A Free Estimate

The myth of the “free” estimate is one that I have to constantly battle. A free estimate is an estimate that is provided to a contractor, owner or architect for no cost, in the hopes that when the project moves forward they will get better consideration once the project is awarded. This method of estimating is a conflict of interests for the project.

First, there is an incentive for the contractor to make the estimate lower that it should be. The project will not be built if it is over-budget, and the contractor will not get paid unless the project moves forward. Early in the design phase of the project it is critical to be honest about the cost of construction, so design decisions can be made early on.

Second, is the fact that any estimate costs money. When people’s time and resources are being used, money is being spent. Make it known to the person that is requesting the estimate that it does cost money and what the cost will be. By paying for services, you can minimize the expectation of the project being awarded to whoever provided the free estimate.

Third, with the free estimate, you get what you pay for. If there is not going to be payment for services, you are not going to get the best end product. Your estimate will not be a priority, and if you push the deadline, you will just get an “estimate” that is more of a wild ass guess (WAG) which is even worse than the free “estimate”, aka scientific wild ass guess (SWAG).

So, don’t be taken in by the promise of a “free” estimate! Remember, you get what you pay for!

123RF

123RF

My Top Four Construction Projects Of 2014

In a professional estimator’s career, they will probably have at least one project that they are very proud of. Maybe it was because it was a high profile project like a sports stadium or museum. It could be a project that was technically challenging and took a great deal of effort, and it came together perfectly. The project could be a first of its kind or world largest project.

A few projects that I worked on this year that I am proud of are:

  • A project at the World Trade Center: This project was unique because of a 27 foot tall, one story, architecturally unique staircase. I do love a challenge!
  • A renovation of a college football stadium: This project included adding seating around the entire field and the addition of vending areas and upgrades throughout the facility. Go Sports Team!
  • An aerospace development laboratory: There was a specialized overhead support structure that needed to be installed to help with the changing uses of the areas within the building. I am a bit of a science and space nut!
  • A visitor’s center for a non-profit organization: This was a new visitor center that is in a very remote location. If normal concrete had been used it would have set up by the time it got to the site. It just goes to show, taking site conditions into consideration is important!

sunny construction site kalomirael

What Do Estimating Consultants Do?

Tempest Company is a Construction Consulting Firm. We provide several services, one of them being estimates. This means if someone needs an estimate, we provide an estimate, but we don’t build buildings or order materials, etc.

Let’s look at a couple of scenarios:

  • Tempest Company CAN help you out, if you don’t have time to bid a project for whatever reason. Let’s say because your estimating department is already overloaded or understaffed.
  • Tempest Company CAN help you out if your estimating department is not experienced enough for a particular project.
    • We are not here to actually replace your current estimators. Your estimators are there, not only to bid the projects, but to develop relationships with sub-contractors, contractors, vendors, owners, and designers. They also track the productivity of the project and analyze how the bid compared to the project once it is done.
    • If you feel your estimators need to have their accuracy checked, may I suggest Tempest Company provide parallel estimates as a way to check an estimate before bid time? That way there are no major surprises and you can be more confident with your numbers.

Oh By The Way… Tempest Company CAN NOT help you, if you decide you want to bid a large project that bids TOMORROW!

  • Yes, we do work many evenings, weekends, holidays, etc. but we have not yet mastered time travel or the ability to make time stand still!

calander clock

Owners and Developers, Want A Successful Construction Project?

Let’s take another look at this! A lot of folks in the industry may not see the importance of accurate numbers to the overall success of a project! – Justin

Owner & Developer Project Success in the Details

By Don Short

Success for an owner is having a budget that can be met at bid time by the contractors. This isn’t due to luck. It is due to the project management team understanding that budget development on a project is not a one shot effort. Budgets for projects are oftentimes bandied about by project participants early in the concept of a project. These are usually not sustainable figures. They do not have a basis and are merely conjecture. Sadly, these figures tend to stick in the mind of the management responsible for authorizing the project.

To attain a successful project budget requires paying attention to the details in the very beginning, through the development of the design and into the construction bidding period. The budget is highly dependent upon having the right scope from the onset. Rough parameters regarding use, area or production output may be the most information known when setting the initial budget. This requires trained estimators used to working with historical cost information to develop the best budgets. They are experienced with having holes in the information but can compensate by adding details that are inherent to the project type. Project type and size influence the time required to prepare a reliable project budget. I have seen reliable building budgets prepared in a few hours. Process plant budgets may take a few days or weeks with engineering support required. The budget estimates may be a few dozen line items to hundreds of line items of detail.

The project budget that is set without further cost verification during design is the one that will fail. The cost monitoring must begin because conditions change. It can be due to scope, material prices or other changes. Established professional guidelines can be used for cost control points. On a building project this would occur at Schematic, Design Development and Construction Documents Milestones. On process and industrial facilities it will occur with a different set of milestones. Some project may require only two or three intermediate cost control points and others may require five or six before the bids are received. In order to maintain the viability of a project, some projects may require extensive value analysis if the initial project budget was not set properly. This may also be required if conditions substantially change after the budget was set.

Continued success in the preconstruction estimating is also in the detail. When preparing estimates, the more detail the better! This applies to the traditional design, bid, build process along with the design build process. To prepare reliable estimates on any of these types of projects, details must be used in the estimate. Historical parametric pricing should be reduced. With the use of estimating professionals the budget will begin to reflect more project factual detail and costs than parametric costs.

By the time the final estimate is prepared on a project, it should reflect the same level of detail as if prepared by one of the bidders. This estimate preparation process can be used as a final quality control check on the bid documents. It can be used as the “fair cost” or bid evaluation estimate. It can be used to verify the progress payment schedule of values. It can also be used to verify the project schedule has correct durations, relationships and values. It can be used to determine if the scope and costs in change orders are appropriate.

Success is in the details. Estimating provides these details. Estimating does not cost, it pays with a successful project!

Construction Estimating Experience – School Or Hands On?

In a previous blog, I mentioned that Tempest Company is growing and that we are looking to expand our estimating department. In that blog, I discussed traits that make someone a good estimator.

Something that keeps coming up in our hiring expectations is experience. Obviously, I don’t think there is a job posting out there that asks for “wet behind the ears” candidates to apply. But what constitutes experience for an estimator? A diploma from a four year college or trade school? I have one of those, but if I had asked my dad to hire me as soon as that hard-won piece of paper hit my hands, do you think he would have said yes? Not hardly.

Yes, experience can begin in education, but most experience in estimating comes from “hands on” work. If you put in your time working in the field then you will understand what it takes to install a HVAC system, or how many wire nuts you will go through installing the lighting in a gymnasium. You will also learn all about taking weather and environmental concerns into consideration, as well as how a construction schedule truly plays out in real life as opposed to on a computer screen.

 Getting that Diploma taught me the basics. But, I cannot diminish the value of learning how long it truly takes to hang light fixtures, or that NOT having the right tools for a job makes a job take longer. Plus there is significant value in a site investigation and taking note of site conditions. These variables can make a huge difference in the quality of your estimate.

 Oh By The Way… What were valuable lessons that you learned from your “hands on” work? They can be serious or silly, either way I would enjoy hearing about them,

The Estimator’s Magical Book Of Construction Costs

I attended a large social gathering last week. I love talking to people, that are not in the industry, about what I do. Talking to people about the need for professional construction cost estimators can be an eye opening experience. A large misconception is held by the public that budgets come from a “magical book of building costs” where you can find all of the costs for any project. Anyone can look at the book and find out exactly how much the project will cost. They are shocked to find that a detailed takeoff and estimate is needed to determine project costs.

I wish I had one of those “magical books of building costs” when someone needs an estimate done in a matter of hours. I could either use it to help them out or throw it at them to knock some sense into them.

Copyright: 123rf.com/curvabezier

Copyright: 123rf.com/curvabezier

 

Construction Projects Can’t Afford To Skip Planning Phases

I was sent this article from a friend of mine. I thought the author had a lot of good points, but I would like to hear your thoughts as well. – Justin

Project Failures Often Pre-Ordained by Shortchanging Scoping Phases By Tom Sawyer

Author Ed Merrow, founder and president of Independent Project Analysis Inc., which studies complex megaproject performance, offered cautionary advice to constructors to test project fundamentals before committing to a project, as failures often are preordained by flaws in “the sequencing of information early on.”

“Failure almost never starts in the field,” Merrow said, in a keynote presentation at a Bentley users conference in London in early November. Errors and omissions in the planning process will generate surprises in construction and lead to project-management challenges. But those problems are only compounded by earlier planning failures. “Project management is the science of planning combined with the art of reacting to surprise,” he said.

Merrow defined the phases of projects and emphasized where fatal flaws often lurk, such as poor project data “shaping.” In other words, bad execution stems from bad planning. He says shortchanging a project’s scoping, purpose and policy development that underpin design decisions often doom projects before work begins. Parties should achieve definition and clarification of business objectives, he said.

“‘Shaping’ is the responsibility of owners or politicians, and deficiencies and oversights in the shaping information development process often go undetected until too late to correct,” Merrow said.

“Building is only the last third of the project cycle. Most of the time of a project is spent doing nothing physical,” he said.

Merrow said planners often cite a lack of time or the high cost of front-end planning as a cause of their planning failures. “If you can’t afford to develop the basic data, you can’t afford the project,” he said.

Oh By The Way… Ed Merrow hit the nail on the head when he stated “If you can’t afford to develop the basic data, you can’t afford the project”. Too often I hear that the owner or designer does not want to pay for a specific service because it will cost too much. The cost for the services is a small portion compared to the total project budget. If you can not afford $20,000 on a $10 million project, then you might want to reconsider doing the project.

We Are Thankful For Our Readers

thanks collage 2014

 

Oh By The Way… We will resume our blog posting on December 1st.

What can a construction estimator do?

What can an estimator do

The US Economy And Construction

It is that time of year again. The nights get longer, the weather gets colder, and the year-in-review articles and recaps start coming out! There is a nice synopsis of the year in construction at Construction Global.com. Please read it and let me know if you agree or disagree with what they said.

What impact is the US economy having on construction? By John McMalcom

Construction companies generate profits by building residential, commercial and public facilities, which can range from houses and apartments to industrial complexes and commercial skyscrapers.

When the economy is doing well, businesses, families and individuals have more money to spend, and they are more likely to invest in real estate.

With the US economy rebounding from the recent recession, the construction industry has been experiencing significant growth in many parts of the country. However, it remains to be seen whether the growth is sustainable.

2014 overview

The construction industry was one of the sectors hit hardest by the recession, but it showed encouraging signs of recovery this year.

Construction spending grew strongly in July, reaching its highest level in more than two years due to an increase in private construction and government spending.

The Commerce Department reported a 1.8 percent increase in consumer spending in that month, amounting to $981.3 billion on a seasonally adjusted annual rate basis. Spending on private construction and public construction increased 1.4 percent and three percent respectively compared to the previous month.

However, in the following month, construction spending dropped 0.8 percent to $961 billion, but it was still around five percent higher than a year previously.

Analysts had predicted that spending would increase by 0.5 percent on a month-over-month basis.

The decline in demand was led by public construction, which recorded a 0.9 percent decrease month-over-month to $275.9 billion. This resulted from the federal and state governments’ decision to cut costs. Private construction did only slightly better with a 0.8 percent decline.

Company and Consumer impacts

Many construction companies were badly affected by the recession. While some of them had to take severe cost-cutting measures, such as laying off workers, others did not survive the tough times.

According to the US Bureau of Labor Statistics, approximately 2.3 million construction employees lost their jobs during the recession, close to 30 percent of the total number of jobs lost.

Since the economy’s recovery, construction companies have been in a hiring frenzy. In April this year, the construction industry added as much as 32,000 jobs, the highest gain in jobs since the beginning of the year.

The growth in private construction spending is partly due to an increase in demand for home improvement products and services. Article Continued

Oh by the way… I agree – I did see an uptick this year, and many of the companies that I talked to indicated the same. And as for the construction industry adding jobs, well I agree with that too – we are hiring at Tempest!

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