The Importance of "Spot On" Estimates

The Importance of “Spot On” Estimates

brought to you by Sage Construction and Real Estate

What Estimators Do

When a construction company begins a new project, the process oftentimes times requires the
contractor to provide the prospective customers an idea of how much the contract will cost
and analyze whether the job is a good fit for the business. That’s where the estimators come in.
They are the ones to calculate the cost information that’s used to help determine the feasibility and
profitability of a new project and analyze which endeavors are turning a profit, according to the U.S.
Bureau of Labor Statistics. Approximately 59 percent of cost estimators work in the construction
industry, collecting data on which factors have an effect on costs, such as materials, location,
project duration, labor, and special machinery requirements, the bureau says.

To do so, estimators in the construction industry inquire and sometimes visit the proposed work site
and collect information on the availability of electricity and other utilities, surface topography, and
drainage, then conduct a quantity survey–or “takeoff”–to determine what materials and labor will
be necessary to complete the firm’s share of the project. Part of the estimator’s responsibility in this
process is taking into consideration the potential for wasted materials, shipping delays, bad weather,
and other disruptions that might negatively affect the project’s profitability.

Competitive Estimating in the Construction Industry

In today’s competitive construction environment, where everyone is trying to do more with fewer
resources and less time, estimators know that they need an edge in order to prosper. Every small
advantage that can help make an estimator more competitive could be the deciding factor in
whether a bid is won or lost.

But staying competitive does not have to mean working longer hours to meet demand. According
to researchers Andrew Stellman and Jennifer Greene of software quality firm Stellman and Green
Consulting, estimating has been referred to as a “black art” and may seem highly subjective–yet a
formal, standardized estimating process can improve accuracy and make it more likely that projects
are completed on time and within budget.

Luckily, there are technological tools available that can help estimators work smarter, streamline their
processes, and keep up with the demand for more estimates without risking accuracy.

Accurate Estimates Are Vital

No matter its size, a company must draft plans and get a realistic idea of total cost before
beginning a project.

Poor estimating can hurt the project, and maybe the company. Sometimes, a company that wins
a job may end up regretting the victory, because a mispriced or overlooked item will result in the
project running over the original estimate.

Being able to deduce a rough estimate of what a job will cost, with limited specifications, and
without the risk of dedicating days of work only to determine the project is not a good fit, can
be the deciding factor in bidding on a job that will be profitable for the company.

Changes happen. Customers decide they want to add or subtract from the project, which can
leave the construction company scrambling to adjust its estimate. Automating the estimating
process enables companies to manipulate the existing estimate more easily and quickly respond
to change requests, avoiding complications later in the project.

Automating the Process

Cost estimating software systems can help estimators do their job more quickly and with less effort,
according to Chris Hendrickson, engineering researcher and professor at Carnegie Mellon University.
Often the software will include databases for unit cost items, including worker wage rates and
prices for materials and equipment rentals, as well as lists of expected productivity for construction
processes, component types, and equipment, he writes.

The software can also be useful when sharing estimates with other departments in charge of cost
control and scheduling, which can contribute to managing costs during the course of construction.
Additionally, some versions will allow for searching a company’s archives for past projects that may
have had a similar design or scope, which can help better inform the estimating process.
According to the Bureau of Labor Statistics, “although computers cannot be used for the entire
estimating process, they can relieve estimators of much of the drudgery associated with routine,
repetitive, and time-consuming calculations. New and improved cost estimating software has lead
to more efficient computations,” which leaves estimators more time to check their numbers, analyze,
and refine project estimates.”

Sage Estimating Software Offers Solutions

Sage software supports the standardization of estimating work processes without forcing an
estimator to forfeit his or her specific style. The system’s flexibility creates a way for estimators
to continue doing what they’re good at but enhances their capabilities using technology tools
to improve efficiencies and increase productivity. Estimates that once took days or weeks—only to
sometimes be scrapped if the project does not have strong profit potential—can now be done more
quickly through automation, all without sacrificing accuracy.

Sage Estimating solutions can help estimators move their work beyond manual entry into a
construction-specific estimating solution. Automation of many of the functions such as item
pricing and takeoff allows for a smarter, more efficient estimating process.

No more are the errors associated with manual calculations, formulas mistakenly deleted from a
generic spreadsheet, and the hours and hours spent double and triple checking your numbers.
Sage Estimating solutions integrate with the company’s accounting and operations software, which
saves time and reduces errors due to the elimination of redundant tasks and duplicate data
entry. Automated information sharing with different departments leads to greater communication
across an enterprise with every aspect of a project and leads to even greater efficiency.

Conclusion

Estimators have always worked hard to ensure they deliver accurate estimates as their companies
bid on construction projects.

But as the business changes and new technologies offer solutions for reducing workloads while
boosting results, it may be time for estimators to stop restricting themselves to the features
traditional spreadsheets can offer. Incorporating estimating software into the process can allow
construction companies to bid faster, smarter and more profitably.

About Sage:
With more than 40 years of industry experience, Sage solutions are Job Ready. In fact, Sage products help manage over 400,000 projects a year and more than 5.7 million subcontracts each year.

About Plumb:
From sales to implementation, training to consulting, Plumb’s team of Sage Certified Consultants work to improve your efficiency and reporting capabilities with Sage 300 Construction and Real Estate (Timberline), Sage 100 Contractor (Master Builder), Sage Estimating and Sage Construction Anywhere. Plumb is a SAGE Software Authorized Business Partner located in Southern California.