Construction Information Technology Blog

We recently came across the results of an interesting survey conducted by Bland and Associates of Omaha Nebraska. In their 2010 Construction Survey they identified a few key trends and issues facing the construction industry in the USA.

One of the aspects focused on is the level of accuracy of construction estimates. “According to national reports, a key challenge for construction companies today is hiring enough skilled workers who can accurately estimate job costs. This is especially important as construction projects become more complex and for jobs with guaranteed maximum price contracts. The majority of 2010 survey respondents (50%) reported their estimates are within 1 – 2% of actual job costs. More than 37% of respondents, however, said they overestimate projects by 3 – 5% on average, a jump from just 19% in 2009.”

In such a highly competitive industry it is hard to imagine how anyone could find estimates that are only within 3 – 5% acceptable. In a study we did in late 2009 titled Bidding Patterns of Successful Low Bidders we showed that over a third (35.7%) of all hard bid projects are won by 5% or less. It seems incredulous that so many sophisticated companies would waste their time and hard earned money with a self inflicted situation that takes them out of the running a third of the time.

The survey analysis notes that “According to national reports, contractors who don’t invest in technology or use it effectively are at a serious disadvantage to the competition. This is primarily because technology enables construction companies to improve project implementation and reduce costs and mistakes, all of which are especially critical in an industry that relies so heavily on correct scheduling, coordination and technical specifications.”

It seems fair to conclude from this that if there are cost effective technology solutions available that can improve the bidding process for contractors that it would be a good idea for them to investigate the potential to increase their odds of submitting a competitive bid from a lowly 64.3%.

Construction estimating is a complex and time consuming process. A good estimator truly understands how a project is managed from start to finish and is able to translate every step into a dollar amount. Estimators today have some very powerful tools available to help them put together the best and most accurate numbers upon which to base their final price. If you are not already doing them here are four ideas that might help you fine tune your process:

1. Help your Trade contractors and suppliers be more efficient
   On a recent and very large project the General Contractor decided to distribute the drawings and specifications on Dvd’s. There were hundreds of pages of drawings and the cost of distributing paper would have been significant. The information on the Dvd’s was poorly organized and very difficult for anyone to work with and find what they needed. Many opted to simply get it all printed out at significant expense just to figure it out. This was simply a short sighted exercise in transferring the cost and effort on to the Trades and Suppliers. It is hard to imagine how that kind of approach which essentially says ‘I don’t care about your time and expenses to give me a bid’ can ultimately result in that Contractor getting the best price from that Trade. If your attitude up front is that you don’t care, why would it be any different when you get on the site? Given that a significant portion of any bid is usually made up of bids from many Trades and Suppliers it would only make sense to demonstrate that you are good to work with and that you are interested in doing what you can to help them make money as well. A better alternative to the Dvd’s (and subsequent addenda) which still took time and cost money to produce and distribute would have been to make them available in an online planroom like PlanSource for fast and easy access by everyone who needed them. It would have cost less than the Dvd’s, taken less time and would have been far better for everyone involved.
   
2. Make sure the right people know when you are looking for pricing
   Sending out Invitations to Bid is essential. There is no doubt that for critical Trades and Suppliers you will still need to have a conversation with them but why not give notice that you are working on the project and let them view the documents in advance of your call to make the exercise more efficient. There are countless stories of how one price from one particular Trade or Supplier made the difference in getting the project. Even for a Construction Management or negotiated contract it is still essential to let people know as soon as possible that you are looking for them to spend some of their time and resources to work with you to put pricing together. Adequate notice simply helps them plan better. PlanSource has excellent Invitation to Bid and messaging functionality that can make the process fast and easy.
   
   
3. Get your database of Trades and Suppliers in order
   We are in a position to see lots of company databases of their Trade and Supplier contacts. Obviously, a key resource for any estimator is the list of contacts they have available to gather pricing from. It appears to be a big challenge for many Contractors to maintain and keep accurate as people and companies come and go. The task of “cleaning it up” is often a once a year exercise for one of the administrators that can take a lot of time and effort to get done. There is a better way. Once again there is software available today that virtually eliminates the need to maintain the list. It can be automatically managed and updated using the management tools available in PlanSource . Add in the available prequalification tools and you have an easy way to screen prospective new contacts to improve and expand your available bidders.
   
   
4. Use On Screen Takeoff software
   Accurate quantity takeoffs are of course a critical element of a good bid. While there is certainly nothing wrong with a scale rule and estimating pad there is no question that good onscreen takeoff software can help you get the work done faster, more accurately and with more options for analyzing and refining your numbers. In addition to the takeoff tools available in PlanSource, there are many options in the market but one well worth looking at can be found at www.oncenter.com .

In a market like the current one where every tender is highly competitive it is more important than ever to make sure you are doing all you can to be efficient with your own time and expenses and to reduce the time and expenses it takes Trades and Suppliers to work with you. Better systems yield better results and ultimately improve your odds of being the successful bidder.

I am prepared to wager that your company has an accounting system. If you are a contractor you have a project management system. Your Estimator uses a system to manage and perform the work they do.

Systems are everywhere and part of everything we do. Properly designed and implemented they make our work lives easier and reduce the risk of errors or omissions. Not that many years ago most of these business systems were paper based manual implementations. Technology has changed many of those processes forever. Accounting, project management and estimating software are core elements of virtually every contracting business. They provide the tools to more efficiently manage all those processes and help ensure that mistakes don’t happen.

A quick look around almost any contractor’s office reveals that despite all these systems paper continues to be an essential part of building a project. This is particularly true for project documents such as drawings, specifications, shop drawings and maintenance manuals. The traditional ‘roll of drawings’ is still the most common way this key information is shared among those who need it. The digital world is starting to change this and now more and more information is being shared electronically whether that is on a DVD, sent via email or downloaded from an FTP site or online planroom. With the combination of both paper and digital documents circulating today it is more important than ever to make sure your document control is systematized and that it accommodates both digital and paper media. The expense from the inefficiency of a poorly managed system and the risk and cost of mistakes makes the need to get this issue under control in your business a pressing and essential task.

The estimating toolkit for Construction Estimators is changing. The days of the scale rule and wheel are being overtaken by sophisticated onscreen takeoff tools. Now that digital files are available for the large majority of projects, using tools that take advantage of that format are making estimating easier. On Center Software, a leader in onscreen takeoff state that, "your estimating team can perform takeoffs with blazing speed and incredible accuracy from digitized plans." This type of technology is no longer limited to only the larger companies in the industry. In fact, many smaller firms are finding it saves them substantial amounts of time and reduces the potential for errors.

The key of course to using on screen takeoff software is having access to digital versions of the documents. With the rapid expansion of the use of online planrooms and document control systems this problem is quickly becoming an issue of the past. Systems like PlanSource include viewers with onscreen takeoff built right in making it even easier for today's estimators to do their work.