Tag Archives: ITB

Reliable Estimating Part 2 Building momentum!

The plans are on the street, now what?

Once the Invitation to bid (ITB) is drafted, and sent to every subcontractor on your bid list, you’re free to pursue the other work that piled up. The more your internal systems are built to output an accurate ITB and an optimal bid-list, the more these tasks will depend on a thorough review of the Construction Documents (CD’s). By having an ITB template that requires answers to the most common bidder questions, you’ll be able to focus your review of the Request For Proposal (RFP) and Construction Documents (CDs). Be advised that defining which trades you need to invite isn’t necessarily a quick process.

Reliable Estimating Part 2 Building momentum!

“Sure you’re doing six things at once, but could you go a bit faster?”

A specialty trade or a really small scope of work may be required via a single note in the drawings. It may be a better choice to get the ITB out to the obvious trades, than to hold everything until you’ve scoured the plans for a buried specialty vendor.

An absolutely pivotal concept of reliable estimating is knowing that time is more valuable earlier than later.

You get more out of the early minute than the final hour.

Learning you need to fix a “hole” in your estimate one hour to deadline means you’ve got 60 minutes to get a viable bid together. Until that problem is solved, the idea of winning takes a back seat to the risk of submitting an incomplete bid!   In comparison, an estimator who found just 20 minutes three weeks earlier could have addressed all the issues completely.

I’ve been in the war room in the final hour when we discovered that nobody had invited an entire trade of subcontractors! Until we found a sub with a complete bid, we had only our historical pricing to go on. If we bid and won using our historical pricing, we took a risk that subcontractor proposals would be substantially higher than what we carried. Given the great value of that scope of work, our exposure threatened the success of entire job.   We were in such a hurry with the bid letting software that a single trade was left out.

Reliable Estimating Part 2 Building momentum!

Even with the satellite, Dave couldn’t make the connection…

Nobody found time to verify the invite list in the intervening weeks. Don’t let it happen to you.

Series of sweeps

It’s really simplistic to assume that estimating is a function of counting, pricing, and totaling. The efforts that make the difference between winning and losing are rarely attributed to punctilious spreadsheets. Broadly speaking, a GC estimator needs to conduct a series of sequential sweeps through the CD’s looking for four basic criteria.

Sub sweep

Getting the ITB on the street required the first sweep of the CD’s to determine who needs to be invited, and what information they’ll need to get started.

Scope sweep

This is where the estimator gets a handle on what’s supposed to happen in the project. Estimators must pay particular attention to where scopes of work overlap between design consultants. Architects are famous for not telling their engineering consultants about an alternate request, and engineering consultants are famous for not sharing requirements that should be included in another consultants documents. For example, an electrically operated smoke damper which is shown on the mechanical plans, but not on the electrical. Estimators must review plans looking for where trades will overlap on scope. If the plans aren’t clear on who does what, it’s the estimators job to provide direction to all concerned. Leaving this to chance on bid-day ends up with double-ups or holes. The scope sweep should enable the estimator to roughly define how much work there is for each trade. Any trade with an especially small scope of work should be noted for a mandatory follow-up with a trusted sub. The same goes for sub-tier subs like Fire Alarm, Pavement striping, HVAC Controls, Coring/Drilling, Imaging, etc. I call these “ghost trades” because they’re never clearly visible, but they’ll haunt your bid if you ignore them!

Error Sweep

After two sweeps of the plans, the odds are good that you’ve already come up with some questions for the design team. The goal isn’t to pick the plans apart, so much as it is to resolve issues that are likely to impact the bid. CD’s often fall short of defining vital project information like site logistics, alternates and phasing. Getting these questions into Request For Information (RFI) format early in the process gives the design team more time to answer which may in turn allow you more time to communicate the answer to your bidders.

Strategy Sweep

There are lots of GC estimators out there whose entire strategy is to simply rely on subcontractor bids to deliver their victories. This flawed approach hinges on two fallacies. The first fallacy is that there’s something magical about their company that makes subs want to give them better prices.

Reliable Estimating Part 2 Building momentum!

You can howl, but then you’re singing along!

The second fallacy is that all subs are bidding all jobs at all times. By inviting everyone, they feel sure that the market leaders will send them a bid. This “strategy” is successful only when there’s no real competition.

Estimating is about controlling risk. If it were possible to simply add everything up and arrive at an accurate price the industry would use cashiers instead of estimators. Risk and how it’s controlled is how a plan becomes an opportunity. A lot of estimators get hung up on risk as a one-sided concept. I hear a lot of GC estimators looking to press project risk onto their subcontractors. Poorly defined scope, misleading diagrams, or counter-intuitive specifications are all treated like it’s the subcontractors problem. These GC’s fail to understand that the uncontrolled risk raises subcontractor prices, making the GC noncompetitive. It’s of pivotal importance for a GC estimator to understand that winning bids is a function of reducing risk for everyone.

Taking responsibility for sorting this out is how a GC estimator can set themselves apart from the field and thereby attract the market leaders. It’s pivotally important to understand that this is a proactive measure administered fairly to all involved parties. Bid directives are an effective means to mass-communicate a plan of action but they can be easily shared with your competitors. I recommend using bid directives to provide clear and accountable leadership that your competitors would shirk. Strategies should be treated as confidential information, and communicated accordingly.

Very few jobs will present an opportunity for a single overarching strategy to secure a victory. That being said, if you can’t find any advantage, you won’t likely land a job. Very often the greatest advantage a GC will have is due to an existing relationship with market leading subs. In that case, picking work that’s best suited to the top performers becomes the GC’s strategy for success.

Measuring time!

Finally, we’ve reached the point where most folks believe the real estimating begins; the quantity take off (QTO). I’ve written about software technology for estimating before. There have been notable advancements in how estimators tasks are completed, like computerized QTO. For example, it’s now possible to measure, count, and color the plans without the printed plans, scale, paper, calculators and pencils. While that’s a huge advancement, most of these proprietary programs lack the logical “polish” of standard business programs. These programs offer an exponential increase in the speed of QTO’s provided the estimators learn their idiosyncrasies.

Whether you’re using a digital system or manual takeoffs, there are some aspects of reliable estimating that never change.

“One pass” takeoff

After all the effort to define which Construction Specifications Institute (CSI) Masterformat divisions pertain to your project, it’s tempting to conduct the QTO in “CSI order”. Lots of estimators will begin their takeoffs with Division 2 Sitework and skim through the plans looking for anything that pertains to that division. Unfortunately there are often solitary notes pertaining to a small scope of work that’s unique from everything else shown on the page. This means that the estimator skimming for a specific CSI division will ignore that solitary note figuring that they’ll get it when they sweep for that division. When the note is on a particularly unlikely sheet, it’s often forgotten. Later, when their Project Manager comes down the hall complaining about how they missed something, that note will be very familiar.

I advocate what I call the “one pass” takeoff. I make sure that absolutely everything depicted, noted, or specified on the page be taken off before I go to the next page. If you’re doing manual takeoffs, this means you’ll have to start a CSI division sheet for each division as they present themselves. It’s a lot of shuffling to record your measurements, and the sheets tend to look less tidy from the many edits. This is still worth the effort since it not only catches the one-note traps, I’ve found it’s actually faster than repeated skimming.

Knowing where to stop is as important as knowing when to stop

Unless the job is fairly small, chances are good that your QTO’s will be interrupted or at least spread across several days. Estimators should understand that co-workers have no comprehension of how much focus it takes to complete some takeoffs.

Reliable Estimating Part 2 Building momentum!

I’m…gonna need a moment here…

Something as simple as the height of a concrete stem-wall may require calculations based on information scattered across several sheets. It’s therefore good practice to write (or type) notes on the plans providing the necessary information where it would actually do you some good. General items like area and perimeter measurements for each room can prove incredibly helpful since a myriad of takeoffs are based on these two pieces of information. By leaving a record of basic measurements, you’re able to pick up where you left off with minimal wind-up.

I would also recommend that your day’s work be paused at a meaningful and reliable point. Stopping mid-way through a sheet is sure to keep you up worrying about what you missed. Choose to either stop early or work late in order to leave yourself a clear conscience.

Before you begin an intense take-off, consider your schedule and the day’s obligations. It’s unwise to get a half-baked start on something complicated right before a meeting. One of the advantages of the one-pass takeoff method is that you don’t have to do the sheets in order. If you’ve got a limited amount of time before an appointment, pick a sheet you can complete. Estimators must accurately track and predict how long each element of a QTO will take. The fastest QTO’s are the ones that aren’t interrupted, however estimating is about more than take offs. Getting interrupted at an inopportune time is part of the job.

Three round review

Checking for errors is the best way to catch them but how you go about it can greatly increase your reliability. Huge data sets and tiny differences can stymie even the most dedicated review. The key to catching errors is to structure your workflow around meaningful review points. The simplest problems are most easily caught earlier in the process. Breaking the QTO down, this begins at the page level. Before moving to the next page in the plans, the estimator should review everything they took off on that sheet. The minute detail is fresh in your memory, and transposition errors are more easily spotted. The vast majority of errors are caught at this level.

The next round of review is when tallying a division as a GC, or a major component as a sub. The errors found at this level tend to be more dramatic because you’re moving the contributions of several plan sheets. A flooring subcontractor might take a moment after tallying the carpet and the tile measurements to see if the relative difference they’re seeing aligns with what they’d expect. These order of magnitude comparisons can tell you if you’re missing an individual room or an entire floor.

The third round of review is after the QTO’s have been entered into the estimate. Does the estimated cost outcome align with the division level review? By using the earlier reviews as benchmarks to compare against, the subsequent reviews become more reliable.

Reliable Estimating Part 2 Building momentum!

You could say the process leaves a mark on you…

I would strongly caution an estimator against more frequent reviews of their work because reviews without benchmarks are little more than skimming plans looking for stuff to add. After a person has looked at the same information a few hundred times, their ability to recognize new information diminishes. You have to be able to trust your work by testing it at intervals that allow you to know if you’re right or wrong.

Taking notes

An awful lot of estimating comes down to judgment when dealing with uncertainty. It’s not fair, but an estimators judgment is often criticized after the uncertainty is removed. People don’t care that you had a good reason for your decision, they only care about the outcome of your decision. It’s therefore absolutely critical to develop the habit of clarifying, stipulating, and excluding anything that requires judgment on the proposal. Effective proposals define with minute clarity what is driving the uncertainty. For that, you’ll need to take notes of where you found the problem. Keep in mind that as an estimator, your work is laying the foundation for the Project Manager’s efforts. Everyone needs to know where the tricky bits are located. Plus if you’re expected to present your estimates for review at your company, it’s good to be able to provide references for all the hard decisions you made.

Schedule slip

As mentioned earlier, interruptions at inopportune times are part of the job. I’ve had multi-million dollar estimates interrupted at the last moment over questions on a $50.00 change order! Estimating is about controlling risk even within the estimating process. Plainly speaking, an estimator must not only predict how long a QTO will take on a piecemeal basis, they must also be capable of plotting a path to recovery when they’ve been derailed. It’s at this point that many, many, “old-school” estimators just plan on spending the night. I believe that most estimators could substantially improve their quality of life by committing themselves to solving schedule problems with overtime as a means of last-resort.

Schedule recovery may involve many approaches ranging from additional workers, to less detailed takeoffs. Estimators should consider the value and the risk associated with each scope of work they’re taking off. A perfect paint takeoff can take a considerable amount of time, yet the paint scope is relatively inexpensive when compared to plumbing. Since the paint scope is relatively inexpensive, the relative risk of an imperfect takeoff is quite low unless you can’t attract more than one painting bid. Estimators should always prioritize on high value, and high risk scopes of work. As a GC estimator, knowing which direction to go between similar bids on bid-day is why you’re doing the takeoff. Continuing with the paint example, a pressed-for-time estimator might shift to a square foot cost for the paint scope followed by a list of scope inclusions that painters might miss. Providing sufficient information to scope sub bids is FAR more important than knowing the precise square footage of Paint color 1.

Lots of GC’s have a team of people working on an estimate. If you’re heading up the effort you will need to think on your feet when people call in sick, show up late, or otherwise drop the ball. Project Engineers are frequently “loaned out” to help in estimating, however they are rarely relieved of their normal responsibilities. Many will prioritize their ongoing projects at the cost of your time-sensitive estimate simply because they don’t work for the estimator. Lead estimators must provide and enforce deadlines for every task. Never give a helper sufficient time to squander your recovery. It’s better to check on them too much, than to find they’ve dug you a deeper hole.

Estimators who are working with interns, Project Engineers, etc. should make a special effort to simplify and compartmentalize the tasks they are delegating. Estimators are used to thinking in terms of length, area, and volume measurements, however these terms can quickly overwhelm someone who’s facing their first takeoff. Estimators should understand that “standard” units for takeoffs are arbitrary to a newcomer. For example carpet is measured by the square yard, yet ceramic tile is measure by the square foot. Taking the time to explain that there are nine square feet per square yard can make the difference between a useful takeoff and a mess that nobody understands.

And for goodness sake, if you’re having people do this work without a digitizer, or on-screen takeoff system, then at least give them a courtesy lesson on how to measure areas that aren’t squares or rectangles! While we’re at it, teach them to use decimal feet in lieu of inches! For some reason, this rather obvious point is overlooked in most construction education.

Addenda of mass distraction

Many architects will respond to bidder questions via an addendum before the deadline. Projects and professionalism will vary which means that GC estimators will have anywhere from over a week to only a few hours to incorporate changes made via the addendum. This practice is easily the single most stressful aspect of professional construction estimating because unclear, misleading, and outright contradictory information is often presented without sufficient time to get clarification. Estimators should note that shoddy plans, municipal or “public work” clients, and last-minute addenda are constant companions.

Reliable Estimating Part 2 Building momentum!

The architect finds last minute changes to be the most fashionable…

The absolute #1 priority is to get that information disseminated to the bidders as soon as possible. The second priority is to provide the necessary leadership and communication to ensure your bid-team isn’t derailed by the Addendum.

As a start, every Addendum should be scoured for changes to the deadline, proposal format, etc. Everything that goes to the bid-team should have the most current deadline printed where it’s easily seen. Wherever possible, notify bidders when an Addendum has little or no impact on their scope. If the Addendum ONLY affects the GC’s, don’t bother the subs with needless panic-inducing addenda.

If your Request For Information (RFI) was answered in the Addendum, you might reference whether the Architect response is consistent with your earlier bid-directives. The better your direction, the lower the risk your subs will face. Lower risk leads to lower prices, this is where the truly professional estimator earns their keep. If you do your best to get in front of issues, you may be rewarded with an addendum that confirms all of your bid-directives which means your subs are the only ones who don’t have last-minute changes.

Preparing for the blitz

Bid day is a real test of your skills, knowledge, tools, endurance, and patience. The better part of victory is preparation. Heading into bid-day you’ll need several critical elements in place. First and foremost, you’ll need your estimate “built” which is to say that your QTO has been imported or entered into your template form and prepared to accept subcontractor proposals. You should have a reasonable estimate of every trades worth, and a decent idea of what the final cost will be. Second, you’ll need your bid packet, which is all the completed forms identified in the Request For Proposal (RFP). Generally, this is the proposal itself, a CSI breakdown, a construction schedule, bond, etc. Everything should be as ready as possible for the bid-runner to deliver.

Third, you’ll need the “bid tab” or “scope sheets”. These are the scope of work as broken down in the estimate in anticipation of how the subs will bid. The scope of work is generally listed in rows, and a series of columns are made for subcontractor comparison. As the subcontractor proposal is compared against each row, the item is either checked as included, marked for follow-up, or an allowance is inserted. Once all the columns are filled for a given sub, their tally is calculated at the bottom and the subs are ranked by price lowest to highest for entry into the estimate.

I should mention that every Alternate that affects the given scope of work should be built into the scope sheet. Poorly defined Alternates can wreak havoc on bid-day. It’s important to know what to expect.

Estimators with plenty of time often export their bid-tab as a checklist which they have their subs fill out, endorse and return. This helps to prevent the “gotcha” nonsense that comes with indecipherable inclusions, exclusions, and clarifications on subcontractor forms.

Projects with special requirements for Minority Business Enterprise (MBE) participation should be tracked in real-time in the estimate. Allowing for “what-if” strategy is a crucial tool to making timely decisions. Very rarely will MBE companies be the lowest bidders, so it becomes a balancing act to meet participation goals, without undue cost.

As you head into the final hour, all of your hard work preceding the bid will be paying off. Be sure to “close the loop” with everything you’ve learned on this estimate by tying your estimate tracking to your bid results. An awful lot of an estimators daily struggle comes down to reconciling the big picture against today’s efforts.

Reliable Estimating Part 2 Building momentum!

Winning profitable work is the estimators constant goal.  Very little has more influence on your ability to win than choosing the right opportunities. Everything is an opportunity to people lacking perspective. Estimators must take it upon themselves to provide not only estimates for projects they’ve bid, but perspective on the market in which they compete. It’s vitally important to show your work in much the same way as an estimate validates the proposal amount.

Reliable estimating practices not only improve bidding, they enable decision-making.

 

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© Anton Takken 2015 all rights reserved

 


Reliable Estimating Part 1: Getting stuff out the door!

Estimating is a deadline driven vocation that can be equally exciting and stressful. Many estimators are expected to manage multiple projects concurrently. With time at such a premium, anything that goes wrong on one estimate has the potential to disrupt several projects. Estimators must keep a wary eye on their entire system from Request For Proposal (RFP) to the Project Manager Handoff meeting.

Much of what goes into a reliable estimating comes down to a consistent process. The focus here is on building a consistent and flexible process to accommodate the various projects you’ll encounter. Estimators must balance the speed of modularity, against the need for specificity for every part of their process.

Reliable Estimating Part 1: Getting stuff out the door!

Nobody figured the “kids eat free” special would have caused so much trouble…

Request For Proposal

The RFP gives an estimator some information on the project, deadline, client, where to get the plans, job-walk date, and potentially some narrative of how the client wants the bid to be handled. Nearly all of this information is as useful to the subcontractors (subs) as the General Contractors (GC’s). Yet very few GC’s will share this document because the prequalified /selected GC bidders are listed. Nobody wants their subs bidding to a competitor. RFP’s also convey when the GC was notified of the job.

GCs may have a lengthy evaluation process for RFP’s to decide whether they will bid. Some GCs wait until the job walk before committing to an opportunity. This hedging can consume the lion’s share of the allotted time to bid the job.   These GC’s are always rushing their subs to bid in a fraction of the time allotted. Revealing that their ever-present urgency is a bid tactic might encourage their subcontractors to pursue their more forthright competitors.

GC estimators may be hard-pressed to find time to evaluate an RFP when they’ve got hard-bid deadlines peppering their bid-board. The urgency of the short-term, consumes the planning for the long-term. The only way out of this pattern is to streamline the front end of the process so that there are fewer problems consuming time later on.

Invitation To Bid

An Invitation To Bid (ITB) is how the GC invites subcontractors to bid on their projects. It should be obvious that the ITB should include all the information from the RFP. This is where we meet our first opportunity to balance modularity against specificity.

The ITB is a simple document conveying the Who, What, When, Where, and Why’s of the project. Estimators looking to quickly get through this process might opt to provide scant detail on the ITB since they can readily refer bidders to the Construction Documents (CD’s). A currently popular approach is to insert a hyperlink into the text which leads the sub to a website where the files are available. From the subs viewpoint, a virtually meaningless document arrives, obliging them to further inquiry just to know why it was sent to them.

Reliable Estimating Part 1: Getting stuff out the door!

On second thought, maybe I’m afraid to ask what this is about…

Estimators making templates should configure the template to show only relevant information. An itemized list with check boxes is a tedious means of communicating vital information. I recommend configuring the templates to sort each common job requirement into separate lists for inclusions or exclusions. Forcing the GC estimator to answer these questions, obliges them to become sufficiently familiar with the job to know what they’re asking subs to bid.

The entire purpose of the ITB is to solicit subcontractor proposals which will only happen when subcontractors are interested in the opportunity. Whenever obviously necessary information is buried, it makes subs wonder about the GC’s motivation. Maybe the GC isn’t really trying to win the job or perhaps the information is buried in hope that mistakes will lower prices?

Does this document make me look bad?

Unprofessional ITB’s do more harm than good to a GC. Every savvy sub could rattle off a list of GC’s they’ll never bid to again. Most of the time, the firm was just as bad as their ITB.

Most GC’s use some kind of bid-letting system. Quality ranges from excellent to terrible. The only way a GC can really tell what their subs are getting is to create a false subcontractor with an email address they can check throughout the bid. If this was done, I solemnly believe that nearly half the bid-letting systems would go out of business in a fortnight. The ITB’s out of some really popular systems are an embarrassment to the industry.

Reliable Estimating Part 1: Getting stuff out the door!

Efforts to shed light on code development are ongoing…

Translating to trades

Before we can begin selecting subs, we need to know about the project scope. Unless you’re bidding repetitive projects, odds are excellent that you’ll need to go through the plans carefully considering how you’ll get everything handled. Since everything relates back to the estimate, this process should follow some basic principles. First and foremost, is organizing the project scope according to the Construction Specifications Institute (CSI) Masterformat system. The CSI format codifies every conceivable construction scope into a numerical section broadly defined by divisions. The advantage of this system is a universal organizational structure for everyone in the construction industry. The disadvantage is that CSI divisions are not always related to how subcontractors will bid the job. For example, an Electrical contractor’s proposal will often include everything in division 26 (Electrical) , however it might take a dozen or more different subcontractors to cover everything in division 9 (finishes). Even a fairly modest project may generate an extensive list of CSI numbers. Adding further difficulty, some trades cover multiple CSI numbers, or even multiple divisions.

This is where estimators face an entirely unique problem. Most companies maintain haphazard contacts databases that are tied to Project Management/accounting software systems. It’s incredibly rare for these databases to be searchable for fields like trade or CSI numbers. Some bid-letting systems include extensive subcontractor databases and they are generally categorized by CSI numbers. The GC estimator simply checks every applicable CSI division, and the system generates a list of subcontractors for the GC to send an ITB.   Most GC estimators end up creating their own in-house contacts database using a spreadsheet program.

If you decide to build a database of your own, stick to the significant details. GC Estimators virtually never need a subcontractors mailing address, yet they always need the name, email address and direct phone number of the subs’ estimator. I recommend that the subs contact information be listed in rows, ordered by a column defined for CSI numbers. If a sub bids multiple CSI numbers, copy their information for each individual number.

Estimating is a time-sensitive operation, you’ll need fast answers from subs. If one company doesn’t answer, you’ll need another one to contact right away.

Estimators keen to save time might consider using the specification manual’s table of contents to list out the applicable trades. A very complete specifications manual might include a CSI number for every applicable scope on the project. Far more often, the specifications manual will include sections on work that doesn’t apply to the project. Architects often recycle their specification manuals from larger projects without culling the items that don’t apply. This thrifty approach creates huge files with small pockets of useful information.

GC’s who use the specifications manual to list out applicable trades invariably invite subs who find there’s nothing to bid. The wasted their subs time which eventually leads to ignored invitations. What’s worse, easily overlooked notes on the drawings may still require trades not mentioned in the specifications.

Bid list

The an old adage; personnel is policy has a tremendous bearing on a GC’s ability to profitably win work. Pick the wrong players and bid-day prices aren’t going to be competitive without being risky. This is probably the single most common mistake of GC estimators. They use the same bid-list for absolutely everything they bid. Somehow its assumed that “teamwork” will compensate for fielding subs who are too big to be profitable, or subs who are too small to make production. Profitless work is rarely a priority so big subs get there when it’s convenient for them. The job languishes until suddenly they mob the scene. Change orders ensue then you’ll be waiting for them to return. Too-small subs can’t keep up and they can’t get out of the way. Either case ruins the job for any related trade that wasn’t causing problems.

GC’s spend fortunes on scheduling and project management software systems intended to fix this problem. Pick a better team and it’s amazing how little work it is to make them successful. Please note that better doesn’t equate to more expensive. Market leaders are cheaper AND better than anyone else. GC’s with stagnant bid-lists are the least likely to believe market leaders exist because it would disprove their favorite excuses for losing.

Every estimator needs to be clear on some fundamental points. First, the odds of winning are NEVER even. Second, the estimators who know the odds will either win, or they won’t be surprised at the loss. Third, bureaucratic inertia and dysfunctional relationships are responsible for nearly all the bidding problems between subs and GCs.

Reliable Estimating Part 1: Getting stuff out the door!

Bad relationships will trip you up and keep you down

Soft-headed software for hard-headed bidding

Think about how noteworthy it is that there are extensive bid-letting systems with millions of subs on file. None of them are tracking market-leadership. None of them are tailored to the GC’s interests. There is no such thing as a subcontractor selection system that’s based on anything beyond geographic proximity, CSI designation, Union status, and Minority Business Enterprise (MBE) status. The reason it’s not available, is because GC’s are insanely stingy with bid-results. Nobody knows who won the bid in each division, even among the losing GC’s. This code of silence means that every single estimator will need to figure this out for themselves.

These systems offer little more than a searchable directory of potential bidders. The idea is to blast the entire market, and hope that the market-leader sub will send you a proposal. This approach cuts both ways, since market leader GCs aren’t likely to use a cattle-call approach with their subs.

So what’s the solution?

The answer here is to generate your own classification systems to define the best fit for each subcontractor. Please don’t assume that classification based on dollar value is sufficient. Some subs excel at remodels and struggle with ground-ups regardless of the value. Every descriptive quality that makes a difference towards selecting a market-leading team should be part of your analysis.

Every bid-result should be used to tweak your rankings so you’re staying current. There’s no sense in inviting a sub who won’t be competitive, or worse, who wouldn’t perform. The entire system should be built to sort a subcontractor list based on the calculated likelihood of each sub being the low-bidder. Not only are these subs the most likely to help you win, they are the most likely to bid the job because it’s what they’re good at.

Reliable Estimating Part 1: Getting stuff out the door!

Pat’s really cheap on jobs that don’t require pants

I would recommend using a spreadsheet based system for this. Whatever can be done to format the output to match the ITB template will prove helpful. Building a worksheet which allows the estimator to select the job-specific qualities will leave the estimator free to consider what the job needs, rather than populating their sub list. If the job aligns with your job-tracking recommendations, it won’t be difficult to come up with the right subs. Chasing work that’s a bad fit for your subs shows up as low probabilities for everyone. That’s a strong sign you’ll lose the bid unless you find some new subs.

The hidden catch

Since this spreadsheet system is based on data you generated, it’s very critical to differentiate between internal and external perspectives. The GC estimator has very accurate bid-results on all their subcontractors. This internal data is your version of what happened. Unless you won the job, you aren’t looking at what happened on the market. What you must learn on every job you’ve lost is which sub was contracted for each trade. This external data will tell you with confidence which of your subs were market value, and which subs you need to add to your invite list. External results are much more significant than internal.

Even if you don’t know much about the sub, you do know all the descriptive qualities of the job they won. Entering what you do know about these subs allows you to run the probabilities and determine when it’s time to contact them. If they’re fiercely loyal to a competitor, you’ll know which jobs are going to be harder to win as a result.

Some throughput suggestions

If every job generates an estimate, it also generates a list of subs which can be ranked. Smart estimators will notice that it’s entirely possible to simply add your winning competitors sub to your sub rankings and list them as “low” when you don’t know their actual bid amount. This adjusts your job-level output to reflect the external market outcome. By not obsessing about dollar amount, you’re free to track by job descriptors which you can accurately define.

Reliable Estimating Part 1: Getting stuff out the door!

“Spiraling descent into madness” may describe a lot of jobs

Every estimate is for a job which has those aforementioned descriptors so useful to sorting subs. Estimate tracking for the GC is vitally tied to sub performance, all of this information serves that purpose.

Estimators should make their estimate template so that a separate worksheet is populated with the ranked subs and the job specific qualities.

Copying that worksheet into the sorting database file allows you compile trending data on all of those data points.

Making it easier to move this information around, makes it more likely that it will be done. Having a job-specific bid-list of bona-fide market leaders on day one is going to significantly increase your hit-rate which means you’ll be able to bid less often. Which means you’ll have more time to perfect your craft. None of that happens if you’re stuck updating spreadsheets for hours after every bid.

Reliable data relies on short memories

Big-data projects get out of hand quickly. The relevance of historical data falls off quickly beyond one year. Most construction work is seasonal, so last month is potentially less relevant than this quarter of last year. It’s useful to “freeze” weekly, monthly, and quarterly databases by saving locked copies separately on a server. Whenever you do a weekly freeze, take the calculated output of your week’s worth of bids and start the next week with that as your first bid. By never carrying more than one week’s worth of bidding in the database you’re able to re-create any files that were corrupted with a minimum of fuss and bother.

After a year’s worth of records, your weekly update would have the previous weeks rollover plus last year’s data for that week. You might run a bid-list search and be reminded of a sub who fell out of touch. GC’s who decide to re-visit an old revenue stream would be able to call up whatever year they were last doing that work. Old allies are better than cold calls.

Useful tools work in many ways

Take this concept and apply it differently, if a GC created a subcontractor pre-qualification form which helped to rank them according to their relevant job metrics, they could do a bid-list search based on that feedback. Appraising the new sub in the context of existing subs could provide meaningful comparisons and insights into how they might work out. Taking a different tack you could search your estimate tracking to see examples of past bids that were well aligned with this subs metrics. Lots of subs will be a poor fit to the work you’re pursuing. Being forthright about their odds and the frequency of relevant opportunities shows respect for their time, and keeps you focused on fruitful pursuits without offending anyone. Giving everyone an equal shot at wasting their time doesn’t breed loyalty. Calling them when you’ve got an awesome opportunity does.

Reliable Estimating Part 1: Getting stuff out the door!

They’ll love you for it!

Speed is your friend

Estimators are constantly interrupted by demands from projects that are all in different stages of delivery. Getting distracted at crucial steps is where lots of mistakes get their start. It’s therefore critically important to reliable estimating to work quickly and systematically. Every repeated process should have a systematic approach that’s complemented by templates, spreadsheets, and databases that are all built for speed and reliability.

People are very adaptable which can often cloud judgment about what’s faster or more reliable. Programs, databases, templates, or spreadsheets that force you to search through long lists for basic and repeated stuff are wasting time. Just because some program or spreadsheet has “always had” some quirk, doesn’t mean it should remain. It’s far better to have a short list of stuff you’re always using, than a long list covering every eventuality. Buried information is wasted time.

The estimator who can get their team rolling on an opportunity in less time and without skimping on information will have better coverage on bid-day. Bureaucratic estimators often take exorbitant amounts of time to get their invitations out to subs. Subs facing short deadlines and slow-moving GC’s are more likely to decline the invitation because it looks like that GC isn’t committed to winning.

A late hit is better than a fast miss

It takes a lot more work to fix miscommunication than it should. A typo may attract hundreds of emails asking the same question, even if you sent a clarification moments after it was initially discovered. Lots of contractors adopt a “do what I tell you” philosophy with their subs. If your instructions aren’t clear, the subs have little choice but to ask you about it. If their questions aren’t answered, they may withhold their bid until you call looking for it.

My next post will pick up from the ITB and will cover how to increase reliability in quantity take offs, communications, plan changes, bid scoping, and so forth.

 

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© Anton Takken 2015 all rights reserved


Plans and Specifications Part 2

Addenda, RFI’s and ASI’s

Addenda are Architect initiated changes BEFORE the bid. Architect’s Supplemental Instruction (ASI)’s are Architect initiated changes AFTER the bid.  This is significant because in most cases, the contract has been written before an ASI was issued.  The ASI should be reviewed for cost and schedule impacts which will require a change order to incorporate into the contract.

Directives from the Architect fall into a gray area, they are typically an informal document intended more to guide interpretations of intent than to augment the design.  An example would be : “The south end of the parking lot may be used as a material lay down yard.”

A Request For Information (RFI) is a question initiated by the General Contractor (GC).  If  there is only one GC bidding a project the RFI’s may be answered directly.  If multiple GC’s are bidding the RFI’s are often answered via a final addendum.  Newer changes trump older changes regardless of which document is used.

In a typical hard-bid situation the Request For Proposal (RFP) will include a deadline for RFI’s and a date for final addendum.  Depending on the duration of the bid, the final addendum may be delivered a day or two before the deadline.  The Architect compiles all RFI’s into a single Addendum document which answers all questions.  This ensures that all bidders are working on the same information. RFP’s are sent to GC’s from clients, whereas Invitations To Bid (ITB) are sent from GC’s to subcontractors (subs)

In practice, this often presents a situation where multiple significant changes to the bid must be accomplished in a very short amount of time.  The GC’s must hurry to get this information to subcontractors.

“I’ll get to that later…”

Many estimators “keep their heads down” trying to complete Quantity Take Offs (QTO), build estimates, and distribute the bid information to the subcontractors.

Plans and Specifications Part 2

Yep, gotta make production….

This practice can compound problems when new projects come in while other bids are underway.  Prioritizing work based on deadlines tends to reduce the effective bid envelope for your team and your subcontractors.

Failure to launch.

New ITB’s represent an opportunity to streamline the information before it goes out.  Well organized and easily searched files benefit your team and your subcontractors.  If your firm uses any kind of plan distribution software, the subs will move far smoother if the information is easy to find.  It goes against the grain of some folks to admit it, but it’s a simple fact that most subcontractors will not look at all the plans and specifications.  The subcontractors are not getting paid to bid, reduce the cost of bidding to your firm by being less difficult to work with.

This is what you actually “do”.

As addenda, RFI’s and directives come in, sort them to folders.  If possible, it’s immensely helpful to publish a bid directive listing the changes chronologically and broken down by CSI divisions.  This directive can become part of a proposal scoping set for the team on bid day.  Keep your eyes up and get the subs unfettered access to the plan information.  If too much importance is placed on having perfect QTO’s and estimate templates, the subcontractor bids will be lacking.  That means they’re either coming up short and costing you profitability or they’re padding for risk and costing you the win.  If you want to win profitable work, you need to run a good bid.  That means precise, prompt, and easy to understand information.  This is especially important with a weak design team.

Get your head up

An interesting paradox exists within the average bid.  The constant interruption that robs you of time to make final touches to your estimate before the deadline is directly proportional to the effort you sink into communicating earlier.  Many estimator’s feel they don’t have time to “spoon feed” information to their bidders.  These same estimators often end up either “walking a sub through” their bid at mach 6 minutes before the deadline, or they get really high subcontractor quotes from bidders trying to cover the risk.  Project Managers posing as Estimators seem predisposed to this mindset, much to their detriment.

Plans and Specifications Part 2

Keep it up Sparky, see how that works out for you…

Plan review

Taking a step back to the ITB, it’s very worthwhile to do a quick scan of the plans.  Get “the gist” of what’s going on for the project.  Take notes on which trades are involved and keep an eye out for trade overlap.  If there’s a new Roof Top Unit (RTU), you should see some structural support, plumbing, and electrical in that area (on the respective sheets).  Be wary of anything with “match existing”, or “building standard” as these are not specifications or definitions, they are requirements to field verify or guess.

Look for avenues for material movement.  Site logistics can often have huge influence over production rates.  Protecting pathways, elevators, stairwells, doorways, or exterior finishes are all often requirements for the project.

If you find an RFI question GET IT OUT RIGHT AWAY!  If possible, ask your RFI questions at the job walk because sometimes the architect will give an informal answer.  Whatever you find you should share with your bidders.

Check the specification manual for missing sections, it’s very common.  If there are any non-traditional relationships get them to the forefront.  Examples include owner furnished and contractor installed material.  Requirements to purchase materials from a national account, or vendor.  Requirements to coordinate with owner subcontractors and so on. Put all of these notes and comments on an eminently readable form easily downloaded by your subs.  If it can’t be read at 90 miles per hour, you’re including too much detail!

Paint a picture, don’t write a book

Don’t forget that alternates may be defined haphazardly in the plans.  Sometimes the very best solution is to draw boundaries and color areas on the plans to convey limits of phasing, breakdowns or alternates.  Referring subcontractors to tedious detail drawing buried in the Architectural plan set is less helpful than a single page saved for their quick viewing.

Ideally, you want to include as much of this information into the subcontractor ITB as you can.  Telling them when the job walk is, what they’ll need to look for, and how the bid must be broken down at the START tends to have much better impact than later down the line.

Great expectations and future plans

Bid day arrives and subcontractors are sending in proposals with items missing.  It’s quickly clear that they didn’t read the specs, the addenda, or whatever.  What could possibly be their problem?  Take a moment and consider a few things.  Are you competing on this bid?  If so, is this subcontractor a loyal bidder to your firm?  If not, this may be an insight into how your competition handles their bid documents.

Many subcontractors will bid a project to a GC then send a version to competing GC’s.  Depending on the project and the GC’s in question, each one may receive a different number.

It can be very frustrating to suspect a competitor won a job by carrying a subcontractor that was missing some scope items.  One way to keep this from happening is to notify the sub they’ve made a grave mistake and send them a link to your well-organized construction documents.  Even if they don’t have time to revise their number, they may still pull their bid from your competitors.  In one kind act you may earn the respect of a subcontractor and prevent a competitor from snagging the job.  That subcontractor may well return the favor by giving your firm their best price on the next job. All of this hinges on the presupposition that you have your “ducks in a row”.  This is one way that the best estimator can rise to the top.

Posting plans and specs

Wherever possible it is more professional to post the INDIVIDUAL pages of the plan set rather than one file.  Large files take longer to download and consume more computer resources for subcontractors than they should.

Save the pages with a MEANINGFUL TITLE.  Bear in mind that many file systems will automatically alphabetize a list of files.  Beginning the page name with its number in the stack will help keep things in order.  Specification manuals can be broken into major divisions as well.

Whatever system you use, be sure to log in as a subcontractor and view the experience firsthand.  Some systems are very time-consuming to obtain the plans.  Do whatever you can to make it fast and easy to get the plans.

Incoming changes!

Changes to the construction documents during the bid can be an enormous interruption.  Time is of the essence which makes you question why some Architects thoughtfully arrange their materials into humongous files that choke email, and cripple servers. Balance speed against utility.  If the architect replaced every sheet in the plan set but only changed two pages it behooves everyone for you to pull those changes out.

Addenda should be in separate file folders on your server, or web drive to make it easier to find everything. Again, save the files as individual pages to make it faster for subs to get what they need.  If the Design Team’s narrative is weak, consider writing your own addendum narrative.  Be very, very, cautious of design teams that won’t bubble, box, or otherwise highlight their changes on the CD’s.  It’s either incompetence or dishonesty,

Plans and Specifications Part 2

Sometimes it’s both.

 

Seek to balance speed in getting the information to your bidders against providing easy to understand information to your bidders.  Weak design teams with sloppy addenda merit a request for a deadline extension.  Don’t hold your breath because weak design teams often work for bad clients who have high expectations and low budgets.

Control the risk by doing your best to ensure that the subcontractors pick up on all the changes.  Often it’s possible to immediately post the addenda files, then follow-up with supplementary information and better file management.

Technology

Most estimators use some form of bid letting software or a private server.  Some of the bid letting software systems will automatically send an email to every invited subcontractor every time you post an addendum.  Private server systems vary but most of them require a separate email to go out announcing that new information is available.

Private servers have plenty of advantages but without automated emailing, there exists the potential for changes to be posted unannounced.  Many firms expect an office administrator, intern, or secretary to handle bid communications.  Few estimators follow through to ensure that everything is getting transmitted properly and professionally.  Subcontractors may not want to speak up when an administrator is sending incomprehensible emails for fear of being excluded on future bids.

Feedback

Since bid communications are so critical, it’s a good idea to generate a secret “fake subcontractor” that has an outside (not part of your firm) email address you can check periodically to ensure you’re getting all the posted changes.  Emails with ITB’s should include the pertinent details in the body of the email.  The deadline should be included in the subject line of the email.  Some GC’s send generic emails with links to the actual invite buried in text or within attached documents.  This is needlessly time-consuming, unprofessional, and self-defeating especially when the link is to a site requiring usernames and password.  While we’re on that topic, usernames and passwords are just terrible time-wasters.  Sites that demand a commitment to bid, or identification verification’s before allowing access to the construction documents are ineffective. Lot’s of estimators hope that these systems will alert them to who’s bidding as some measure of confidence that they’ll receive bids on time.  Estimators need to focus on selling the opportunity rather than nagging for commitment.  Subs will not feel obliged to bid a job simply because they once clicked a “Will Bid” button to see the plans.  Systems that “bury the lead” behind links, buttons, or other nonsense are reducing the odds that your bidders are making your projects a priority.  Few of these systems would persist if more estimators ever saw how irritating they are.

Follow through

Speaking of irritating, plenty of estimators feel that nagging the subs via phone calls is a vital and necessary part of the bid.  This drudgery is often passed on to the aforementioned administrator, intern, or receptionist.  The notion that nagging subs leads to bid is very flawed.  Subs remember to bid on work they want to win and show particular enthusiasm for projects they feel likely to win.

Consider the following;  Estimators transmit endless demands.  Bid this by then, include this, not that, be low and maybe we’ll hire you but no promises.  Subcontractors are looking for opportunity and they are turned away by risk, uncertainty, and delay to name a few.

The amount of labor expended in irritating the subs could be much better employed in making it easier to bid for subcontractors.  Estimators could address most of this by shifting their attitude.  Thoughtful actions that reduce subcontractor risk are huge because they make the job more profitable and easier to win.  Work that’s more profitable and easier to win is a better opportunity.  Subs are working with much less time than you are.  If they have a question, don’t delay, dither, or pass the buck.  Asking for alternates is asking for additional work.  If your answer hinges on knowing the dollar value of an option, tell the sub that.  An educated guess may give you enough insight to pick a path and get the sub rolling.  Subcontractors can be incredible sources of knowledge so don’t be afraid to ask a question to help yourself to give a better answer.  If it needs to go in front of the Architect then get the RFI drafted right away.  Write it yourself, if you don’t understand the question, you’ll surely screw it up at some point along the line.  Take the time to learn what’s involved so you can represent the build team knowledgeably and responsibly.

Final thoughts

Be aware of how you appear.  Overly cautious and conservative estimators may pose little risk to subcontractors.  However they pose little opportunity on a hard bid because they are consistently high.  It’s an estimate which means there MUST BE SOME RISK which means you must make difficult decisions.  Make sure your bidders know you’re actions align with your words.  Many fraidy-cat bidders call subcontractors claiming they are “really going after” a job.  Over time their calls end up unanswered. Speaking of unanswered calls, it’s significant to maintain professional distance.  Be kind, polite and professional but keep it short since time is money.  Subs that like to talk a lot should hear from you just before lunch to provide a handy conversational exit.

Whenever possible you should use email to maintain a record of the who’s, what’s, when’s, and why’s.  Make an effort to personally thank at least one different subcontractor every bid.  That will get you remembered because it’s shamefully rare.

Plans and Specifications Part 2

 

 

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© Anton Takken 2014 all rights reserved