Editor's Note: CSI is pleased to publish this blog from Ken Lambert, Director of Industry Development and Technical Services for the International Masonry Institute. He can be reached at klambert@imiweb.org. If you have an idea or opinion you would like to share with your colleagues in the construction industry, please contact CSI Content Strategist Peter Kray at Pkray@csinet.org. He would love to help publish your thoughts.
There are many critical components of a successful construction contracting company, but one that may not always receive due credit and attention is the company estimator or estimating department. While estimators may not be the most visible or highest paid staff members, they are crucial to the viability of the contractor.
Over the last year, as I found myself at a new company and in a new position, I’ve spent very little time calculating estimates. For me, that’s been a little odd, since for almost 25 years I was regularly responsible for estimating and takeoffs. In a somewhat warped sense, I almost miss it.
A contracting firm either sinks or swims based on the accuracy and completeness of its estimates and bids. If the initial project estimate is considerably low or considerably high, it doesn’t matter how well the crew operates or what kind of great deals or terms the purchasing department or controller can negotiate.
Hire for Details, Train for Skills
The truth is—and many company owners and C-suites will admit this—finding, hiring, and retaining a good estimator is one of the hardest tasks in a construction company. An estimator needs to be extremely detail-oriented, skilled in math, and have practical knowledge of how buildings physically go together, a combination that can be hard to come by. I believe the best bet on a new hire might be someone who not only is focused on details but also competent in time management. The other skills and “nut-and-bolts” tools can be learned over time.
Over the years, I have compiled and submitted estimates on behalf of general contractors, subcontractors, and material suppliers. The running joke in the estimating community is that nobody remembers the 98 percent of project estimates you did well; they remember the 1 or 2 percent when you underbid a job and cost the company some dollars.
Construction estimates and their scope, detail, and degree of accuracy can be all over the spectrum. Early budgets based on a schematic set of a few drawings might have a plus or minus 25 percent accuracy and are often based on wide assumptions and basic historical data. Even public sub-bids on a complete set of construction drawings from competing trade contractors can vary by 100 percent or more!
Specifics Matter
On the other end, I’m reminded of the time I worked for a general contractor that did a lot of work for the US Postal Service. I’m unsure if USPS still operates like this, but this was my experience in bidding projects that were generally between $100,000 and $1 million.
The bid form was extremely specific, and we had to list each building component or assembly and its quantities on the form. Each line item had an associated “unit cost” attached that was given to us by the USPS each year. This cost was what the USPS was willing to pay a contractor for that item installed—they would pay no less and no more.
As a general contractor, if we wanted to bid $200,000 for the project, but all our line items equaled just $180,000, we had to bid $180,000.
Mastering the Art of Estimates
Creating these project estimates (and bids) was exceedingly time-consuming. I had to count and list how many 6” stainless steel anchor bolts were on the project, and how many 36 x 84” hollow-metal doors in a 6’ 5/8” metal frame were on the job, etc. The degree of detail required was incredible. Note that this bid type is certainly the exception to the rule for the industry.
All said, estimators are what makes construction contractors successful, or not. Bidding too high will never get the company hired in a competitive marketplace. Bidding too low… well, we know what happens with that.
Construction estimators may not have the sleek and glamorous position, but it is a challenge and it is difficult to be consistently good at it. It is probably more science than art, but sometimes the true artist does shine through.