How Estimating Has Evolved
New technology meets the expansive needs of today’s estimating professionals.
Estimating might not be the oldest construction trade, but it ranks up there with the most important. Throughout the years, the approach to estimating hasn’t changed much, although technology continues to move the field into new ways of thinking.
Two recent factors have made technology adoption in estimating even more critical: the aging and departing workforce of experienced estimators and the speed with which RFPs (requests for proposals) must be responded to in order to get the job. Add to those the need to deal with constantly changing prices and material availability and you get quite the headache if your estimator isn’t on top of things.
Addressing the first challenge, Nick Papadopoulos, president, estimating software provider Eos Group, www.eosgroup.com, Scottsdale, Ariz., comments, “That’s exactly what we’re seeing as an industry, we aren’t growing enough estimators, the schools aren’t growing them, we don’t have the apprenticeship programs, and companies cannot afford to invest (years) to effectively grow individuals into veterans who know these numbers.”
Estimating is generally a local art—not only are prices for local market conditions important but so are things like bidding and estimating strategies, knowing the local competition, knowing how busy they are, and knowing your available labor pool. Can you effectively put up a facility in an area where all the brick masons are tied up on some other project? In general, national databases are good at predicting macro level information, but to get to a bid estimate, you must go into the locale, and get prices and availabilities of those material components in order to effectively compete at a hard bid level.
As Papadopoulos says, “People think estimating in general is all about identifying something in the job, scoping it, putting a price against it. You see that thinking at the designer levels, that’s one of the reasons why designers produce horrific estimates—they’re either way high or way low because they take a very naive approach to the estimating process. They don’t understand method, risk, the strategies involved in delivering, and implementing the components of the project they’re designing. Contractors do they have to.”
From the general contractor to the subcontractors and material suppliers, coordination of information is critical to getting the most accurate—and most profitable—estimate for each job you bid on. It’s that collaboration, information exchange, and currency of data that is handled easiest by today’s technology.
As those involved in the planning stage move to digital plan delivery, getting information necessary for a strong estimate requires working in the same format. One of the innovations that technology has created is digital takeoff. Rick Bean, chief estimator, Diversified Landscape Co., www.diversifiedlandscape.com, Winchester, Calif., says, “The old way was you would get the plans and put them on a digitizing table and you take your pen and you count all the valves and measure your pipe and things like that. Now all these plans are online so we can download them as a .tiff file—we don’t even print the plans anymore. We download the plans and bring them into the takeoff program.”
Bean says they have one staff member who sits at a widescreen monitor and does all his calculations and all the things needed to do a takeoff paperless. Data is then entered into ProEst, the estimating program from Construction Management Software (CMS), www.proest.com, San Diego, Calif. “I think we bid $55-$60 million worth of work in 2008 with two people,” comments Bean. “We’re doing that all electronically. With other products, there’s no way we could’ve done it.”
Jeff Gerardi, president, CMS, outlines a significant return on investment using the technology, due to the reduced cost of printing and man hours. “If a contractor estimates about 100 projects a year, we calculate the ROI to be $62,000 in savings a year by using our tool: 50% time savings, 50% money savings in printing blueprints.”
Gerardi says the company is set to release the latest version of its digital takeoff using Microsoft .NET technology and SQL server.
Giovanni Marcelli, president, Accubid Systems, www.accubid.com, Concord, Ont., also sees great ROI in digital takeoff. In this realm, the company offers cadLive, and he estimates contractors can save greater than 50% in time spent quantifying the estimate by taking-off material directly from a CAD drawing.
He says, “And with a true ‘live’ link existing between the CAD drawing and the estimate, changes made to the drawing are automatically updated in the estimate.” Larger specialty contractors are finding benefit in using this product collaboratively with engineers and architects, developing scope, work, and budgets right at the inception of a project,” says Marcelli.
Closer to Home
As companies expand into new markets, collaboration across great distances becomes common. Architect in New York, owner in Chicago, and building going up in Los Angeles using a general contractor from Phoenix isn’t impossible. In each of these areas, costs will differ. Transportation costs for materials, labor costs for direct hires, and subcontractor rates all have to be figured into the estimate. To aid the collaboration necessary in such a scenario companies are focusing efforts on making programs for contractors that can be either accessed on or reside on the Web.
Steve Williams, vice president, U.S. COST, www.uscost.com, Atlanta, Ga., explains, “For companies that deal with others that are dispersed our Web application allows for realtime collaboration in estimate preparation and review by any team member, anywhere in the world. This helps from a quality control standpoint because it does away with the need for paper or even electronic estimates to go back and forth and that reduces the risk that someone may be working with outdated information.”
Its Success Enterprise 8.1 operates off a central database which means “data mining” for cost information is very easy. You can search across databases and historical estimates based on an unlimited number of query conditions to find what you need. In addition, Success Enterprise is a Web-based application with nothing to install on the end user’s machine. “Just install it on your server and anyone in the organization has instant access to the program,” Williams points out. “It’s role-based as well so different permissions can be established for different user groups. This approach also reduces support cost and makes updating the users with new releases extremely easy.”
The use of a central database online can be valuable for maintaining up-to-date costing, but equally important is the database of previous projects the company has done. This is a wealth of knowledge, the location of which often resides in an estimators head. Which filing cabinet? What was the name of that job again?To the rescue come a number of costing programs that establish the relationship between the expense of a previous job and the cost of doing the same work today.
Steve Watt, president and CEO, WinEstimator, www.winest.com, Kent, Wash., paints a typical scenario: “It used to be that if a school board said, ‘We need another dormitory facility built’ they would engage a contractor and roughly outline the scale of what they’re talking about, then ask what they’re looking at from a cost perspective. Typically a contractor scrambles around, they go to the wall of three drawer filing cabinets and they try to look for something similar to what’s being described. In most cases they’re lucky if they can put their hands on a single project.”
WinEstimator’s Modelogix is an “electronic storage cabinet” of all those projects, defined by certain parameters and scope. You can quickly put in some factors and have Modelogix show you the last six projects that met the search criteria. In addition, it analyzes the cost across all six of those and then helps develop a budget so you can respond to the owner about this new project. “It’s innovative in the sense that if companies look at the investment they make in putting estimates together over the course of the year, typically the value that they generate for that investment is the value that they get for the one project that they created that estimate for,” argues Watt. “Modelogix is all about leveraging that investment to help you estimate future projects.”
‘Price and Politics’
A good database of previous job estimates includes those that were (a) overpriced and lost and (b) underpriced and not profitable. Most contractors understand this and keep those underachievers handy. John Rapaport, director of operations, Component Assembly Systems (CAS), www.componentassembly.com, Pelham, N.Y., is one of them. He notes, “We’re dry wall contractors but this is the information age, we’ve been able to develop software that can enhance our bottomline.”
CAS is working on a prediction market philosophy. Rapaport says: “One of the big questions in a business, and one that doesn’t get discussed a lot, is who decides what jobs to bid? A lot of times the owners of the company say, ‘I know which job to bid, I know what’s going to be successful.’ Meanwhile there could be new customers, new types of work that might be better to bid.”
He takes a look at the current economic conditions and adds, “A lot of the private sector work has dried up and if you’ve been bidding on some that has been canceled, you’ve wasted a lot of time. We wanted to create the ability to adjust during market changes and help make the best use of the estimator’s time. Tracking their time allows us to have a historical record so we know the ongoing effort required to estimate projects based on time and scope.”
With the advent of BIM (building information modeling), subcontractors will be brought in earlier on a project. This will require a time commitment by the sub to a project that may or may not be won in the bidding stage. It’s a fact that few companies will win every bid on a BIM project that they get involved with early but sometimes you have to do it just to keep a client happy.
As Rapaport admits, “A lot of jobs are based on two factors, price and politics. We’re going to rank whether a job is more of a price driven job or politics driven job some jobs are both, some jobs are one. We’re going to grade all the risk factors—type of project, client, historical record, the type of job, everything we can think of.”
Production based reporting allows project managers to go through and really capture whether they’re making their desired production or not.
Following acquisitions of estimating product lines from Quest and Estimation, Maxwell Systems, www.maxwellsystems.com, King of Prussia, Pa., has begun introducing integrated systems that link estimating and job cost/accounting. With this type of integration, Jim Flynn, president, Maxwell Systems, says, executives can easily monitor and forecast resources, cash flow, and profits, compare initial estimate to actual costs, resolve labor and equipment issues as they arise, minimize costly problems and delays, and identify how, where, and why the project is (or is not) going as planned.
According to Jim Wenninger, CEO, WennSoft, www.wennsoft.com, New Berlin, Wis., “We’re starting to see the ability to activate the cost code workers charge to. One of the things you find is that they never want to send bad news back to the office—if they run over on a category, they look for some places where they were under and charge some extra time there so that everything comes out even. That’s not a good thing if you’re trying to use your job process to help you accurately estimate. So what we do is we inactivate any cost code when that area is done. What that does is it stops the migration of hours from the unsuccessful one to the successful one so we really get true history of how did we put those jobs together. It allows us to estimate accurately and not skew our numbers in the future.”
Hardware as well as software is progressing and things like laptop computers and tablet PCs are showing up on jobsites for production control and data collection. Angelo Castelli, director of business development, On Center Software, www.oncenter.com, The Woodlands, Texas, comments on one such product, “Our Digital Production Control software has been released and we’re starting to implement tablets in the field to track labor production. Clients are having field foreman use software to find their men for the work that needs to be accomplished that day as well as track what’s been done that day so they get the home office an instant report on where their production is at.” This adds to the company’s product line, which includes the widely used On-Screen Takeoff, its digital takeoff technology.
Until true artificial intelligence is applied to estimating, people will be the key and managing them and the data they produce will be critical. New technology is bringing the industry one step closer to this reality. •
Tom Inglesby is a contributing writer for Constructech.