Estimator training

[rockstar.esq]

It's been my experience that most estimators were trained on the job. In fact most professionals in the Construction industry studied at the "School of hard knocks". Construction Management programs at Colleges or Universities will typically include a course on estimating. Speaking from personal experience, I can say that these programs focus primarily on "bean counting". That is to say that Quantity Take Off's (QTO) utterly dominated the lesson plan. Cursory instruction on material pricing guides like "RS Means" were provided to allow students to generate pseudo estimates. Some classes required group project presentations on the mock estimate.

 

The mechanics of estimating     

 

Quantifying the work, tabulating your results and correlating market pricing is the over-arching mechanical process of estimating. There's a continuum for detail ranging from entirely conceptual to unit pricing. Much ado is made of the differences between square foot costs and detailed estimates.   In fact, I had a teacher who insisted that EVERY estimate should progress from conceptual to square foot, to detailed as a means to "hone in" on the "right" answer. In practice I've found that "free" estimating work should be proportional to design completion and client commitment.

 

 

Sometimes hot air is a structural element.

 

"Pricing" and "90%" drawing sets are often budgetary exercises with no sincere client commitment to hiring the low bidder during slow markets. Design teams inundate the market with pricing exercises that rarely lead to contracts. Since most pricing exercises are quick turnaround it's important to understand that being too cheap is a problem because the final design invariably involves costly items not present on the budgeting plans.

 

"Hurry up and tell me how much I've got to spend"

 

There's an old adage that applies here; "Quick, Accurate, Cheap, you can only pick two". As a result, most conceptual estimates strive for accuracy over low bidding.

 

A conceptual estimate might be done on the basis of several references. The most common is comparing the conceptual project to similar completed jobs. Rough approximations of gross assemblies are very useful here. Think in terms of " X number of restrooms, and Y number of floors". Square foot costs can be helpful for conceptual estimating when the area is fairly homogenous as in a large office or a warehouse building. A lot of square foot costs fall apart when decorative elements and existing structural concerns are undefined.

 

The ball and bucket

 

Lots of people confuse detailed with accurate. As a thought exercise consider the following.

Let's say you're trying to perfectly center a ball in a round bucket. A very small, perfectly round ball would obscure the least amount of visible area and might allow for measurement tools to gauge how well centered it is. Being small, it's unlikely to sit still for measurements, leaving you chasing it around.

 

Now imagine a ball that's the size of the bucket. It can't help but perfectly center itself. What it lacks in fine detail, it makes up for by being error-proof.

 

Estimating is about controlling risk which is how centered the ball is in this example. In order to quantify the risk it's important to work from more than one direction. Myopic focus on minute differences might well reduce risk. However the risk you're concerned about is what can actually hurt your firms ability to profitably complete the job. Controlling that risk is about an overall process that's scaled to fit your specific challenges.

 

 

Pictured: Room for improvement

 

For example the price gap between low and second low is one means of defining the risk in a given scope of work. If that risk is too high, it's indicative of a substantial difference in bidders, scope inclusions, or adherence to specifications.

 

Lots of instructors teach trainee's to relentlessly pound through the low bidders scope looking for holes to explain the price gap. Truthfully, a great deal of an estimators time on bid day is doing just this. However, time is short so prioritizing is a necessity. A great deal of risk is alleviated by working with reliable, trustworthy and professional bidders who are committed to working with your firm.

 

Spending an hour on the phone de-tangling the riddled mess of a hack bidder is its own risk because it consumes time to review other more professional proposals.

 

 

Warning; the clowns are out there.

 

The project risk is collective, so time spent firming up the bulk of your bids can have a profound impact. Balance your efforts accordingly.

 

If an estimator was perfectly certain they had put together the most competitive and complete bid covering all the project scope, it shouldn't be possible to have a lower bid without making a mistake and/or losing money.

This is a crucial aspect of estimating that is not driven by detailed QTO's or orderly spreadsheets. If your bid depends on subcontracted work, you are relying on your bidders to secure your victories. Established firms with good reputations have a profound advantage in this regard. Estimators in training must understand the absolute necessity of maintaining a good reputation.

 

Most training programs fail to show students how to avoid making bad impressions. There are many aspects of the bid process that revolve around pushing information. Getting the plans out to the invited subcontractors, communicating job walk dates, sharing addenda, and so forth. Faceless emails blind copying hundreds of subcontractors are indistinguishable from a computer-generated message. The information needs to be disseminated, and it's often routine. However the reason you're bidding is to capture an opportunity. Bids are won via group effort, be sure to communicate that you're picking players for the winning team.

 

Training programs should stress the leadership aspects of estimating. Subcontractors will have lots of questions. Plans aren't perfect which is why an estimator exists in the first place. Firm decision-making is paramount to success. CD's are sometimes ambiguous so you must commit to a plan of action and deliver on that commitment via clear direction to subcontractors. RFI's should be written so that even weak design-team responses generate clear directives. "Yes or no" questions are particularly appropriate even if it means you've got to draw a sketch to make the question clear. RFI's should be written so that owners, contractors, and tradesman can fully understand what's going on.

 

 

Artistic rendering of the Architects perspective.

 

Going hand-in-hand with decision-making is enforcing the stated expectations. Deadlines are necessary tools of your craft. Everything has a deadline including RFI responses, Addenda postings, and proposals. Bidder instructions should provide all necessary information in an organized and readable fashion.

 

A quick review of "typical" invites to bid would reveal how technological reliance has eroded professional standards. Emails from anonymous addresses demanding commitment to bid jobs that aren't defined are common. Some don't include the bid deadline, their own company name, or even the city in which the job is located. Links to password protected websites crammed with enormous files (and long download times) are commonplace.

 

The "mechanics" of estimating are fairly straight-forward but won't necessarily lead to winning work or controlling risk. Few training programs involve a developed decision-making process to get traction with your individual bids. Much like modern management training programs, a great deal of "there are many ways to achieve your objectives" is presented instead of a more compartmental (and successful) approach.

 

Priorities

 

There are some basic priorities/ directives that every estimator should have to "ground" their decision making. I'd outline the hierarchy as follows:

• Be ethical, honest, and forthright with everyone all the time.
• Protect your firm, your client, and your subcontractors best interests.
• If it's in the construction documents (CD's), you should know about it and bid accordingly.
  • If you've got subs bidding, it's YOUR responsibility to make sure they know (and include) all the scope.
  • If you know something's missing from the CD's, it's YOUR responsibility to bid reasonably.
• Bid to win. Know your market, and where you (and your team) fit. Estimates are not free.
• If you don't have it in writing, you don't have it at all.
• If you don't know, don't guess. RFI's, exclusions, clarifications, allowances, and alternates offer options to reduce risk.
• Keep track, stay current, communicate, and you'll constantly improve.
• A "win" is only a success if the risk is managed and the work is profitable.
• Time is of the essence so you must;
  • Prioritize on high-value issues
  • Make your estimate system nimble, understandable and reliable
  • Communicate efficiently, effectively, and consistently.
  • Constantly seek to accelerate QTO's.
• Make concrete progress with every effort.
• Get "above the fray" to see what's really going on
  •  Job costs are driven by many factors including the schedule, client, and site logistics.
  •  Politics, relationships, corruption and institutional inertia play a role in every market.
  • Weak design teams, bad clients, and indecisive leaders add to project risk
  • Hiring a sub for work that's too big for them is a serious risk for all concerned.
• Check your work THEN trust your results.

Think like an estimator

 

So much of estimating is considered a blend of accounting and voodoo when in reality it's just a way of thinking. Sure you could painstakingly add up everything you can think of that goes into a project. Assuming you've thought of everything, and that you knew what everything costs, you'd eventually arrive at a number.

 

 

It's harder than it sounds.

 

Alternately, you could look at the project as an object bounded by expectations. Training an estimator should involve teaching them what entire projects actually cost. So much time is spent memorizing the square foot cost of paint or the unit cost of a faucet. Very little time is spent developing a perspective on what market value is for the entire project.

 

From there, estimators need to learn what drives the cost of certain projects. Define the key players. As a surprising twist, it's not always driven by the most costly trades. If a particular scope of work is hurting productivity, it can dramatically influence the prices of other trades. Many successful estimators capitalize on an opportunity to do things differently.

 

Teaching on the job

 

When it's your turn to teach someone about estimating, remember the investment others made in you. The margins of error are small so it's critical to have high expectations of anyone taking this work on. That being said take the time to explain why something must be done a certain way. I've spent years developing an approach that works for me. In many cases, I have tried a different way of doing things which didn't work as well. Share those lessons right away and save them the time.

 

 

Hey we got you some help, just teach them how to get started...

 

I've never had a reduction in my workload when taking on a trainee. In fact, trainee's were most likely to be hired when the work was so demanding we needed help! Despite the difficulty of meeting onerous deadlines with inexperienced staff it's critical to maintain perspective. I firmly believe that concrete progress is the only measure of training success. To start it's your responsibility to establish clear standards, expectations and deadlines. Correct the work as needed before moving on. Balance the need to teach the material against demanding a perfect report. Lots of estimators get hung up on any detail being wrong. This can stall the process by demanding edits, revisions, edits, revisions, and so on. Wherever possible catch everything that's wrong on the first review, follow them to their workstation and have them correct it so you can give them their next assignment.

 

"Hey Chief, one quick question..."

 

Some trainee's will struggle and that's part of the process. Make sure that tasks are brief enough that there isn't time to wallow in a problem. If you've struck the proper balance, you won't be interrupted in the mean time. Be sure to gradually include more opportunities for judgment calls on their part. The goal should be to develop decision-making skills. Asking why they did what they did gives them credit for thinking things through. Explaining what you'd do differently respects their intelligence and guides their next efforts.

 

At each step review that you've made concrete progress towards what you want them to know. Too much emphasis is laid on "practice makes perfect" which leads to talented trainees counting doors for way too long. Once they've done it right, make it clear that you expect good work in the future. Sure it's a lot of pressure, but remember that you're checking their work just like someone did for you. Estimators must learn to work as though there's no net to catch them.

 

"I wondered if you knew where I'd find this thing you asked me about?"

 

Along with judgment calls, it's necessary to teach trainees how to find their own answers. Most firms default to "ask the person training you". I believe it's necessary to develop fact-finding skills early on. When an opportunity presents itself, demonstrate a question you're looking to answer. Whether you're calling trusted subs for insights, or internet searches for related topics, it's important to show how you get this done. Gradually task them with new searches to guide their judgment. Lots of time can be lost looking for these answers so monitor their progress.

 

Firm foundations

 

As trainees gradually move on to active projects, make sure you've equipped them to do the job. Weak communication skills are best addressed before trainee's are contacting bidders, architects, and clients. Lots of firms have shaky-voiced interns stammering their way through calls to subcontractors. Five word responses may be fine for texting friends but it's inappropriate in business. Making the wrong impression can limit their potential.

 

 

"No Wally, you're not getting a promotion this week either"

 

Give trainee's the direction they need to start off on the right foot. Above all, focus on outcome rather than intention because that's how the world responds to your actions.

 

Lead decisively and expect trainees to act decisively. Cowardice, hedging, and sand-bagging have no place in professional estimating. It's an honorable pursuit that can be very rewarding for those who apply themselves. Encourage trainee's to act on principled thought, and calculated reasoning instead of fear. We're all concerned that we'll miss something. A sound process with solid execution silences doubts better than any amount of guesswork. Teaching others has a way of bringing clarity to what you know. Contributing your knowledge can build a legacy that will outlast all the projects you've won.

[SoCal Dave]

Wow, great understanding, thanks.  

[rockstar.esq]

Thank you very much.

[Jacques]

Thank you for writing this.

 

I always read your pieces and it makes me think.

[HWooldridge]

I also enjoy your posts.  I started my working career in a small company that did all sorts of fire alarm, CCTV and electronic security installations - some of which were pretty large projects.  I was initially hired for direct sales at the tender age of 23 but we were pretty busy and I had previous experience in construction so they put me into the field for about a year to help finish jobs.  I eventually went back into the office and started doing takeoffs and estimates from plans.  The other two estimators had never done field work so they often made mistakes on how much labor to put into a quote.  The company owner was often overly optimistic when he quoted work and would lowball jobs so we tried to keep him out in the field making face-to-face sales calls (something he was good at doing).  I worked there for 4 years and about a year or so after I left the company, he quoted a large fire alarm project that eventually put his company in bankruptcy.  More proof that poor estimates can result in bad contracts and cause a slow painful death under some circumstances.

 

Here's a brief story from my time there that illustrates how easily you can get caught.  We received an RFQ from Kelly AFB in San Antonio (now privatized), which was to install one fire alarm siren in a loud area of their huge machine shop.  The drawing was a not-to-scale schematic and the specification only listed the device, the type of wire required and the fact that the conduit had to be rigid and not EMT.  I took a trip out to look the job over and saw that the conduit run was almost 1000 feet through a very busy shop with lots of twists and turns; I quoted the job around $8000 (this was back in the early 1980's).  When the bids were opened, two other companies were right around my price but a fourth bidder had come in at $3000.  I forgot about it and went on to other things but I received a phone call a couple weeks later from the guy who had landed the job because he had to buy a specific Edwards siren and we were the local distributor.  We started talking about it and he admitted he had not looked at the site ahead of time, had not priced the device (which was a special configuration that was more expensive than other typical brands) and had simply thrown a number at it based on the RFQ.  To make matters worse, the Contracting Officer called him after the bids were opened and asked whether his bid was valid - so he got an opportunity to cancel his bid - but he stuck with the numbers.  I had priced all of the hardware at almost $4000 so this poor soul would have been better off paying the fee to break the contract rather than moving forward with it.  I went back to the hangar sometime later on another job and saw the device was installed but never found out who actually did it.

 

Successful business has many facets and correct estimating is only one of them but it is a very important step.

[rockstar.esq]

Thank you all for your posts!