I was recently asked if I would recommend estimating as a career. This being the first time anyone ever asked me this question, I was unprepared for how complicated it felt to answer. I find myself between two competing perspectives on this vocation. On the positive side, most people who major in Construction Management do not voluntarily pursue estimating. As a result, there is usually a tremendous amount of competition for Project Management positions, which in turn, limits the individual’s ability to move up the ranks.
Project Managers multiply like…well you get the idea!
Estimating in contrast, has very little competition. It’s very common for successful estimators to get rapidly promoted to senior positions. A quick survey of construction contracting will reveal that estimators are well represented at the ownership level. Estimators are in a unique position to witness market and industry trends. If they’re paying attention, they can see what’s going on both inside, and outside of their firm to make better decisions. Estimating is a wonderful way to network with professionals in your market. Bid deadlines can be very short, so coordinating everything and everyone requires a lot of direct communication. That direct communication provides lots of opportunities to stand out as an individual. Being perceived as a real contender attracts market leaders, which can make you a winning bidder. These are the proven connections between your integrity, your reputation, and your success.
Plus you’ll be surrounded by some good company!
The construction industry has some serious challenges that will factor heavily into your daily life as an estimator. It’s entirely possible to be the lowest complete bidder and still lose the job. Major economic trends cascade through the industry upending everybody’s plans. It is very frustrating to see hard-won projects getting postponed or abandoned when your firm badly needs work. Oftentimes there will be lot of pressure to generate results when work is scarce. People tell me that they wouldn’t want a job that depends upon their day to day performance. I see it differently. Just about everyone’s job depends on their day to day performance. The same transparency that exposes all the bids I lost, will equally showcase all the jobs I won. I can see, and more importantly prove my value to my employer.
Desperation encourages a lot of bad behavior on all sides of this industry. I often remind people that it’s not the job you lose that puts you out of business, it’s the job you win. All of the very worst projects of my career had one thing in common; dishonesty. You will encounter a lot of people who will rationalize dishonest and unethical business practices as being somehow necessary. “The thing you gotta understand…” is the familiar preamble, cheating is the inevitable conclusion. It’s presented in terms of negotiation where the arrangement just so happens to require cheating the winning bidder out of their contract award. If they didn’t want to work with a firm, why did they accept the bid? As crazy as it might sound, I’ve had clients who claimed they had a lower bid than mine and asked me to beat it after the fact. When I declined their request (called their bluff), they went quiet for a while, then sent me a contract for my full bid amount. Some days, it can be very difficult not to take it all personally.
“Jim does his best to stand out from the crowd, but sometimes the job eats at you…”
So where do I start?
I could list off all the education and work experience stuff, but it won’t lead to success on it’s own. Estimating is a unique profession in that I meet very few who pursued it intentionally. The vast majority of beginning estimators go on to pursue other lines of work. It’s my belief that this career misalignment is largely due to two things; clarity of purpose, and perspective. When people don’t really understand what they’re supposed to achieve, they make poor decisions that prioritize process over production. This kind of thinking is how we end up with “bid mills” where firms push their estimators to recklessly bid everything in hopes that it will increase their odds of winning. It doesn’t work, it never worked, and it’s always been a very bad practice. The estimators purpose is to secure profitable work by managing risk. If you want to be an estimator, you’ll need to maintain clarity of purpose. Chasing everything to appear busy is confusing motion with progress. Aiming at the opportunities you can actually hit is where perspective comes in.
“Jared was all eyes and ears which is why he’s always running around”.
There’s a meaningful difference between perspective and opinion in this context. Perspective comes from the honest observation of what’s going on, driven by the curiosity to determine what actually matters to success. Since we know that our success is defined by securing profitable work, we can focus our attention on the variables that affect that outcome. A word of warning here, make sure that your focus is proportional to the indicative value of a given variable.
Here’s an example of what I mean. Let’s say you’re competing on near-identical projects like retail chain stores. If you find that you’re losing by 5%, it makes sense to find a way to trim 5% from your bid on the next one. However, if you make that cut (or more) on each successive bid, yet continue to lose by 5%, you should focus your attention onto other variables. Find out how it’s possible to “miss” with such precision. Are you working with the same people as the wining bidders? If so, there may be relationships you need to build up, or work around, to improve your odds of securing profitable work. If the work in question is outside of your efficiency of scale, your company will need to make structural changes to profitably secure that work.
“Give me a lever long enough, and a fulcrum on which to place it, and I shall move the world“
These are just some of the many reasons that estimators must have the perspective to know what is and is not, a viable opportunity to pursue. With clarity of purpose and the right perspective, you will be well equipped to recognize the risks and rewards of any given “best practice” in estimating. There are a lot of “solutions” that are worse than the original problems. I worked for a company that painstakingly measured every square inch of each paint color where painting was consistently worth less than 1% of the total project cost. When I started, this same company used crude, square foot costs for complex trades like structural steel and Electrical which were consistently worth 12% and 20% respectively of the total project cost. Over 30% of their project value was guesswork because the estimator never found time to learn how to quantify and estimate the more complex trades. The rationale was that the painters weren’t very good bidders, compared to skilled trades so they needed fine detail to verify the painters bids. While this was generally true, it ignored the relative risk versus reward. Any error in a skilled trade bid was probably worth more than the entire paint scope. Simply put, there was no reason to even measure the paint because we could plug in double the average paint contract value without materially affecting our odds of winning the overall bid. In fact, most of their jobs were won or lost on the basis of six critical trades.
Learn from your losses
Careful readers have likely noticed that there’s a lot of valuable information to be gained from losing a bid. Depending on the internal bureaucracy of a given firm, it can be difficult for an estimator to know how successful their wins really were. There’s a built-in delay on this feedback because you must wait for the project to conclude before the full story is revealed. Estimators working in booming economies may not lose enough jobs to keep their perspective honed. When things slow down (and they always do), these estimators are often blindsided by layoffs. Savvy estimators who know the market value of, and market leaders in hardscrabble work are in a much better position to weather a downturn. Wherever possible, seek the tutelage of a senior estimator who has weathered recessions. There is no greater test of an estimators skill than to consistently land profitable work in a recession.
Estimating is a humbling pursuit because it’s impossible to achieve your potential without experiencing some failure. There are however, many moments where you’ll know your worth with a clarity that is undeniable. That confidence adds to everything you touch, and inspires the good people you’ll work with.
There will be opportunities to help people who may help you in a time of need. In so doing, you can change your corner of the world for the better. If all of that encourages you to become an estimator, I hope to see you out there!