Estimating

E572: Qualify Your Quotes

Review your quotes before submitting your proposal.

 

 

  1. Part of our estimate includes quotes
    1. Supplier quotes
    2. Subcontractor quotes
    3. Equipment quotes
  2. During estimating we reach out to vendors for quotes
    1. We typically provide them with the information
    2. Some review that information and some don’t
    3. They provide us quotes and sometimes for the wrong thing
  3. Protect you estimate by qualifying your quotes
    1. Qualify each quote you plan to plug into the estimate
    2. Call the vendor to review and ask questions
    3. Have them revise and quote what is correct

E562: Creating Accurate Estimates

Accurate estimates help us win the best work.

 

  1. We want to bid less and win more
    1. Bid to the right clients
    2. Bid on the right projects
    3. Create accurate estimates
  2. Good estimates start with accurate take-offs
    1. We need accurate quantities for good estimates
    2. We need to capture all the proper materials
    3. Include the full scope
      1. Including overhead items
  3. Next be sure to get full pricing on everything
    1. Get quotes on all the materials
    2. Request prices from all subcontractors
    3. Be sure to review and clarify all quotes
      1. Ask for scope/quote sheets ahead of bid day to have time to review

E557: Bid Less to Win More

Bid strategically to win more work.

 

  1. What’s your bidding approach?
    1. Bid a lot of jobs in hopes to win some
    2. Bid strategic jobs knowing you will win
    3. The best approach is to bid less
  2. Bid fewer jobs so you can win more of your bids
    1. In racing they say slow down to go faster – the same applies here
    2. If you bid too many projects at a time then the numbers are not accurate
      1. You often win when you make a mistake
    3. Take your time and bid fewer projects to have more accurate estimates
  3. Start winning more of your bids
    1. Bid on the right projects with the right clients
    2. Invest the time in each estimate to be accurate and realistic
    3. Be strategic about what bids you entertain

E552: Chase The Right Work

Landing the wrong project can destroy a good business.

 

  1. Not all work is equal
    1. Different project types, sizes, locations, etc.
    2. Different Owners, clients, managers, financing, etc.
    3. Different requirements placed on the contractors
  2. Determine what is best for you
    1. Start with your vision – what types of projects support it
    2. How do you want your business to run
    3. What are the skill sets you have now and in the future
  3. Use the Go / No-Go process
    1. Create your ideal project and create a score
    2. Score each potential project should be scored and compared to the ideal
    3. Use this scoring to determine which projects / clients you should chase
    4. Don’t be afraid to walk away

E542: Scope Clarifications In Contract

Review your contracts with estimating to clarify the scopes.

 

  1. Most estimates have them
    1. Clarifications to the bid
    2. Exclusions and inclusions
    3. Discussion items in negotiations
  2. Problems arise if not in contract
    1. Often happens when the project is on-going
    2. The project team is expected to perform per contract but contract is wrong
    3. Items are missed in the scope and now there is a cost gap
  3. Establish procedures to protect yourself
    1. Contract review procedures with estimating involved
    2. Check the proposal versus the contract and construction documents
    3. If there are questions or interpretations get them clarified

E537: Buying A Job To Win A Client

Dropping prices to win over a new client can be a good strategy.

 

  1. Buying a job is a common strategy
    1. We target a client and give them a low price in order to start a relationship
    2. We get in with them in hopes of future work at our normal pricing
    3. Does it really work?
  2. My successes and failures
    1. A developer – we did a job at their typical pricing in hopes of showing them they should pay us more – it worked
    2. An industrial plant – took a low price job in order to get in and later found that everything was based on lowest price regardless of value provided
    3. A city – took a project to get in and put the wrong team in place, didn’t provide value – never got shortlisted again
  3. This strategy can work but takes some careful research and understanding
    1. Know the customer – are they right for you?
    2. Know the projects – does value matter over price?
    3. Make sure you have value to add – if not they will never pay more for your services on the next project
      1. This is the key part – you must be bale to prove the values you offer in order to get the pricing you want in the future

E522: Estimating The Contract

Review your contracts carefully during the estimating process.

 

  1. Contracts are the basis of all projects
    1. Contracts = risks / deliverables = cost
    2. Contracts can be simple or complex
    3. Review the clauses and account for them in your estimates
  2. Risks & deliverables cost money
    1. Depending on the risk / deliverable the value will fluctuate
      1. You can break them into Actual and Potential
    2. Actual: reporting, scheduling, manpower, supervision, security, etc.
    3. Potential: Acceleration, change order mark-ups, delays, hold harmless, etc.
    4. Account for them in the estimate
  3. Review and add to your estimate
    1. Treat like a contingency – have adds/deducts
    2. Review each clause to determine what time / effort is required
    3. What are the possibilities on the project

E512: Estimating Contingencies

Build a solid safety net into your estimates with contingencies.

2

 

  1. Contingency = money added to an estimate to cover a potential risk
    1. We often see allowances in contracts – contingencies are a little different
      1. They cover potential risks that may or may not occur like unsuitable materials
    2. I put them in all my estimates
    3. It’s a great way to create solid estimating data and cover potential risks
  2. Make them part of your sound estimating practices
    1. How do you cover the potential risks encountered when working in a new area?
      1. I used to adjust my actual estimate – maybe add some time to the crew to cover potential costs
      2. That doesn’t produce a good solid estimate or good historical data
    2. Price each job properly based on the project itself and not the incidental risks
    3. Cover the incidental risks using contingencies
  3. Make them a standard item in your estimates
    1. Price your projects as you should
    2. Add your standard markups
    3. Add contingencies – there are many things that you might add them for like:
      1. Travel / New Owner / Hard Owner / A/E Team / Weather / Location / Inspectors / etc.

E497: Managing Estimating Documents

Protect your estimate with good document tracking.

 

  1. During the estimating process we often have changes and alternates – make sure you keep track
    1. It’s important to know what was priced in the estimate
    2. Track all changes and alternates
    3. Come to a starting point for construction
  2. Track and update documents throughout estimating
    1. Create a log of all bid documents
    2. Update the log and the drawings with all changes and alternates
    3. Make sure you distribute any changes to all subcontractors / suppliers
  3. Do a final review and reconciliation
    1. Before signing the contract review and reconcile the log
    2. Be sure to reference your log in the contract
    3. Create a “construction” set of drawings that matches your estimate

E472: Material Pricing Strategies

Create a strategy for material pricing during the estimating process.

 

  1. How do you handle material pricing for estimates?
    1. Use historical numbers from your database?
    2. Get pricing from suppliers? Some items? All items?
    3. Do you work with select suppliers or the market?
  2. Establish best practices for your organization
    1. Determine the strategy that works for you
    2. You should always price major supplies
    3. Check the market to stay competitive
    4. Let suppliers know what you expect and get the right pricing
  3. Consider negotiating some strategic relationships
    1. This can be beneficial depending on the quantities you buy
    2. Select some key suppliers and negotiate some annual programs
    3. Keep tabs on the industry to keep you relationship in check