Estimators - The Foundation of a Successful Project Bid
In the following blog post, we'll look at who an estimator is, what they do, learn about takeoffs, an estimator's importance, challenges they face, and, finally, the tools they use.
Estimators - Who Are They?
In simple terms, estimators are the people who create overall project estimates. The estimate typically includes:
Contractor's General Conditions
All the items that make up a project (Takeoffs - we'll look at this later in this blog post)
An estimator needs to work very closely with vendors, design professionals, and clients. Estimators need to be excellent communicators who can leverage existing relationships to get the best price possible. Not only do estimators need to be communicators, but they need to be highly detail-oriented as well. Estimators have to keep track of all the materials and resources needed to bid on a project when creating estimates. To make an accurate estimate, estimators need to be able to visualize a project from several viewpoints. In doing so, estimators will then determine the best way to bid on a project.
Estimators - What Do They Do?
Put simply, estimators create estimates; however, it is much more than that. When it comes to estimating, there is no one size fits all. Since each project is unique, so are estimates. Estimators need to understand the project's scope to understand the materials required to build a project. Estimators need to understand costs and project deadlines.
Here are some typical roles an estimator performs:
Estimators create cost estimates by analyzing the materials, equipment, and labor needed to complete a job. They base their estimates on the calculations derived from drawings, contract bids, specs, and subcontractor quotes.
Communicate. Communicate. Communicate. Estimators need to be excellent communicators. Estimators need to have the ability to explicitly outline what they need their subcontractors to provide quotes on.
Estimators need to know how to procure items—they need to negotiate with subcontractors to receive the best price and recommend contract awards.
Estimators need to cultivate relationships with subcontractors to have a wide range of vendors to work with.
Estimators need to effectively work with project owners and design professionals to ensure estimators are interpreting drawings and specs appropriately.
Estimators - What Are Takeoffs?
Before diving into how estimators work with takeoffs, we must first define what a takeoff is. Takeoffs are a detailed breakdown of all the materials needed to complete a construction project and all their associated costs to create a total material cost estimate. Once completed, the takeoff is rolled in with labor, overhead, storage, equipment, and so on to make a final detailed project cost estimate.
To create a takeoff, an estimator needs to understand blueprint and schematic reading to create a comprehensive list of all the materials required for the project. Once the list is made, the estimator needs to assess the cost of materials. Will they create an estimate based on the bare minimum for materials like wood or steel, or will they "upgrade" to higher-grade materials. In doing so, this will affect the detailed cost estimate and the project's profit margin. Ultimately, estimators need to ensure the cost estimate they create is as close to the anticipated future material cost. For example, a bid due in August, with a bid award in September, with excavation to start in October, needs to account for wood framing that will happen in January. The estimator needs to ensure the price they quote for wood will be as close as possible to the cost estimate created in August. As one can see, creating takeoffs is an incredibly time-consuming process that must be highly accurate. If it is not, any inaccuracies will cause cost overruns that will impact the project's profit margin. In the end, with the correct foresight and experience, overages can be minimized, but there are still potential risks and factors that can impact a final detailed cost estimate. This is why it is imperative for a second set of eyes to review the initial work.
Estimators - How Important Are They?
A successful estimator understands the detailed cost estimate they spent so much time on will never match the project's final price tag dollar for dollar. This is just the nature of construction. However, an accurate cost estimate will help project stakeholders make important decisions on a project's feasibility and overall profit margin. The detailed cost estimate is used to award contracts and procure the necessary materials for procurement. As the project progresses, project stakeholders can make decisions that can negatively or positively impact the project's financials. For example, the owner may strongly suggest that a contractor use a higher grade material than was allocated for. In this case, the estimator will need to help evaluate how these choices can be mitigated so stakeholders can make the right decision with the correct information coming directly from the estimator's subject matter expert.
Estimators - What Are Their Challenges?
The main challenge an estimator faces is they are required to forecast future costs by working within the constraints of the fixed budgets and incorrectly created schedules. The estimator needs to make the call whether a project is worth bidding on by using their extensive knowledge to see if the project has unrealistic expectations. Along with this, estimators need to take into account shifting costs. This is why it is imperative that an estimator either create a database or use estimating software loaded with up-to-date information to make the most accurate detailed cost estimates possible.
Estimators - What Tools Do They Use?
To create accurate, detailed cost estimates, estimators have a variety of tools they can use.
At one time or another, estimators use or have used spreadsheets to create their cost estimates. The most common spreadsheet program in the construction market is Excel. Estimators will make a wage, equipment cost, crew rate, material, productivity, bond, building, and subcontractor quote spreadsheets. These will roll up into a final Summary Worksheet that will serve as the detailed bid estimate. As one can see, this is a lot of manual work because one has to create these spreadsheets initially but must also keep the formulas, rates, and costs up-to-date. On the flip side, spreadsheets are easy to use, flexible, and offer more control when setting up formulas and calculations.
Estimating software such as Trimble's WinEst has helped transform the construction industry. With estimating software, estimators now have up-to-date cost rates, which allows them to be able to create detailed cost estimates quicker, be able to create different scenarios, and can significantly help the estimator from bidding too low or too high because they now can look at past bids to ensure their cost analysis is in line with the project type and market conditions.
Estimators - Where Does This Leave Us?
As we have seen, estimators play an extremely pivotal role in every project that comes their way. They must use their extensive knowledge and experience to create detailed cost estimates quickly. They must be able to foresee possible project cost risks and account for those in their final bid. Using a cost estimator limits the probability of things going wrong because they have done their due diligence.