• The numbers and the words match! (6,000,000 and six million)
• All the blanks are filled in.
• All the required signatures are accounted for.

It may sound simple, but it does happen!

The questions need to be referenced to a specific scope.  This may mean citing Specification 1234, paragraph 5.0, sub paragraph 5.0.1a and one particular sentence from the paragraph.  The question must be kept simple.  State the specific item and then ask one specific question.  The last thing needed is a compound question looking for two answers.  If two answers are needed, ask two separate questions.  This will result in less confusion for the reader and likely result in a complete answer.

When asking about conflicting specification provisions whether within the specification or between the specifications and drawings, again be specific with what is stated on each document.  Communications regarding the problem need to be clear.  It does not meet the needs of anyone just to say there is a conflict.

All of the questions should be numbered.  This will eliminate confusion as the questions are discussed and if they are referred to in subsequent conversations or writings.

All questions and answers developed during a pre-bid meeting should be put in writing as a part of the meeting minutes.  If they are not a part of the issued minutes, do not rely upon verbal answers.  Get the questions and answers in writing! This holds true for any meeting or conversation with the owner or architect/engineer where they are answering questions on the project.

Oh, By the Way… Asking questions of the architect/engineer and the owner is another way to make your competitors aware of problems with the bidding documents.  This is a good strategy to have competitors price out the true scope of the work on the project.  Now they can consider costs they may have otherwise missed and you are competing against better bidders!

The economists call the recession that is underway a “cleansing” recession.  This is a polite way of saying “thinning the herd” of the weaker firms or putting the poor business operators out of business.  But is a cleansing recession really possible in our industry?  I would like to think it is.  A recent conversation with another estimator is giving me some second thoughts.

We were discussing the difficulties in bidding for the past two to three years.  Work is being bid at or under cost.  The cleansing effect was brought up due to these practices.  My counterpart stated that it was impossible to get rid of the poor business operator.   Thinking I was the bright one I said, “Oh Yeah?”

Well his point was each poorly run firm would continue until they had to get out of their market or out of business.  There would be a multitude of reasons – unprofitable projects to unsuccessful in bidding.  A swift analogy would be for a home builder to liquidate their holdings in bad times and start building decks where only the tools of the trade and a pickup truck were required.  Once the times started getting better it would be back into the former market they served – likely under a new name but following the same old practices that got them out of the market in the first place.

Another point was the employees that are laid off from companies oftentimes start up their own companies.  These start out with a pickup truck and the tools.  While many of them may be excellent craftsmen, they can be the worst businessmen.  Too many do not have the education or knowledge to determine what a billing rate should be for their time and equipment.  If they make enough for a living, they are content.  Never mind making enough for a business to succeed or that profit is not a dirty word.  These then put pressure on the low end of the market, forcing companies to move up or get out.

The companies that move up may bring the same poor business practices in to the next larger market.  A break even approach to bidding will not keep a company in business.  These business operators and firms must learn that it takes profit to stay in business.

Oh, By the Way… The late Peter Kiewit always liked point out his company’s projects and say they were paid to build it.  He was not in the business to pay the client to build his project.  His company has succeeded since 1884 by following this practice!

The basic skill sets for an estimator are in reading, writing and arithmetic.  These skills can be picked up in grade school through high school.  They are improved upon by on the job training, like blue print reading, contract interpretation and constructability issues.  Sometimes the skills are gained through specialized courses of study in vocational schools or colleges.  This involves a wealth of subjects too.

The nuances to these three areas are what distinguish a competent estimating professional or career estimator from the pretenders.  The nuances are what an experienced estimator knows and what the beginning estimator must learn.  This is what other professions need to understand about the estimating profession.

Take the basic skill of reading.  An estimator must read blueprints and specifications.  These must be translated from their existing media to another form for identification and pricing purposes.

This leads to writing.  The estimator must take the information from reading and identify all of the potential cost items on an estimate sheet.  This lists items that are shown on the plans and called out in the specifications.  It also includes related cost items that are necessary but not shown on the plans.  This could be as straight-forward as adding a crane for lifting.

The reading and writing lead to arithmetic.  At its simplest level it is just sixth grade mathematics. A quantity multiplied by a unit hour will give the total hours.  The total hours times a labor rate will give the total labor dollars.  Continue this process with materials, equipment and/or subcontract prices and you will have a line totals.  Add all of the labor, material, equipment and subcontracts together and pretty soon you have an estimate total.  Add indirect costs and profit and pretty soon you have a bid amount.

These are the basic skills to begin a career as an estimator (or even to be a pretender.)  In upcoming blogs the nuances of the reading, writing and arithmetic will be covered.  The estimating professionals may nod and say “Yep.” Others may say “I didn’t know that.” Some may say “Baloney” or another equivalent.

Architects and engineers tout the benefits of being able to see the project in 3-D.  Estimators have to do this and have been doing this for centuries.  They use the 2D plans to visualize how they fit in 3D so they can reliably estimate the costs.

The architects and engineers proclaim BIM will let them see the project in real time 4D to spot problems.  Again estimators have been doing this for centuries.  They have to determine the means and methods of the project in order to correctly estimate the costs.

When was the last time that an architect or engineer had a design that was complete?  Not just 60% or 70%, but lets say 95% to 98% for a Design-Bid-Build project?  Not in a long time!  Estimators have been filling in the blanks before architecture became a profession.

The architects, engineers, owners and others are touting BIM as a great means to share information and improve the construction process.  This could be considered the “I” in BIM.  The trouble is this system relies upon the architects and engineers putting in the correct information in the first place. Big mistake!  One way to correct this is to provide some training and education for architects and engineers. Ask any contractor for a course of study!

Oh, By the Way… My take on the BIM is:  Bim! Bam! Boom! It is just another attempt to curtail a major crisis in construction due to a lack of “How To” knowledge in the design professions.  It does accelerate communications but it is still GIGO (Garbage In Garbage Out) only faster without trained and educated personnel.

Good and great estimators are the reason companies stay in business!  Companies can recover from bad project management, but it is rare to survive bad estimating! With a construction company, a poor superintendent can be replaced but the bid estimate cannot.  It is something that cannot be changed.  An inaccurate estimate for the owner or developer may postpone or kill a “worthwhile” project while a “marginal” project proceeds.

The estimator is supposed to be right, not just some of the time but all of the time.  If something is wrong with the job costs, it was the estimator.  If the job is profitable, it is thanks to the project manager. If the estimator was “only” as accurate as a weather forecaster, they would be unemployable.

Today, the estimator’s job has high expectations, minimal training and is with less than stellar pay.  It did not use to be this way.  The career path to the top of a company used to be through estimating, not today.  Companies used to be more profitable, not today.

Do you think there just might be a correlation?!

Omaha, NE is supposedly one of the bright spots in the United States.  If that is the case, why is the level of unemployment in the construction trades at 40% or more?  I have been told by others in construction that their areas of the country have the same high level of unemployment.  So what areas of the country have such low unemployment that the national average is only 20%+ according to the feds?

Omaha, and other areas of the country, are seeing desperate contractors, subcontractors and vendors quoting work 30% to 40% below cost on all sizes of projects.  If the economy is on the rebound why can’t the contractors take work at reasonable prices? We are hearing about the manufacturers telling their distributors and wholesalers to watch their receivables.  They are warning them of contractors that are such poor business operators that they do not even know they are bankrupt yet.  Isn’t the Stimulus Spending bringing us back to prosperity?

I look around areas of the country and read reports to see there are companies earning profits.  I also see that they are not spending this money on additions, renovations or maintenance items – by choice.  I drive around the country and see that malls, shopping centers and other commercial establishments have few cars in their parking lots – at all hours of the day.  If the economy is getting better, why are they not spending the money?

I have spoke with people in the power generation sector.  They haven’t been able to build new plants, add to or significantly modify existing plants for several reasons.  A lot of the reasons involve federal regulations, among them the potential for the Cap & Trade (Cap & Tax) becoming law. With electricity demand down so much they have not had brownouts or resorted to rolling black outs.  I guess it’s a good thing we are in a recession!

Oh, By the Way… According to the federal government our economy is on the rebound.  Manufacturing is up.  Home sales are up.  The Consumer Confidence Index and other indicators are all up!  Unemployment is down.  I believe what they tell me!  Yeah, right!

The Environmental Protection Agency (EPA) is running amok trying to label carbon dioxide a pollutant.  They are attempting to enact legislation to cap the limits that can be emitted for this allegedly dangerous greenhouse gas.  Today, prior to enacting this legislation, companies are dealing with the uncertainties of Cap and Trade on carbon dioxide.  Projects, not just in the power and industrial sectors, have been cancelled or postponed.  Employees are being laid off or being asked to take early retirement.  Companies are preparing for more expenses that cannot be reduced and will only increase under the proposed Cap and Trade.

These companies ranging, from power producers to distilleries to little mom and pop operations, are going to be on the receiving end of large penalties.  These penalties will be for exceeding arbitrary determined limits of a gas that is necessary to all plant life on earth.  You can expect your utility costs to increase, not just by five or ten percent, think in the order of two to three times more than your current bills!

The cost of manufactured goods will increase substantially due to the manufacturers using the utilities that will double or triple in cost.  Manufacturers will also be creating their own “dangerous emissions” of carbon dioxide.  Every stage in the delivery of goods and services will have to pass on the increased costs of goods, services even if it is only the increased utilities.

When will the EPA start to penalize you for every breath you exhale? After all you are spewing carbon dioxide into the air.

Oh, By the Way…Plants turn carbon dioxide into oxygen.  Animals turn oxygen into carbon dioxide.  This has been going on for millennia.  What happens when we eliminate plants due to a lack of carbon dioxide?

Entertainment venues are a favorite of this method of funding. It includes professional sports facilities in the major leagues, minor league ball parks, arenas, convention centers and a host of other projects.

It happens for roads, bridges and highways too.  Light rail transit systems are currently in vogue.  City after city has proposals to spend taxpayer money for systems that are not financially viable.  Completed costs are known for several cities yet the politicians continue to quote costs lower than what have been incurred.   They quote ridership levels and fees that cannot be met.  All of this will burden taxpayers with future liabilities to make up the income difference.

Intentionally understating costs and overstating revenue is nothing new.  It happens at the federal, state, county and city levels of government. The next time a project or a budget is proposed, ask the politicians who was responsible for the cost estimates.  Was it a firm with true estimating credentials or a consulting firm with a vested interest? Was it the politicians stating the revenues or an independent firm?

Oh, By the Way… Once the project is approved and the project costs roll in, the politicians then act surprised that the costs are exceeding the budget.  Imagine that, it is like hearing a 4 year old say “I didn’t do it.”, when asked about a broken toy.