Check out James Benham’s new blog. He takes a look at wearable technology and the applications it could have for the construction industry. What do you think? Is there room for this technology on the job site? Let me know your thoughts.
Our social media started with the idea that a blog would be a great way for our clients and other people to know what we were up to and it has been going strong for 6 years. Then we decided to add in LinkedIn to also get the word out about us. Twitter is our next step in our social media presence. You can follow us @tempestomaha. Our plan is to keep the followers up to date on our blogs, give short estimating related tips and spread the word about what is going on in the industry. As always you can find us on LinkedIn and you have already found our blog.
I read an article about the pent up demand for power generation construction and how to prepare for it.
A lot of the items that they talk about are good for any contractor to know when preparing for work that has not been around for a while. Preparing for this particular type of work will give you a competitive advantage over the contractors that plan to do the work “the same way as before”.
Oh, by the way… Click here for more ways to achieve a competitive advantage in the construction industry.
I recommend you take a look at a white paper I came across the other day, “Contractors Have To Win Four Times To Win A Project.” It is written by Matt Stevens and Jennifer Day and featured in The Construction Contractor’s Digest.
One of the parts that resonated the most with me was something I find myself trying to articulate with my clients on an almost daily basis. “Contractors, who work hard to make projects come in on time and on budget, create a positive future for themselves.”
A friend of mine was recently laid off. He was an estimator with a large construction company. A new VP came in and announced that the company would no longer be bidding work. They were only going to do negotiated work. Therefore, the VP did not see the need for estimators anymore, and the entire estimating department was eliminated.
I know a lot of you are probably thinking, without your estimating department, won’t it be really hard to know what is a good negotiated price for a project? Well, yes, I think it really would be difficult, not impossible, but very difficult.
I have heard of companies eliminating a single estimator role and having them wear many hats, as mentioned in Dan Frondorf’s blog. And while it is rare, it’s not unheard of for a company to eliminate the entire estimating department. I am not trying to criticize the company’s decision; I believe that their justification seems odd. I think it is strange to get rid of an entire estimating department just because you are moving to negotiated work.
Oh, by the way… What do you think about all this?
I have heard of quite a few projects lately that have needed to rebid. The reason for the rebidding was not because the project had a budget overrun; it was that there were not enough bidders on the project. By not enough, I mean no bidders for some major trades.
There are a few different scenarios that would cause this:
- The project was not a desirable project to attract bidders.
- There was not enough time to bid.
- All of the contractors for the specific trade were not taking any more work.
- The project was not advertised properly.
- Or a combination of the factors.
Oh, by the way… The projects that this happened to were local project. Have you seen this trend in your area?
Here is an article from a friend and colleague, Dan Frondorf. Dan is an estimating consultant in Cincinnati, Ohio. I really liked the direction he took with this, and I hope you enjoy it as well. Let me know what you think.
“Independents can provide necessary services very cost effectively, and very objectively as well – we have no horse in the race that depends on winning a bid to help keep the lights on, so owners can be assured that their budgets are as unbiased as possible.”
The New Estimator
By Daniel G. Frondorf
For many in my profession, traditional roles and duties have developed into something that “old school” estimators wouldn’t necessarily recognize. Maybe a better verb for the previous sentence would be “transformed”, or perhaps more appropriately, “evolved”. It isn’t uncommon for the modern day estimator to wear even more hats than they always have. We’ve always had to have some of the same skills that other professionals have, even those outside of the construction industry. Sharing skills with architects, engineers, lawyers, and accountants has always been critical to the success of the estimator, but what we do with those skills is what has changed, particularly in the past 10 years.
It’s not enough anymore to simply review plans and specs, perform takeoffs, and assemble a cost estimate (and eventually a bid, quote, or budget) from the information derived from those processes. The modern estimator has evolved into a risk manager, a negotiator….a “preconstruction specialist”, and often a “post pre-construction manager as well”. Depending on their employer and the type of projects they chase, and on the project delivery method, many estimators are involved in projects long before they ever beak ground, during construction, and until the owner takes occupancy. This is especially true in the design-build delivery method, and the construction management method as well. Negotiating with subs prior to bid day and during buy-out, and managing those subs once construction starts have become common duties. These are some of the duties that have been traditionally performed by project managers, but it seems as if project management is the job of the estimator in many companies. Some refer to this as “eating what you kill”, but whatever it’s called, it adds new responsibilities to the job description of the estimator, almost rendering the job title obsolete. “Estimator” has always had a pre-construction connotation to it, but it seems less relevant today.
Why are we seeing this in our profession? Are contractors and CM firms wanting to live with fewer employees, or is the nature of the business forcing this change? Did the economic downturn of 2007-2010 force employers to learn to do more with less, and now that the construction economy is definitely on its way back up, have they gotten used to the smaller staffs? Have the learned that having the same staffers involved all the way through the lifecycle of the project is good for the performance of the whole team, and perhaps leading to safer, better managed, and more profitable jobs? Or have the skills of estimators simply been better harnessed to provide more value to the employer… have our employers finally wised up to how talented we really are? I’d love to believe that is true.
There still exists a need for estimators on the purely cost predictive side of the equation. Budgeting, feasibility studies, and go/no-go decisions still rely heavily on the skills of the estimator, especially those who shouldn’t have a role in the post bidding phase. The pre-construction phase still needs cold hard facts on which financial decisions can be based, so I don’t think the traditional estimator will ever completely fade away. As estimators employed by contractors are more likely to have these new construction management duties thrust upon them, many owners and CM firms are realizing the value of the independent estimating consultant who can provide the cold hard facts they need to make those decisions. This is what makes me excited about my particular niche of the construction and engineering world. Independents can provide necessary services very cost effectively, and very objectively as well – we have no horse in the race that depends on winning a bid to help keep the lights on, so owners can be assured that their budgets are as unbiased as possible.
In summary, the estimator as we knew it might be a thing of the past. Students studying to be construction managers by and large have no interest in being “estimators” upon graduation, and I don’t think it’s simply because of the long held misconceptions that estimating is boring, monotonous, or even “uncool” – I think it’s because they realize the traditional roles and duties of bid prep are outdated and not in line with current expectations of employers. I also think we’ll see a greater utilization of consultants in the future. As a profession, we have to understand how the industry is changing and we have to figure out how to adapt to the new expectations. Expecting it to stay the same, to meet the traditional roles and duties of the past, will only lead to us being left behind and “what was”.
I was talking with a friend of mine about the construction industry over lunch. He was telling me about a bid that he had the opportunity to review. There were 16 scopes of work, and they only had one contractor bidding on each scope. I knew that the bidding market in that area was a very tight market, with lots of work in the construction and bidding phase, but I did not know how many subcontractors were into the selective bidding of projects.
Unsurprisingly, this project was over budget when the bids came in. The first thing the owners did was to blame the contractor for being over budget. The bid was reviewed and the costs were independently verified. It turns out that the budget was where the problem originated. The owners did not look at how their budget was developed, or even if their original budget was correct. In addition, the original budget was never updated to what the final design eventually became.
While having a limited pool of contractors bidding on projects can drive up the costs on projects, an owner needs to have a good process in place to track the costs as the project is being designed.
Oh, by the way… The owners could have saved themselves a lot of trouble, if they had taken the time to have their budget verified and updated. Many owners seem to think they are saving themselves money by skipping these verification steps, when in actuality, they were NOT saving themselves time nor money
To say the least, my dad was generous with the information he collected over his years of business. He was “blogging” even before the concept of blogs! I have many of his articles and white papers dating back into the 1980’s that I think need to be shared. I will be adding some of his articles to Oh, By The Way… since the info is still very good. Here is a look at another.
CPM Scheduling Will Work For Your Project
The first attitude encountered on a project involving Critical Path Method (CPM) scheduling is often times, “Do we have to?” This is one attribute shared by owners and contractors on a large majority of projects. Unfortunately, this attitude can cause substantial problems for the project. There are numerous good reasons for preparing a CPM network diagram on most projects – ‘because it’s required by the contract documents’ is not one of them; ‘because we have to’ is also not a reason.
The most important reason for developing and maintaining a CPM is to manage the work. Side benefits to this are improved communications between the prime and subcontractors and between the owner and the contractors. A CPM can be useful for progress payment requests, determining potential delays to the work, determining alternative sequences, and many other uses. To make the CPM useful, the information must first be input (presuming it’s a computerized schedule in these days) and then updated on a regular basis.
While the prime contractor is responsible for the preparation of the schedule, the preparation of the schedule must involve the subcontractors and suppliers. The schedule must incorporate the owner’s requirements and the specifics of the project, not general assumptions. (Article Continued)
I found this write up on Construction Executive. It covers historical construction costs and the roles they play in today’s estimate accuracy. Let me know what you think.
Don’t Ignore the Role of Cost History in Today’s Estimating
Cost history analytics: the foundation for timely, accurate estimates
What role does cost history play in the contractor’s estimating process? Until recently, the answer may have been minimal, which explains why conceptual estimating sometimes feels like a well-educated and highly detailed guess—a situation loaded with potential risk.
Most contractors are well aware of this dilemma, yet they seem resigned to what they mistakenly believe is their inability to systematically tap into past project history due to a lack of time and resources. As a result, the “one and done” approach prevails as the focus turns to the next project. The actual cost metrics from recently completed projects are relegated to a filing cabinet and likely forgotten—valuable data that could help streamline and improve future estimates. (Article Continued)