying on top of all the active, pending and archived projects. Projects are picking up but hiring will never regain the levels it once was—and that is OK so long as companies leverage automation solutions to fill in the gaps. Solutions can maintain and manage digital plans to prevent hunting through mounds of paper plans to do or review the takeoff. Collaboration must be at the level where a field guy sees something, takes a note and immediately communicates it to the office. Everything needs to be accessed and available online.
Don’t let the rush of the market turning around keep you from doing what is best for your business. Don’t return to the days of guess-timating. Stay where the profits are which is leveraging your best people to win the profitable business.