Your first task concerns purchasing all the pipe, fittings, fixtures, equipment and materials. Many companies do not have a full-time purchasing agent who knows the market and has ample time to shop around and compare current availability and prices. This is called “ordering” materials rather than “purchasing.” Depending on the size of your company and the annual volume of your purchasing, you need to analyze cost vs. savings. How much would an efficient purchasing agent cost vs. how much could an agent save you on buy out as well as coordinating on-time deliveries and returns?
Although buy out savings always exists and can be improved through efficient scheduling and on-time payments, you should not include those potential dollars in your bid. That money belongs to you and not your customer. You may have to share if that buy out involves a substitution or deviation from what was specified.
Our next task is to estimate how much it will cost to install all of this material and equipment. This is the biggie. We have so many variables — circumstances that could easily double or triple your estimate. Fortunately we could also encounter situations that might cut it in half. In either case, as you are putting together your bid, all you can do is guess.
But some realistic factors will assist you with this potentially profitable or chaotic estimate:
- Above all else your estimator needs some hands-on jobsite experience. This working exposure would reinforce their ability to value engineer each task and also determine which items could be economically pre-fabbed. To make the situation easier, some companies will pair the college graduates with a mentor for one or two years of jobsite experience to augment their estimating and reasoning ability. Some will put them directly into their estimating department and provide a mentor to assist with unusual pricing situations or job conditions.
- Your estimator also needs a working knowledge of construction practices, contract documents and local ordinances and building codes. They must be able to communicate with you, your staff, your jobsite supervisors, as well as architects, engineers and clients. Most of this communication should be documented to eliminate any possibility of a future misunderstanding or claim.
- Your estimator must have the ability to visualize what will occur with each and every installation. He should be conceptually building that project as he puts together each estimate. When he finally reaches his decision and puts that number on the bid sheet, you are stuck with it.
- Record your own historical costs by cost-coding your weekly time sheets. Contractors have access to many labor unit pricing sources for establishing labor units and job costs. We have Means, MCAS, PHCC, Walker’s, Trade Services, Ottavianos and dozens of others in manual book form and/or computer discs.
- Always remember that an estimating price source is based on average productivity and average conditions. This is why jobsite experience is so critical for any estimator to produce a realistic estimate.
- When a task is not in the manuals or your historical background, your estimator should first question jobsite employees to see if any of them have had previous experiences similar to what’s being bid. Your estimator can then brainstorm a conceptual installation and establish a “best” and a “worst” labor cost.
Producing a realistic estimate for any job involves knowledge, experience, common sense and wisdom. You can easily see why I recommend training every one of your jobsite foremen to estimate. Learning the ins and outs of putting knowledge on an estimate sheet or into your computer is well worth the effort for that foreman, as well as for the company.
In addition to becoming second-string estimators, these “trained” foremen are also available as “moonlight estimators” to assist with bidding overloads or emergencies. Most contractors will pay moonlight money equal to what it would have cost for their estimating staff to produce those numbers. You can see the financial advantages plus the camaraderie you gain between your office and jobsite personnel. You can also see what a blessing you would enjoy if the foreman who helped you bid that job was then assigned to build it!