Tempest Company‘s Oh, By the Way blog, started six years ago by Don Short, has provided invaluable tips and ideas for anyone concerned with the most important challenge in bidding fixed price jobs — getting the original estimate right.
Contractors (and subtrades) make or break their businesses based on the estimates: If they make errors or misinterpret scopes of work, they lose, either by failing to win the work they could have performed or (far more seriously), taking a bath on projects where they had underestimated costs. Good estimates also catch out flaws in the plans and documents — perhaps leaving room for change-order profits or (I think more ethically), giving the estimator the opportunity to communicate and clarify the potential problems with the design team or owner before bidding the work.
It’s a crazy, challenging part of the construction ecosystem — and I think Oh, by the way really communicates the estimator’s challenges and spirit.
In a recent post, Short outlines an older one — from 2009 — explaining the risks of computer-based estimating, observing the risks of rushing the process or relying too much on automation.
I am a bit old fashioned when it comes to estimating. I think it needs to be done right. In order to do an estimate right you have to have the correct foundation – just like a building or piece of equipment needs the right foundation.
The foundation of a good estimate is the quantity takeoff. If the quantities are not correct then nothing else will be correct. This means the material prices, labor hours, equipment requirements, indirect costs, and profit will be based on incorrect information. This impact will last all the way through the end of the project.
To have an estimator speed through the quantity takeoff process defeats two main reasons for using estimators in the first place. The estimator needs to focus on what is represented on the plans and in the specifications. The estimators are the only persons that have to look at the plans to determine how the project will be constructed.
Good thoughts — and an important reminder that taking care of the details early on can save money and ensure profitability later in the project.
Short’s blog, indeed, is a worthy entry in the 2015 Best Construction Blog competition.