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%.