==================================================================== CONSTRUCTION ESTIMATING The founder of one of the world's largest and most successful construction companies maintained that contracting was a very simple business. All you had to do was "get work at the right PRICE and do it for the right COST" While he refused to elaborate, and let us in on some of his secrets for actually achieving these two goals, the comment nevertheless contains a wealth of wisdom. He was emphasising the equal importance of "getting" and "doing" the work. The two functions depend upon each other like the blades of a pair of shears. How often do we see contractors pour enormous effort - and money - into trying to recover from "low-ball" tenders which have landed them with the wrong job at the wrong price? Or technically competent and "operationally efficient" major - and not so major - organizations disappear from the scene because they seem incapable of consistently "getting work at the right price"? Whether work is obtained by negotiation or competitive tender, the root problem must be poor estimating and bidding. This is how the price is originally determined. Is the estimator's art so arcane - and construction so unpredictable - that this level of risk is inevitable? If so, why are some organizations recognizably better tenderers than others? Do they just spend more money than their competitors to get more - and better - estimators? Obviously there are risks in contracting that can never be removed or properly "allowed for". It is equally obvious that "good" estimators are as rare as hen's teeth; considerably more expensive; and probably worth still more! Just throwing more money at the problem isn't a solution. "Good" tenderers don't always spend more on estimating. The difference is in the effectiveness and efficiency with which they use their estimating staff, the involvement of management, and the feedback they obtain -and use - from the jobsite. Improvement in some of these areas may depend upon changes in priorities, management approach and company costing and reporting systems. But considerable improvements in estimating effectiveness and efficiency may require no more than simple changes in estimating procedures. Typically the bulk of the estimator's time is absorbed in routine and repetitive chores like - * pricing job overheads * calculating "all in" labour rates * calculating "all in" equipment rates * pricing repetitive items * extracting and checking "usage" lists for materials, * making adjustments for changed material and sub prices * making adjustments as the tender is reviewed * extending, subtotalling and checking arithmetic * "spreading" overheads and markup * "balancing" the submitted total back to the adjusted estimate * "writing up" the tender submittal "Good" tenderers have typically automated and standardised these functions so there is no need to "re-invent the wheel" on each job. They have standard lists of overheads, proforma labour calculation sheets, good records so that they can easily "borrow" information from old estimates, arithmetic processing checks to catch errors, and standardised "adjustment" and "closing" procedures. By minimising the time and effort wasted on "dog work", the estimator is able to better focus his time on the important aspects of the estimate; construction methods, production rates, getting the best supply and subcontractor prices etc. Much of this estimating "dog work" should be "computerisable". A lot of it is just arithmetic and the tedious manipulation of information -and that is where computers should outperform manual methods "hands down". In fact, estimating was one of the first areas of the contractor's operations to feel the effect of computers. Estimating software, for mainframe computers, was produced as early as the late 1960's and early 70's. As the pace of computerisation has quickened - and the size and price of computers has plummetted - computerised estimating has moved from the mainframe to the mini and now to the desktop PC. So, what has been the experience of construction companies with computerised estimating? Does it "drastically cut" estimating costs as is claimed? Can you produce more estimates in "a fraction of the time"? Are "all errors eliminated"? Profits "substantially increased"? Users generally acknowledge that there are savings in both time and money and arithmetic errors are significantly reduced. The general consensus is that computerised estimating is the "only way to go". However there is also a common thread of slight dissatisfaction; complaints of lack of flexibility; remarks such as "yes, but it can't handle ...", "some things can only be done manually" and so on. These reservations often stem from the fact that the production of an estimate rarely follows a simple procedure of define resources, allocate resources, set production rates, apply markup etc. A skillful estimator often prices one part of an estimate immediately, "plugs" figures into more complicated items, uses "rough" resource costs until better figures are available, "tactically" sets artificial rates for some items, and so on. Software should allow - and facilitate - this "dynamic" approach. Unfortunately, even the more expensive computerised estimating systems are typically rather restricting and limited. They effectively "dictate" a particular tender structure and demand a "mechanistic" approach to the preparation of estimates. The packages are often unable to prepare a realistic tender submission as they cannot mimic the structure of the Owner's documents or handle overheads, spread allocation and rounding in a flexible manner. Computerised systems need not suffer from these limitations. An economical, PC based estimating and tendering software package, developed by the Australian software developer PROCON CONSTRUCTION SYSTEMS, illustrates just how powerful and flexible the latest packages can be. PROBID offers all the technical capabilities the user could ask for. Large data capacity, extremely fast calculation and generation of reports, well designed reports showing the makeup of the estimate from different perspectives, standard libraries, unlimited nesting of crew and assembly definitions, digitizer takeoff of quantities, simultaneous entry of scheduling information, etc. More importantly, the system is flexible and easy to learn and use. The estimator may organize items into Sections and Groups, divide items into operations and price at the item or operation level. Subcontractor quotes can be directly assigned to items, and spread allocation can be controlled in many different ways. The estimator can define his own cost types, decide on the level of detail for resource analysis, set rounding options and prepare the tender in the order that suits him. PROBID uses "state of the art" techniques - display and selection windows, context-sensitive help and intelligent entry evaluation - to ease the learning curve for the new user and simplify use by the experienced estimator. For information on PROBID contact: PROCON CONSTRUCTION SYSTEMS 3/5-7 Victoria Parade MANLY NSW 2095 Tel: +61 2 9977.6863, Email: sales@procon.com.au ====================================================================