Tag Archives: Accountability

Immortal Tasks; Is there a Silver Bullet?

We’ve all seen it before,  a task that re-appears on the to-do list over and over again perpetually interfering with any effort to move on.  It can be tough to see why this happens, which makes it especially hard to know what can be done to make it stop.

Immortal tasks are brainless, tangled, and sting everyone they touch

The first step with any problem is to identify the cause.  In my experience, immortal tasks are caused by:

  • Poor planning
  • Miscommunication
  • Lack of follow-through
  • Debate based on speculation
  • Bypassing the chain of command
  • Difficult people

There is little more vital to success in construction management than perspective.  Specifically, being able and willing to look beyond the current task at hand to see how it fits into the big picture.

 

 

In a bacon and eggs breakfast, what’s the difference between the Chicken and the Pig?

 

The Chicken is involved, but the Pig is committed!

 

The whole reason we use the term “Contractors” instead of “Builders” is because contracts legally and financially commits the firm to the project.   As the responsible party, it’s critical for contractors to understand that their project may be imperiled by involved parties who have completely different priorities than their own.  As a result, it’s very common for involved parties to introduce delays for the contractor. In order to be successful, the contractor must develop and communicate their plan accordingly.  One of the surest signs of poor planning is when the first response to every problem is finger-pointing.

Incomplete information can raise more questions than answers which is especially frustrating when the information was slow in coming.  Plan for every predictable problem by providing timely communication about what’s needed and when.  In the absence of clear direction, communicate the contingency plan you’ll be taking so that all affected parties know what to expect. 

Not having a contingency plan leads to situations where everyone is “doing their best” while  patiently watching as the window of opportunity closes.  Contractually speaking, when the risk of rework is less than the penalty for delay, the contingency plan should default to prudent and defensible action.   Conversely, when the risk of proceeding in error is greater than the penalty for delay, the contingency plan should define the work that will stop, in terms of the critical path delivery of the overall project.  Where reasonable and prudent, develop mitigation strategies such as out of sequence work, while being careful to coordinate unconventional deliveries with the inspection requirements of the Authorities having Jurisdiction. 

Incompetent managers prefer to remain silent on the sidelines in hopes that they may claim successes or deny failures.  Contractors working with or for these managers should understand that the “plan” is to let nature take it’s course on the project.  If this approach worked, nobody would ever hire a manager.  

Power struggles 

Lets address an elephant in the room.  Many contract relationships are adversarial by design.  We may dress up the situation by calling it “checks and balances” but many owner representatives have an obvious conflict of interest.  It doesn’t matter whether the Architect or the General Contractor, (GC) is the owners representative, the contract terms will create incentives opposed to the owners best interest.

Modern marketing would like to suggest that this is easily overcome by finding “the right firm”.  Contractually speaking, it’s a far better approach for the client to make it profitable for the “wrong” people to do the right thing.

This speaks to one of the fundamental principles of power-struggles.  People who are concerned about ethics and fairness often find themselves reluctant to reward avaricious motives.  Just doing your job shouldn’t require extra incentive.  As a result, the focus shifts from the proverbial carrot, to the stick.  Construction contracts are predominately a list of obligations with corresponding consequences for compliance failure.

The focus on preventing malfeasance (not doing your job) often creates a very real incentive for misfeasance (doing your job in a harmful way).  It has been my experience that misfeasance is at the root of most power struggles.  A superficial observation of this practice will appear as though the misfeasant professional is merely defending the integrity of their work.  This happens at all levels and all sides of this industry.

Here are a couple of examples;

Design professionals often rigorously enforce specifications that benefit favored product representatives.  Curious people might ask how the representatives responsible for overpriced products reward that kind of loyalty.  

It may not be wise to attract the Architects attention…

Estimators often find problems in the CD’s that have the potential to add cost.  Some GC estimators conveniently overlook subcontractor bidders who bring these costly items to their attention.  They do this in hopes of winning the contract before revealing the issue to justify a change order.

The misfeasant actor in either case exploits their client while proudly thumping their chest for “venerating the integrity of the plans and specifications”.  If you’ve ever heard the expression “The process is the punishment”, you’ll see the role that process plays when it comes to abusing authority. 

So how do we work around this mess?

I suggest starting with acceptance.  The only thing you can change about human nature is how you feel about it.  While it’s a tragic shame to see so many professionals guided by avarice, your duty is to get things accomplished.  This whole mess was predictable, which means these problems are due to poor planning.  All of which strongly suggests that the avaricious stuff always was the plan.  Any contract which does not reward timeliness, transparency, and accountability, for all involved, effectively rewards avaricious behavior.

This leads us to the next snagging point which is miscommunication.  In order to define what you say or write, we need to recognize how you will be heard.  It’s critical to understand the tactics used in a power struggle.  If everyone was just doing their job, there wouldn’t be any conflict to stall things out. You won’t “kill” the immortal task without addressing the root of the conflict.

What they’re really doing is protecting their interests which may be completely opposed to the best-interest of the project.  If it serves that purpose to play dumb, or keep-away, you must recognize what is not being said.  Ultimately, they want to know that their interests are secured before they’ll perform their duties.  To that end, it’s important to maintain diplomacy.  I have found it’s helpful to project a persona of kindly compliance who just so happens to communicate on-the-record with an unusual level of transparency.

This diplomatically communicates that their avaricious concerns will be secured, while establishing a precedent for full disclosure.  Many professionals will recognize the  connection between my disclosure and the potential for their exposure, which encourages cooperation.

Kind-hearted readers may object to this cynical view.  After all, it’s entirely possible that sincere professionals are simply confused, or misunderstood.  I’ve certainly encountered this in the working world, especially so when working with rookies.   

Rookies are often hard-headed about soft skills.

The reason I presented my solution to the cynical view first, is because it works equally well with sincere people.

Following through

Entropy is the natural tendency of stored energy towards disorder in a closed system.  In construction, estimators put all this energy into pre-construction efforts which get bound into contracts to build the project.  If that was all it took to successfully build a project, nobody would ever hire a General Contractor.  This coarse example serves to illustrate why follow-through is so important to actually getting things done.

I’ve won projects that required dozens of bids over the span of several years before the contract was awarded.  That’s long enough that some of the firms involved will have new staff and no records of what was quoted.  We see similar challenges on projects with lots of addenda before the deadline.  It can be downright difficult to know what is, and is not, in the final project.

As an estimator, it’s often your job to guide everyone through these changes which can feel like an immortal task.  One popular approach that aggressively doesn’t work is to simply dump all the available information into a file-sharing site and expect everyone to wade through it.   The unspoken truth in these situations is that most of that information is obsolete, unnecessary, or redundant.  It doesn’t take long for people to get nervous about what risks might be hiding in all that nonsense.  If the presented information is arranged to conceal risks, people won’t trust you.

Proper follow-through builds on the communication principles for dealing with power struggles.  Address their concerns in a manner that displays transparency.  I’ve found it worthwhile in some situations to build a “follow the bouncing ball” narrative which directs the person through the relevant issues, arriving at the necessary outcome.

I prefer to use email for these communications to generate time-stamped evidence of what was sent.   Don’t forget to use the email title to communicate effectively.  A lot of tasks fail to make progress because the recipient refuses to answer communications in order to maintain plausible deny-ability.  I’ll forward the original email with the title revised to include “second request”, “third request”, etc.  Depending on who I’m dealing with, I may copy proportionately more higher-ups in the respondents firm with each follow-up request.  Sometimes I temper this action with messages conveying my concern for the health of the unresponsive recipient.

Evasive people will often respond with some variation of “I’ve just been busy, I’ll call you soon”.  If they call but fail to resolve the task, I memorialize the conversation and all the promises, in a summarizing email which I send immediately after the call.  If they don’t call, I’ve found it helps to copy their bosses on an email where I ask for someone who’s got time to resolve my task.

Talking in circles

Hardworking people who cannot get a task completed day after day can get frustrated.  It’s natural to ask yourself; “Why is this not getting done?”.  After all, you know that’s the first questions your boss will have for you.  Sometimes a task will involve multiple unseen players who must complete their portion in sequence, according to chain of command.  This creates situations where the visible players are anxiously waiting for something to happen.  As critical time passes, you’ll be called upon to provide progress updates.  When hardworking people have nothing to go on, they might start picking at loose ends in hopes of finding a thread to unravel the snag.  This is where people start debates based on speculation.  I’ve worked with professionals who have an incredible ability to generate delays and confusion by pursuing fruitless arguments over things they did not understand.  This is a good time to focus on solving problems you understand.

Research efforts to improve the coordination of design teams are ongoing.

Life on the chain gang

Contractually speaking, chain of command is set up to mitigate risk for all concerned.  Any communications or agreements outside of the contractually defined processes have no legal bearing on the work.  This is why GC’s rigidly enforce requirements that subcontractors do not communicate directly with the design team or client.

There can also be a chain of command at the individual firm level.  Some firms create administrative blockades tiered to protect senior staff from trifling concerns.  This approach is common in firms of all sizes.

Chain of command has a couple of shortcomings.  Communication is slow, and the structure is prone to abuse by misfeasance.  In my experience, quite a few immortal tasks are due to bad actors in the chain of command.

Before we get into how to handle this, lets look at how chain of command is likely to prevent tasks from getting completed.  We need three things to contractually resolve an issue;

  • Permission/Direction: This is contractually binding instruction on a specific issue.
  • Responsibility:  This is the risk of being held accountable for negative outcomes pertaining to the specific issue
  • Process:  This is the perfunctory stuff which connects the specific issue in question with the contract terms.

When issues get “stuck” in the chain of command it’s generally because someone in a position of authority is withholding at least one of those three things without explaining why.   This kind of problem is common in professional groups which lack the necessary leadership and accountability to perform.  It bears mentioning that many firms intentionally put inexperienced, and unsupported people in gatekeeper positions.  Some people are better students than others, so invest your teaching time wisely.

Running out the clock

Everything in construction is time sensitive, so any issue that won’t resolve will eventually threaten a project.  People who can’t or won’t do their part within the chain of command, are often insulated from the pressures of your time constraints.  Where possible, and with permission, it may be possible to communicate with the person holding things up directly.  Although it may seem obvious to some, the success of this approach hangs upon strong social skills.  The goal is to define what motivates their actions, without questioning their integrity, or competency.  Be mindful of the limits of your knowledge, let them tell you what they think is going on.  Show appreciation for their courtesy and their time, by asking how you can bring the issue to resolution.  If you’re talking to a “junior buckaroo” gatekeeper, they will often allude to senior staff making decisions behind the scenes.  Where appropriate, offer to help explain things to those senior staff.

If they transfer you over to the senior staff, be prepared for an earful of information.  There are often really good reasons that an issue is difficult to resolve.  That being said, remember to ask this professional to outline the steps to resolution.  Where appropriate, ask what you can be doing to help.  Don’t forget to ask for specific timelines.  Be positive, helpful, and insistent that everything goes “on the record” so it’s done according to the contract.  Remember that you wouldn’t have this problem if the team had effective leadership and accountability.  It may prove helpful to memorialize the action plan from this discussion with an email entitled “Thank you for your help with (the specific issue) on the (name of project) job”.  Where possible, prudent, and appropriate, copy that email to the relevant affected parties.

Be sure you understand that last part.  Any viable action plan has the potential to cast an unflattering light on the individuals involved.  It might be possible, and arguably appropriate, to work around an individual it would be imprudent to offend.

Remember that any solution you work out this way is contractually meaningless until that solution is communicated through chain of command, via a formal process.  Wherever possible and prudent, incorporate the memorialized action plan into your paperwork for formal approval.  This is especially helpful in situations where you suspect that unsupported junior staff will be processing the paperwork.      

The bane of all productive activities

If an issue lingers on long enough, someone will call for a meeting.  This is a popular approach to solving problems that is affected by the same lack of leadership and accountability that caused the problem.  Getting the most out of these meetings starts with understanding what is likely to happen.

Companies with administrative blockades tiered to protect senior staff have two primary strategies.  The first, and most common management strategy is to send in the rookie.  This is likely the same person who can’t or won’t perform their duty because their superiors have left them unsupported.  Expect them to emphasize process, without touching on the responsibility they’re trying to avoid by withholding permission or direction.  Pay attention to any names you hear in case the rookie offers to “loop someone in” on this issue.  This is invariably the senior support staff of the rookie that didn’t attend this meeting about the issue they wouldn’t address.  Most of these meetings conclude with a commitment to wait and see what the hiding senior staff member comes back with. 

The second most common strategy is for senior staff to arrive at the meeting claiming to be unprepared to make a decision.  Be very careful here, especially if there is no reaction from team leadership.  This is a common ruse to trap the unwary.  I’ve encountered plenty of professionals who came to the table feigning cooperative ignorance, who revealed the depth of their knowledge later on.  You’d better have your facts and figures at the ready, or they’ll trip you up.  I’ve also encountered situations where a professional played dumb to protect their colleague(s) and/or cronies from exposure.

Matt has been playing dumb for so long, that nobody believes otherwise

Getting the most out of a meeting starts with mitigating wasteful behaviors.  If you are setting up a meeting, you might ask all the senior staff to provide a brief overview of what they need to resolve the issue.  Compile that into an agenda which is copied to all invitees.  By developing a meaningful meeting agenda, you might accidentally solve the problem!

If an invitee won’t answer the email, they’ll probably avoid the meeting too.  Anyone who can’t/won’t make a meaningful addition to the agenda is communicating something.  Use their lack of response as an opportunity to request access to their superiors.  Again, I find it’s helpful to couch this in terms of concern for the unresponsive person’s health.  It’s truly remarkable how often people will find time to reply after I’ve asked their boss if they’re out sick.

If you are asked to join a meeting, you might suggest this process by volunteering the items you need to resolve the issue on your end.  Be careful to “stay in your lane”, because weak and unaccountable leaders are often counting on someone else taking charge so they can claim success, or lay blame.  If you don’t know who should handle some item you need resolution on, admit it.  Hopefully things go well and you arrive at the resolution to your issue.

Be thankful for the difficult people in your life, for they teach you who not to be.

Construction is a field which attracts a unique blend of skills and personalities.  It’s truly remarkable how the various combinations can come together to make an individual really good at their job.  Still, it’s not for everyone, and some people take longer to make that discovery than others.  Many people are in a difficult situation after they’ve invested heavily in higher education, to begin a career that’s nothing like the coursework they enjoyed.  Others suffer from the Peter principle; “People in a hierarchy tend to rise to their level of incompetence”

These are just a few examples of how squandered human capital tends to create difficult people.  I’d like to stress that “difficult” in this context, is simply referring to the relative complexity of getting an individual to either do their job, or stand aside so others can make progress.  

I’ve had some success with the following strategy which works well with most people.

  • Respectfully set a precedent of positive productivity
  • Establish guidelines for success, and an escalation strategy for course correction
  • Define timelines for performance
  • Evaluate and follow through
  • Maintain records to develop a narrative which defends or promotes the necessary course of action.
  • Escalate as necessary

Hopefully these ideas will bring some of your immortal tasks to an end.

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© Anton Takken 2021 all rights reserved

 


Growing pains

Time is money, the customer is always right, estimates are free, every company wants and needs to grow.  These expressions are so familiar that they sound like universal truths. Life has a way of being more complicated than we’d like it to be.  I’ve definitely encountered rare situations where costly time was squandered, customers were wrong, and estimates cost a fortune.

Is growth always good?

To answer that question, I’ll ask another one.  What puts more companies out of business, losing too many bids, or winning too many?  This isn’t a trick question, and it doesn’t require any extensive market knowledge to answer.  Consider the following.  If a company doesn’t win any work, they’re not getting any income which means their overhead is consuming their capital until they’re insolvent.  The overhead and the existing capital are known entities to the firm.  This means that it’s possible to accurately define how long the company can remain in business without landing work.  More significantly, it defines how the company can fail without owing anyone.

If a company wins more work than it can complete, it’s in a very dangerous situation.  Contractually they’re obligated to complete the work and penalties for failure are severe. In real life, things don’t fail in a neat and orderly manner.  One bad job has a way of taxing resources on all the others, systemically spreading the failure to everything the firm touches.    A company that might ordinarily be able to weather one bad job is now facing the prospect of losses on all their projects at the same time.    Taking on that one additional job might well doom the entire operation.  The knock-on effects of this are severe.  Clients and subcontractors are often left in serious financial jeopardy.  It’s difficult to know the total downside risk, but it’s clearly much worse than having to close up shop for lack of work.

Risk versus reward

Businesses operate on risk versus reward relationships.  Growing a successful business is often assumed to be a low-risk, high-reward proposition.  After all, you’re just copying whatever worked to capture more of the market.

There are two assumptions underpinning this plan that have the potential to upend the whole risk to reward relationship.  I’ll pull them out here.

“…copy whatever worked…”

and

“…more of the market…”

 

Let’s start with copying “whatever worked”.  On the surface, it might seem like any entrepreneur or professional would have a solid handle on what they do, why it works, and how it can be copied.  In my experience, this sort of corporate self-awareness is extremely rare.   Quality control efforts tend to focus on detecting the signals and causes of failures.  People just aren’t that curious about their successes.  If something is working, there isn’t much incentive to push boundaries in search of weaknesses.

With their heads in the clouds, management keeps tripping on molehills

I worked for an entrepreneur who proudly told me that “big and clean” ground-up construction projects were the bread and butter of the company.  A quick review of the accounting would show that “ugly and small” remodel projects constituted 85% of the annual revenue, and well over 95% of the annual profits.  Simply put, the “ugly” remodels didn’t attract as much competition, so we could win with higher fees.  Since they were smaller, we could do more of them per year with the same size workforce.  This entrepreneur is by no means an isolated case.  I regularly encounter professionals whose company “identity” has little resemblance to reality.  Projecting the image of what they think they are into new markets rarely works out for them.

So, what’s the assumption with the “more of the market” part?

This is a two-part problem.  First, if the firm doesn’t know what they’re good at, they’re unlikely to be aware of the market factors that influence their success.  Very few companies are “good at everything” so there will only be a select few market segments that are viable to any specific firm.  Those segments can have many factors that influence the quality, quantity, and frequency, of opportunities to seize upon.  Simply put, there might not be “more” of the target market to pursue.  This is especially true for niche contractors in depressed economies.  Just before the last recession hit, there were lots of companies boasting about their growth into diversified client bases.  After the recession hit, most of those firms had layoffs.

The venturi effect 

Giovanni Venturi discovered the venturi effect which is visible with a simple experiment.  Blow at a right angle to the opening of a straw placed in a glass of water.  The venturi effect will cause pressure in the straw to drop, drawing the liquid up the straw.

During an economic boom, it’s not particularly hard to win bids.  Companies quickly decide that they need to grow in order to capture more of the expanding market.  So, they hire more people, buy more equipment, and generally take on more overhead.  Now that they have this overhead, they need to win even more work to pay for it.   The constant expansion creates a venturi-effect on overhead.  Some readers have gotten this far and figure this is all normal growth.

The bids aren’t just placeholders in the process of converting opportunities into profit.  Bids freeze the value of the project before it’s begun.  Adding overhead to the company post-bid is effectively trading profitability for growth.  During a boom, the revenue can be expanding so rapidly that it’s hard to tell that the individual job is actually getting less profitable.  Eventually, many such firms reach a point where their very survival depends on growth because none of their jobs were won with sufficient overhead to pay their own way.  Some readers might be asking themselves why the estimators at these firms didn’t react by raising the overhead in their bids.

While I’m sure that some of them do try, they’re often obliged to prioritize the more immediate problem of staying competitive enough to keep winning work.  Estimators should understand that businesses in general, and managers in specific, tend to prefer a flawed but executable plan over an effective strategy that requires constant judgement.

Strategy versus planning

As individuals, it’s impressive how easily professionals can spot the unfortunate outcomes of rigidly following a plan.  When personal accountability is threatened, many will claim “their hands are tied” by these selfsame plans.  People respond to incentives.  A “plan” sounds much less risky because people assume, they’ll be rewarded for following (or at least appearing to follow) the plan.  A strategy that requires judgement means you might be solely responsible for anything that goes wrong, even if your reasoning was sound.

Longtime readers of this blog know that estimating isn’t about a plan or a process.  Estimating is about controlling risk which requires good judgement.  In my experience, the better your judgement, the less you have to fear in terms of accountability.

“Matt spends a lot of time looking for a place where his reflection matches his image.”

Where do you start?

Estimators need to understand the power of perception.  Hard-charging entrepreneurs hire estimators to control risk, so they can focus on growth.  When sports cars are advertised; the horsepower, the speed, the looks and the luxury are all prominently featured.  Nobody’s talking about the brakes.  Race car drivers know that better brakes slow the car in less time which means they can maintain higher speeds for a bit longer before they must brake for a turn.  This means that they’re covering more distance in less time.  As odd as it might sound, it’s entirely possible for a car with better brakes to win a twisty race against a car capable of higher top speeds.

Estimators looking to gain traction with leadership need to illustrate the effect of controlled risk.  How does winning a given bid relate to securing a better position for the company in the future?  Mindless assumptions should be challenged.  I had a boss who wanted to “really impress” a municipal client with a very low hard-bid in hopes of securing no-compete contracts for future work.  The city in question has charter rules expressly forbidding city contract award without a competitive bid.

Strategic thinking looks beyond the client-retention platitudes.  In this example, there will always be competition, so the focus should be on maximizing profitability at the market-leading price point.  In practice, we found that we were able to profitably win work in a handful of cities.  Looking deeper, I was able to determine that a longstanding culture of bid-shopping among the local General Contractors (GC’s) in one city had created an incentive for the local subcontractors to work with out-of-town contractors.  By being honest and forthright about everything including bid results, I was rewarded with better subcontractor pricing than my competitors.

Since repeat business depended upon winning bids, we had an incentive to reveal any design-driven chicanery that threatened to exceed the client’s budget.  On one such project, there was a sole-specified vendor for window coverings that was three times the cost of their competition for a plain “white goods” product.  From a strategic standpoint, the estimator has three options.  They can bid per plans and specs hoping that everyone else does too.  They can carry the cheaper product in their bid in hopes that it will be accepted by the Architect, and finally, they can expose the cost difference to the client on their bid form.

Options one and two depend heavily on the integrity of others for success.  Option three risks angering the Architect by exposing their chicanery.  When weighing the strategies, compare the relative risks.  Any one of them might fail, thus losing you the job.  Option two might still anger the architect when you submit on the “wrong” product.  If the alternate material is rejected, option two could result in winning a job at a loss which is worse than not having a job at all.

Option three presents the least total risk and most potential reward. If the base bid is per plans and specifications, you’re not violating any trust or instructions.  The alternate is voluntary and can be truthfully presented as an alternate equal. If presented as a way to achieve their design intent within the client’s budget, the Architect can accept your alternate and save face.

The “savings” presented can be whatever you choose to offer.  Strategically, it’s smarter to allow yourself greater profitability to counterbalance the potential difficulty in getting an alternate approved.  As an estimator speaking to leadership, this strategy is a win for the client and the contractor.

 

A journey of a thousand steps

Strategic growth is more difficult than it sounds.  During the ebb and flow of larger market trends, it can feel as though a perfect strategy has no priority over your daily concerns.  There will almost certainly be times where the best course of action is to simply press onward, making the best of what you have to work with.

Quick story.  I started working for a company that chased hard-scrabble projects for low budget General Contractors (GC’s).  Every client who put us on their bid list was treated like an unassailable gift from the heavens.  Bidding was miserable because deadlines were short, bid shopping was rampant, and the work was virtually worthless.  Things weren’t much better in the field where most of the jobs ran late, over budget, and suffered from chronic mismanagement.

Strategy was regarded as a nicety we never had time for.  Since the jobs were small, I was constantly inundated with bids to keep everyone busy.  Chasing larger projects with the same class of client didn’t improve my fortunes.  By one year in, it was clear that our three “best” clients were a financial illusion.  They hired us for more work than anyone else, but all of their work was so poorly managed that we lost productivity and profitability on everything else we had going at the same time.

I was deeply frustrated, and at an annual review, I presented a list of the top 100 GC’s in my area to my boss.  I insisted that we make an earnest effort to get ourselves invited to bid on their work.  Some put us on their “small projects” list which was a feeding frenzy of projects identical to the work we were trying to escape.  Others only invited us to bid on work that was too far from our market.  Eventually, we were invited to bid on a modest job with a major GC.  It was a rousing success!  Every single project since has been awesome.  We met with their pre-construction managers where we learned that they were very selective about who they’ll invite to bid.

Mesas and Buttes

Mesas and Buttes are often confused.  A Mesa is flat topped land mass where the width is greater than the height.  In contrast, a Butte is a flat-topped land mass where the height is greater than the width.

Submitted without comment.

It’s pretty easy to spot market stratification in the construction industry.  Some projects command higher prices than others, even when they are very similar.  When we see “price point” markets, there’s a wide selection of mostly standardized offerings from similar providers.  I once bid a job which had a tremendous number of bidders in each trade.  Plotting the bid amounts on a continuum from smallest to largest, it was plainly obvious that the bids clustered around three separate values.  Broadly speaking, the clustered bidders had strong similarities in terms of market share.  Among peers in their cluster, all of the bidders were strong competitors.

Comparing individual bidders from one stratum to the other, it didn’t seem probable that they were looking at the same scope of work.  For the most part, the bidders in a given stratum had similar economies of scale relative to the scope of work.  At the cheapest stratum, the bidders were neither too big, nor too small, they were just right.

Bid invitations that are open to all comers will generally result in an award to the stratum that best matches the scope of work.  We can visualize the market stratification as if there are populations living atop mesas of different heights. Everything is organized roughly the same on each mesa, but they’re too far apart to bridge the gap between them.  Moving from one mesa to the other requires painful transformation because there are no resources at the valley floor.  It’s dark down there, and there’s no one to guide you so only the determined, or desperate dare to try.

Markets can stratify in less obvious ways as well.  Elite clientele may decide to solicit bids from only the most qualified general contractors, who in turn, will only solicit bids from the most qualified subcontractors (subs).  In many cases, the business is conducted with such discretion that only the most observant of the mesa dwellers can tell that it happened at all.

Getting to this level is a formidable struggle, which is why there is less competition.  We can visualize this kind of market stratification as a butte.  The butte can be at the same height as a mesa, but the butte dwellers benefit from a completely different client base.

An island in the clouds

Chasing elite clients sounds like a foolproof plan, and honestly, there’s a lot to recommend it.  However, there’s a big difference in the relationships that underpin every opportunity.  Going back to my butte metaphor, it’s significant to realize that while the height might seem familiar, the boundaries are sheer cliffs.  Any failure to perform, even the perception that you might fail to perform, may be all it takes to be kicked out.  It’s critical to understand that these rules apply to virtually everyone on the butte.  A GC with a sub that’s not performing, is an existential threat to their livelihood.

The greatest advantage of life on the butte is that you can’t exist here without doing construction management right.  Half-baked, absentee Project Managers (PMs) doing their best to maintain plausible-deniability are not tolerated at all.  This is a huge improvement for all concerned, including the GC, because the client is willing to pay the going rate for qualified leadership.

So what’s not to love?

Elite clients have different motives than commodity level consumers.  Time and money may not be their primary concerns.  For example, bank tellers require a lot of costly in-house and on the job training. Once a given teller has the necessary skills, they can easily work for a competitor.  The bank was much more concerned about inconveniencing tellers, than time or money.

Elite clients know that they’re paying a premium, so they expect the build team to do whatever it takes to make the project successful.  Design teams aren’t appraised by their construction documents (CD’s), or the efficacy of their management, but by their portfolio of built projects.  The quality of the finished work may not reflect the quality of the original design.  Astute readers will note how this “cuts both ways” for every professional involved.

There are many unique challenges to working for elite clients, but the biggest risk by far isn’t obvious to most people.  When things are going well, life on the butte is pretty awesome.  As a company, you can be doing less revenue for higher profit with less overhead, and manpower than you’re used to.  When an elite market slows down, your company may face some really difficult adjustments in order to successfully pursue hard-bid work.

Estimators love to think that they’re constantly diversifying their client base in case of a turnaround.  In reality, the butte work is always the highest priority.  Coming down from that height and climbing back up the hard-bid mesa isn’t as easy as it sounds.  Even if the estimating department is up for the challenge, the leadership and the workers all need to adjust to very different priorities.

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© Anton Takken 2020 all rights reserved

 

 


Honesty speaks

Construction firms love to advertise their integrity, their honesty, and their commitment to doing their best.  In contrast, we don’t see a lot of advertising space used to mention on-time deliveries, site logistics, or accurate accounting.  Surely the client cares about their project’s timely completion as much as their contractors integrity, so what’s going on?

Honesty speaks

Maybe we need to put up more safety banners?

If advertising exists to encourage clients to select your firm over your competitors, it would appear that most construction advertising operates on the assumption that contractor selection hinges on the client’s perception of your honesty.  By extension, this communicates that there aren’t noteworthy differences in abilities, experience, equipment, trade-craft, market share, or purchasing power for the client to consider.  In most companies, the estimating staff is a huge portion of their marketing efforts.  Often it’s estimators who form the clients first impression of their firm.  How well does the estimators actions align with the firm’s message?

Standards versus statements

Taking another approach, if we assume that the principles of these firms are simply advertising based on their deeply held beliefs, we must then ask how they go about ensuring that their staff meet these expectations.  Without enforceable standards, these are merely hollow statements.  In my experience, most of them are.  There are discussions among various estimator groups about how to create some form of ethical guidelines or integrity-based mission statement for the vocation.  Lacking a means to enforce standards, it’s more likely to attract scoundrels seeking legitimacy, than it is to attract honest professionals seeking company.

Honesty speaks

Don’t be fooled by the diploma he bought online,  Eddy didn’t study like his classmates.

Gray areas and grease

The first stumble towards enforceable standards will come from folks who are surrounded by “gray areas”.  Absolutely every opportunity to do the right thing is carefully weighed against an opportunity to feign confusion that just so happens to lead them to a more pleasing outcome.  I’ve personally encountered estimators who thought nothing of revealing their dishonest choices, right before they asked for my help.

For example: “I know we bid this one several months back with the promise that we’d hire the subs on that round of bidding, but you only beat your competitor by a few hundred bucks so we figured we’d have the two low bidders go another round to see what we could save…”

They broke their first promise to hire the low bidder on the last round of bidding.  They’re specifically telling me that they knew that hiring me was low risk because I’d just barely beaten a competitor thereby proving the price was market value.  Now they’re telling me that they’re hoping to “save money” on another round of competitive bidding.

The GC won the job on the basis of my bid.  Now they’re pretending that it’s “too close to call” to see if they can eke out some additional profitability (at no risk) by making me compete on the job I already won.  Plus, they’ve likely provided my competitor with bid results so we both know what the GC’s maximum price is for our scope of work.

The impressive thing about this person is that they think it’s fair because both companies have an equal opportunity to win on this round.  It makes no difference if the mechanism is a formal bid, backroom bid-shopping or a verbal auction, this person won’t do the right thing unless it’s the most profitable option.

Honesty speaks

Your reputation is like a shadow that reveals the outcome before the game

Ethical obligation to win

I’ve written before about how estimators must have clarity of purpose.  Estimators exist to win profitable work.  Some folks interpret this to mean that they must win, then make the job profitable via bid-shopping, collusion, and other deplorable (if not illegal) actions.  This self-defeating approach ignores that successful businesses will need to reliably win work in your market continuously.  Cheating the subcontractors (subs) will only work until the General  Contractor (GC) burns their last bridge.  These are the GC’s who are constantly begging for bids.  They’re not calling with a great opportunity, they’re simply out of trusting subs.  Estimators should consider their reputation to be a vital means of winning work.  GC’s who attract market leading subs will not only win more, but they’ll get better pricing allowing them to achieve higher profitability than any of their competitors.

Accurate estimating, and proving the truth

Construction estimating has a paradoxical relationship with the truth.  Consider how best practices for estimating call for detailed quantity take offs (QTO’s) that are tabulated according to material, labor, etc.  Every effort is made to accurately reflect the real world costs of the project.  Upon request, the estimator can provide facts, figures, measurements, and detailed illustrations to prove any aspect of the project’s cost.  Yet when we consider estimating in relationship to the market, specifically focusing on how an individual estimator may prove they’re acting with integrity, the trail goes cold.

Bid results are supposedly provided “upon request”.  On the rare occasion that a GC provides bid results on the record, the information provided will often be stripped of accuracy, context, or actionable content.  Off-the-record bid results are far more common because there’s plausible deny-ability for the GC.

Honesty speaks

Silence and plausible deny-ability are rarely good when you’re on the receiving end…

Considering that the underlying agreement of an Invitation to bid (ITB) is to solicit free sub proposals in exchange for either the fair award of the contract, or bid results, it would seem rather obvious that proving fairness is a basic estimating necessity.

Broadcast

GC estimators are already mass-communicating project information to the sub market.  Everything is optimized for efficiency, speed, and competition before the bid deadline.  This is because even a small delay could spell defeat.  After the deadline, everything goes to silence because the winning GC will need time to check the bid for errors, and to be sure of which subs they will award.

The losing GC’s have no such obligations or concerns.  In fact, timely, accurate, voluntary, and public bid results would give their bidders the information they need to curtail any cheating.  More to the point, sharing the information as a public broadcast provides transparency and accountability.  This incredibly simple approach is much easier than answering hundreds of subs asking for bid results.  It’s just as easy to publish bid results when you’ve won, with the notable requirement that it’s delayed until the letters of intent are sent out.  Subs will happily accept this modest concession to discretion, to have proof of fair-dealing.

Meaningful marketing

If Clients are seeking Contractor virtue in terms of integrity and honesty, it’s time to have enforceable standards, made meaningful by transparency.  Estimators are uniquely able to prove they walk the talk by publishing bid results publicly.  Giving clients an insight into how the company acts with integrity to respect and protect their industry makes for a great first impression.  Perhaps more importantly, the client would be empowered to identify what an honest firm does differently.

 

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© Anton Takken 2016 all rights reserved

 


Stress and boredom

Life as a construction estimator involves a lot of ebb and flow. Building estimates, doing quantity take offs (QTO’s) and tabulating results can range from steady progress, to boring slogs through minutia. Sharply contrasted are bid days which can move at a fevered pace studded with snap decisions that will make or break all the work that’s gone before.

There’s a hidden nuance to this pattern; boredom is its own kind of stress. Tedious or repetitive measurements are prone to error because it’s difficult to recognize subtle differences when everything looks the same. Conscientious estimators know that boredom can lead to mistakes. It can be very frustrating because checking for mistakes often means going through the same boring material. Each review loses its potency until you’re so familiar with the material that you’ve lost perspective.

Stress and boredom

Even estimators who aren’t worried about making mistakes can find boredom stressful. Tedious and repetitive tasks are the “grunt work” of estimating. In firms with a dedicated estimating department, the hierarchy often dictates who does what. Since General Contractors (GCs) employ fewer estimators than Project Managers, Project Engineers, and Superintendents, the estimator advancement potential at any given firm is typically tied to vacancies or company growth. This can lead to situations where seniority is a greater factor in advancement than skill, ability, or performance. For the perpetual “junior” or “assistant” estimator, this can mean years of doing the grunt work without much opportunity to advance your skills. Human Resource professionals refer to this condition as “underutilization” and it’s been shown to harm morale, and reduce productivity.

Stress is often discussed in exclusively negative terms which can serve to conceal the real picture of what’s going on. For example, bid day can be described as a hectic experience with plenty of hazards to negotiate. Bid day might also be described as the culmination of weeks of labor where all the parts come together according to plan, ending in a well-deserved victory. Lots of folks are so used to thinking of estimating as a brief process in a larger chain of events that it becomes reasonable or them to think that generating a price is like turning a crank. Smooth and uneventful bidding reinforces this perception while concealing the work it took to get there.

Being part of a well-organized and highly motivated team of professionals can be exhilarating. Spending the day in constant motion makes it seem like time is flying past. However it’s often difficult to “let go” of everything in your free time. As an estimator I’ve lost more sleep thinking about mundane jobs than I’d like to admit.

Stress and boredom

Smoothing the peaks and filling the valleys

From an outsiders perspective, it might be difficult to see what estimators are getting so worked-up over. To most folks, estimating is a combination of ringing up a total like a cashier, and running an audit of the plans. The reality is that estimating is about controlling risk. There are many forms of risk to contend with, but uncertainty is the one that attracts the most estimator attention. QTO’s go a long way towards becoming certain of what’s required. The natural extension of this thinking is that greater detail leads to higher certainty. The problem is that time is always limited, and there are risks beyond what’s depicted in the drawings that must be accounted for. Minutia nourishes limited perspectives while starving big-picture thinking. Estimators need to understand the driving forces of a project in meaningful and actionable terms. GC estimators should build their estimates to furnish pertinent information for comparing and scoping subcontractor bids. For example, it’s not as important to know component level pricing (screws, nails, etc) as it is to know assembly level (meeting room carpet, air handling unit, etc.) pricing.

There’s a balancing point to be struck on relative detail. You’ll always feel better with a bit more information, but you can achieve a lot with a bit more time early on. When it comes to the really tedious QTO stuff, it’s worth taking the time to consider how useful that information will be. It damages a lot of ego’s to point out that perfect QTO’s of low-value and high tedium items have little bearing on successful bidding. Time sunk into tedious tasks early in the bid cycle robs you of time to develop strategies, answer questions, and direct resources to make the entire estimate successful.

Rather than strictly recording quantities for later comparison, your time might go towards communicating intentions which leaves less potential for discrepancy on bid day. Estimators looking to control risk should remember that losing the job through misplaced priorities is a very real possibility. Perfect spreadsheets are little consolation for lost opportunities.

Routine tasks

Some routine tasks lend themselves to interruption or working in stages, like QTO’s for example. There are some tasks that must be completed entirely or you’ll lose time constantly attending to remaining items that won’t wait.  The Invitation to bid (ITB) is a simple document that conveys the who, what, when, where, and why of the project to the invited subcontractors. Incomplete ITB’s are distressingly common, especially among GC’s who are using a bid-letting software/service. Documents that generate more questions than answers ensure that the estimator will be constantly interrupted by bidders looking for necessary information. Creating an ITB that gives bidders everything they need will take longer to assemble, but it leaves much less for follow-up. Being able to move on from a routine task not only reduces your stress, it’s a vital stage of a successful bid.

It bears mentioning that time spent on bidder convenience is often an investment in reliable turnout. One obvious and constantly overlooked element is the how the Construction Documents (CDs) are configured. It’s a waste of a subs time to download an enormous drawing file just to access a single page. The old argument that giving subs the entire set guarantees they’ll catch the buried architectural note, is hollow because it’s the GC estimators job to find all the “gotcha” nonsense, and communicate it to the subs. Label the individual sheets with accurate and understandable terms. Whenever possible, group the sheets by discipline (Civil, Structural, Architectural, Interior Design, Mechanical, Electrical, Plumbing, etc.) to speed bidders to the files they actually need. Be advised that delegating this task to the office receptionist, or summer intern is a risky move because they rarely understand the pivotal importance of naming things properly.

Stress and boredom

Office designers are finally addressing interns in the workplace

Estimators should develop the habit of organizing their work to maximize expediency, reliability, and professionalism because it’s very likely they’ll need answers in a hurry.

While we’re on the topic of file storage, it’s a good practice to maintain saved copies on more than one machine. For example if the company server goes down, you might need to progress on your standalone computer. Having older iterations on file allows you to “fall back” if your most current version gets corrupted. Plus, it can be handy to have time stamped “save points” to plot your progress through your work afterwards. Don’t forget to maintain this practice on bid-day. It might save your bid should the “war room” computer falter at a vital moment.

Perspective on pressure

About the only thing worse than a tedious takeoff, is knowing that you’re running out of time to get it done. Procrastination and poor planning leads to a lot of unnecessary overtime. We hear about how working well under pressure is a vital quality in an estimator, but there’s little curiosity about the source of the pressure. Estimators need to get their heads up and pay attention to the scope of their own operation. How long does it really take you to get the QTO done for this or that? Working backwards from the deadline, how does the sum of your estimated durations line up with reality?

Fighting the clock

It’s ironic that stressed-out estimators are often unwilling to apply their craft to their own schedule. Create a schedule, then track your time against it so you’ll see when and where you’ll need corrections. Every successive schedule will become more and more accurate. Identify where most of your time is spent, and take stock of what that means. If you’re constantly answering bidder questions, you might consider publishing a bid-directive that proactively answers group questions.

Slow grind

If you’re mired in QTO, it might be time to look into better software, hardware, training, or templates. Looking back at your performance, you should see an increase in QTO speed without any loss in accuracy. If you’re not improving with experience, you’ll almost certainly stagnate or stress out. It’s not discussed much, but lots of GC’s do painstaking estimates on things like paint, but square foot cost items like Mechanical, Electrical, and Plumbing (MEP) simply because they don’t know enough about those trades. The MEP trades are among the most expensive subs on a typical project. These estimators would be better served by square foot costing the paint, and spending the time learning what drives MEP pricing.

Quick-hitter quicksand

If you’re constantly transmitting RFI’s, Addenda, and bid-directives for quick-hitter bids, you might find relief in a higher level of client. Insincere, underfunded, and unprofessional clients rarely attract top-level design teams. It’s a LOT more work to bid an incomplete design for an underfunded client and you’ll have little to nothing to show for it. Marketing folks are loath to admit that low barrier to entry clients are the most likely to waste an estimators time. Tire-kickers aren’t clients, pretending otherwise is busy work theater and you’ll be the star of the show! Conceptual pricing techniques shouldn’t drift into design-build territory.

Stress and boredom

Bob’s not sure why he never wins, but he’s having fun and that’s the important part.

There’s a lot of fast ways to render a courtesy bid without wasting your companies (or your subs) resources. Good record keeping builds a vital reference resource for these tasks.

Redundant department of redundancy

Some GCs strongly believe that good sub turnout on bid day is directly tied to “working the phones”. Nagging subcontractors to bid is an incredible time-sink that’s based on a fundamentally flawed perspective of how bidder relationships should work. Estimators often call a project an “opportunity” because a competitive bid offers professionals a chance to win a contract by doing their best as part of a team. If the GC or the project lack sufficient luster to attract market leading subcontractor attention, it’s spectacularly unlikely that any amount of nagging will change that. Building “pull” with subcontractors is a function of establishing a valued relationship with the market. Winning bids obviously gets the market’s attention, but so too, does transparency, honesty, and leadership. There’s a lot a GC estimator can do to bid an “ugly” project successfully. Nagging is never the answer. Voluntary, accurate, and timely bid results are the single most effective means for building pull in your market.

Furious futility

Some GC’s respond to lost bids by increasing the volume of bidding in the hopes that volume will lead to victories. Grinding out bids as quickly as possible means that there’s never time for strategy, skill, or teamwork. There’s never a shortage of low-end clients looking for quick-hitter bids. Sadly, the majority will be fruitless because insincere clients and urgent bid requests are constant companions.

If you’re tracking your estimates, you’ll be able to assess projects in terms of how successful you expect to be. Lots of companies think they’re excellent at everything, but the reality is that most companies are only market leaders in specific areas. Estimators should keep in mind that the project management side of their firm may adore a client or design team that’s generated profitable change orders. Being profitable on the basis of what might happen is better known as gambling. Estimators should be looking for work that will be profitable at the bid amount. GC estimators should learn to look at their market potential in terms of their subcontractor base. If the GC can’t attract market leading subs for the work in question, they’re going to lose to a contractor who can. Picking work that aligns with your best subs abilities is critical to success. Most GC’s see this entirely backwards. They pick projects that look profitable, easy, or fun to manage. If they chose work that aligned with their market leading subs, there would be less difficulty, and more profitability, regardless of how fun, pretty, or prestigious the project appears to be.

Blind faith in the process             

Estimators need to maintain a sense of purpose. You’re there to profitably win work by controlling risk. While we spend a lot of our time building estimates, it’s vitally important to maintain perspective on the market, competitors, and clients. There’s entirely too much blind faith placed on QTO’s, spreadsheets, and bureaucracy. Estimators need to see what’s really going on and they need to respond accordingly. Contracts are awarded to the best market value, if you don’t know what that is, you’ll struggle to profitably compete.

Perspective is an investment

The key to building a meaningful perspective is to faithfully record what’s happened on past bids. Bid results are often treated as a vestigial appendage of the estimators craft. “Yeah, yeah, we lost but we’ll do better next time…” neatly sums up the attitudes of many estimators. The bid cost real time and real money to produce. It’s truly remarkable how little effort goes into defining how a job was lost, compared to the work put into bidding. With a more accurate picture of what happened on a loss, the next bids benefit from refined judgment. REALLY simple things like getting a winning competitors sub on your bid list can make all the difference. There’s an interesting element to post-bid investigations that’s constantly overlooked. You get more information from your allies, when you share more information with your allies. Once an estimator has lost their bid, they’ve got plenty of useful information to exchange that can materially change their position on the next bid.

Stress and boredom

Earlier I brought up career stagnation in estimating and it’s here that I hope to offer some help to the folks trapped on the lower rungs. Most GC’s aren’t particularly scientific about tracking their bids, their subs, or their markets. By and large, they trade on their established contacts in their market which brings them varying degrees of success according to luck, market conditions, and subcontractor quality. If you’re doing the grunt work without seeing much opportunity for advancement, I encourage you to build your own tracking systems to help define for yourself what is and isn’t working. Be advised that your daily tasks are higher priorities to your superiors so it may be necessary to invest your personal time.

Be cautious about relying on small data sets, or those with wide-ranging values that will skew results. In time you’ll develop perspective on your clients, your market, and your subs. If you decide to offer suggestions on how things might change, you’ll have facts and figures to lend credence to your perspective. Advancement is never guaranteed, but you’re wiser for the effort and you’ll learn what to look for wherever you go. It’s worth pointing out that we’ve all learned from those who went before us. Do your part to improve our craft by sharing what you’ve learned. I’ve found that a policy of forthright honesty has been a profound and enduring advantage against my competitors.

Policy driven pinch points

The bid-day blitz can be a terrifically stressful experience for a GC estimator. Bids come rushing in at the last moment and everything must be done at high speed if you’re to make the deadline. Last minute sub proposals aren’t happening by accident. It’s a calculated effort to limit or obstruct bid-shopping by starving the estimators of time to act. Getting right to the root of the problem, last-minute bids are a sign that the market views corruption as a serious threat. The lack of trust may be anywhere in the supply chain. Corruption thrives in secrecy and wherever it’s possible to curtail competition.

Accountable transparency is the only effective way to counter corruption. It’s predictably unpopular because it requires a strong moral compulsion to act when it won’t help you directly or immediately. Lots of people opt to remain silent which prevents the honest majority from working together.

Stress and boredom

Estimators need to understand that they can’t win work alone. Company policies that work against transparency, accountability, profitability, and good judgment should be questioned and if necessary, changed. Estimators need to be able to show the market that they are ethical professionals if they’re to be market leaders.   It’s worth saying that accountability means facing repercussions for mistakes. Estimators should take heart in knowing that while accountable transparency will reveal their honest mistakes, it won’t conceal their honest intentions.

To recap, much of an estimators daily stress comes from incomplete tasks, dysfunctional relationships, and misplaced priorities. With greater perspective, we can find avenues to re-direct our energies towards successful outcomes. Boredom is an insidious source of stress with roots in minutia. We must make the connection between utility and effort before we commit our valuable resources to proving things we already know. Growing our base of knowledge and sharpening our decision-making skills should be constant pursuits. Finally, we should all do our part to improve our craft by acting ethically, sharing what we’ve learned, and facilitating advancement in our ranks.

 

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© Anton Takken 2015 all rights reserved


Stuff nobody will tell you about estimating

I suspect every profession has a few hidden qualities you wouldn’t discover until you’d been at the job a while. Estimating has some interesting features that can really make or break your chances of success, provided there’s somebody to point them out to you.

Speed is your friend

On the surface, estimating seems to be about careful measurements, considered accounting, and an overwhelming obsession with minute detail. In practice, successful estimating is about time management. General Contractor (GC) estimators are responsible for getting the information out to their subcontractors (subs) as well as getting the subs questions answered by the design team. Every problem needs time to resolve so it’s really important to maintain rapid communications during the bid.

Stuff nobody will tell you about estimating

Mobile office solutions, speeding you on your way to the next crash…

It’s really tempting to silence your phone and ignore your email for a few hours to get something done. Which leads to the next item…

Leadership is more important than takeoffs

If your estimate relies on sub or vendor quotes, your first priority should always be to providing direction, insight, and encouragement to those bidders. Specifically, your efforts should be directed towards finding a unique and advantageous approach to the project. Ineffective estimators tend to assume that there’s something special about their company that will ensure that bidders will give them their best efforts. In a vacuum of leadership, subs will hedge towards protecting their own interests which never means low prices.

Perspective, then persistence

Hard work and persistence are admirable qualities that absolutely will not lead to success on their own. Lots of estimators assume that bidding and winning have a cause and effect relationship. It’s true that you can’t win if you don’t bid. However the reverse is not always true because there are insincere/unfunded clients with projects bidding that have no chance of being awarded. Sadly these clients consume the lion’s share of the slow market. While they can occur at any level of the market, these clients tend towards the bottom strata wherever they appear. They can be identified by their incomplete plans, short deadlines, multiple alternates, and resistance to answering questions. Everything is supposed to start right away despite the lack of permits, or even plans that would pass building department review. These clients range from uninformed neophytes, to jaded negotiators. What they have in common is the general belief that they don’t owe the low bidders a contract award in exchange for the free bids.

In the worst cases, the client will use the proposals to inform their negotiations for bid shopping. “Helping” an unethical client to award your competitor is a destructive use of your time. Morally flexible estimators might think it’s great to be the person such a client calls to “negotiate” with. Clients who bid shop are cheating all the companies who bid in good faith.   These negotiations open with two assumptions; the client is never fair to their contractor, and they think you aren’t smart enough to see that.

Any estimate that will not lead to contract is a waste of time. Better estimators don’t make better clients. Until such time as estimators can seek recompense for time wasted on feckless clients, we must protect our companies interests by declining to bid. In hard times, the estimator must be prepared to accept that this means precious few real opportunities will exist. This reality escapes those consumed with hope that behind every half-baked set of plans lies a great opportunity. The fact remains, when the good clients exit, the market declines. Down markets always have lots of terrible clients wasting everyone’s time with profitless jobs that rarely happen. It’s the only time they can attract bidders.

Stuff nobody will tell you about estimating

“Attention everyone, ship Desperation is now boarding..”

There is no market for bad news

Estimators looking to trade publications, and mass-media for relevant information on their market are bound to discover that there are precious few articles that will admit when things are bad in the present. Unless the article is written to influence an election, you can count on the article to refer to bad markets in the past tense framed in the perspective of steady improvement since then.

Periods of intense bidding with low backlog should indicate that contractors are starving for work and are chasing whatever is out to bid. Often, these times are couched in phrases like “Bidding picked up in the 4th quarter signaling potential growth this spring”.

Once spring rolls around and the summer rush work comes out to bid, these articles will say “Despite holiday season slow-downs, construction steadily climbs”.

This optimistic world-view is on display whenever you talk to other estimators. Go to a job walk and eventually you’ll hear someone ask; “You guy’s staying busy?”. With rare exception, the response is merely a list of the most impressive sounding projects that estimator won within the last nine months or so. Nobody likes a downer but it’s important to understand that what you’re hearing is not the entire truth. Estimators must learn to look beyond what’s said, and listen for what is missing.

If you’re struggling to land work, consider what you’re hearing from others. If the projects listed at a job walk are all finishing up, that’s a strong indicator that new victories aren’t newsworthy which may suggest that your problems are shared. Subs bidding to GCs should pursue bid results aggressively. GC’s are often more candid about the client, and the market after they’ve lost a bid. Estimators who speak truthfully and share what they see often benefit from information shared in kind. GC estimators are often listening intently to the nuance of what their subs are telling them. Don’t get too involved in trying to appear strong when you’re trying to find work.  Posturing sends the wrong message.

Decisions define us

Estimators exist because it’s not possible to simply “add everything up” like a cashier. Simply put, estimators must make decisions about what to do when things aren’t perfectly clear. The lack of information is a risk, making a decision on how to handle that risk means you’re accepting responsibility for the outcome of that decision. It’s easy to see that decisions based on the worst case scenario is the most likely to add money and time to your estimate. GCs who habitually sandbag their estimates are communicating their priorities. Competitive sub bids will go where they won’t be squandered.

While on the topic of unclear plans, it’s worth commenting on motivations. Missing, incomplete, or contradictory requirements may be a symptom of design team motivations. Estimators who’ve reviewed plans from a design-build project may notice that the plans have far fewer notes, and shorter specifications than projects developed for hard-bidding. Design professionals working on hard-bid projects are primarily concerned with their liability.

Design teams know that budget blowouts are a frequent outcome of bidding. Costly items are often sparsely mentioned on plans in the hopes they’ll be overlooked by the contractors. These buried notes are an owner-placating feature that the designer is trying to buy with the contractors money.

Stuff nobody will tell you about estimating

It’s rare to see such a perfect application for existing technology

Their decision to be predatory speaks volumes on their character. Exposing these traps through Request For Information (RFI’s) is how you can control risk without losing the job.

The advantage of ethics

Dishonesty is rampant in the construction industry. Incomplete plans labeled “100%”, or unrealistic schedules, are simple examples but this issue runs deeper. Information is withheld simply because it’s less risky to remain silent.

Bid results are traditionally provided upon request.  In practice, this typically means the GC estimator plays “keep away” with the information until it’s all but assured that the sub will never profit from it. Some GC’s are so focused on their own interests that it borders on cruelty. Providing bid results is seen as additional work that only benefits subs.

The deal offered to subs is to either award them a contract or furnish them with bid results in exchange for a free bid. GCs should promptly and publicly furnish this information to recompense subs for their bids. Better informed subs deliver better bids.

Acting ethically can present huge advantages beyond good-will. Trustworthy estimators benefit from stronger relationships with their vendors and subs. There’s less risk in working with honest people, lower risk means lower prices, which means you’re harder to beat and more profitable than your competitors.

It won’t do much good to pursue the bottom of the market with high-minded principles. However an established reputation for fair-dealing has a way of opening doors to quieter opportunities. The very best clients choose to work with honest contractors. There may be fewer opportunities compared to the hardscrabble market. However the work you’ll land is more successful, and reliably profitable than the high volume of profitless work out for public bidding.

Good estimators have pull

With all the information going back and forth, it’s easy to overlook a vital aspect of an estimators craft. GC estimators rely on subcontractor proposals to help define, describe, and value the scope of work. Attracting market attention is a function of a good opportunity, minimized risk, and profitability. Market leaders will avoid unprofitable, risky, or difficult projects. As an estimator it’s easy to think that the project’s intrinsic qualities aren’t under your control. To be sure, there are definite challenges in bidding ugly work.

The estimator must understand why they’re pursuing a project. Simply grinding out bids because a Request For Proposal (RFP) landed on your desk is what I call bid-milling. Bid-milling is the practice of chasing everything in the hopes that higher volume of bidding will create profitable wins.

Stuff nobody will tell you about estimating

It’s not a good look

This never works because each firm will be a market leader for specific opportunities. A contractor with a high volume of losses communicates that they’re not a real contender. The market-leading subs won’t waste a bid on GC’s who aren’t sincere about winning.

A GC estimator needs to understand that a mediocre project with a good client can be made into a profitable and low-risk opportunity through their leadership. GC’s who habitually work for good clients naturally attract market leaders. Contractors with a history of well-managed and reliably profitable projects are able to reduce the risk of less professional clients and their design teams. All of this starts with the estimators commitment to controlling risk.

Estimators who pursue good opportunities with accountable leadership, ethical dealing, and meaningful feedback are more successful than their competitors because they are the professionals, that everyone wants to work with.

I encourage you to consider those actions carefully. These simple actions are profoundly rare in professional estimating because most folks think their situation is different, therefore some aspect doesn’t apply to them.

Success in this craft requires clarity and intent above all else. There are no shortcuts with something this simple.

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