Vince Bailey / April 2016
I have squandered my existence for a pocket full of mumbles; such are promises …—Paul Simon
It’s the “gift” that keeps on giving. And most bidmeisters these days recognize what a mixed blessing it can be when presented with the “opportunity” to perform a budgetary estimate. In all fairness, there are times when assembling a budget can open a path to a lucrative award down the road. And it’s based on that elusive chance that we always accept the dubious prospect with outward gratitude, while our inner selves pay it about the same level of optimism we have for an online Nigerian inheritance proposition.
Typically, budgets are presented through a couple of delivery modes. They are most often opened up as an invitation by a friendly general contractor to participate in ball-park pricing what is assumed to be a negotiated project. The invitation is usually quite encouraging, going something like this: As we at (insert GC) recognize (insert your company) as highly dependable and duly capable of performing successfully on a project of exceptional volume and challenging scope, we extend to your firm this opportunity to partner with us in assisting with our development of (insert project name) for (insert design team) through timely and thorough estimates as the design evolves. Budget proposals for the attached design development drawings are due (insert “way too soon”).
Note that there are a few implications that might be subject to interpretation: “opportunity to partner” suggests an exclusive relationship between you and the GC; similarly, “our development of…for…” implies that the GC also has a unique agreement with the owner. If this is truly the case, an intent to award is subtly indicated. But, to lift a fitting phrase from Ira Gershwin, it ain’t necessarily so. Many times more than one GC is involved, and your “partner” has extended the same invitation to your closest competitor. Clearly, when the estimator receives such a flattering invitation, it behooves him to do some detective work and determine if the inference of exclusivity is valid. Otherwise, the path to an award may be a lot less certain than he believes.
Almost as often, a project may be presented as a “bid,” but the conceptual nature of the plans suggests otherwise. Drawings that are presented as 75 percent complete but actually lack such basic information as wall types are really just budget drawings masquerading as a bid set. The first round of bidding is designed to narrow down the field of GCs and subs alike, and a more detailed set of plans is in the offing for the lowest “bidders.”
While the lure of working on budgets lies in the questionable promise of a guaranteed award, the problems with budgetary estimates are considerable. First, the conceptual nature of the early-issue plans are subject to wide-ranging interpretation, and second, the multiple revisions demand an effort that is extremely time-consuming.
Obviously, when development drawings lack the detail for precision pricing, the options left to the estimator range from lean to fat. He can choose between the “when in doubt, leave it out,” or “where it’s thin, add it in” schools of thought in his interpretation. Extremes in either direction lead to trouble. Infilling gaps can send owners into initial sticker shock, but a literally lean approach can lead to the same result when more information nets significantly higher pricing on successive revisions. I know an estimator who priced only what literally appeared on the drawings of an initial set of plans and had to submit a detailed summary to justify every penny of his substantial increase on the more detailed second revision. Naturally, the best course is a discriminating balance of the two approaches, but which way he tends to lean may depend on certain extraneous information, such as the level of competition, whether he is confirming (or disputing) an existing budget or if the exercise is actually determining the budget.
The other downside of pricing budgets is the extraordinary time and effort that goes into estimating the inevitable multiple revisions. Many initial budget drawings are so conceptual that they require two or even three revisions before a construction set is developed, and many times the changes and additions are so significant that nothing short of a fresh takeoff is required each time (the gift that keeps on giving—giving you grief, that is). Of course, the in-house recognition of such drudgery is underwhelming. Volume is frequently only credited once, and if a budget does not come to fruition, volume/sales ratios will apparently suffer.
Clearly, when an invitation to assemble a budgetary proposal becomes a path to an award, the reward is well worth the extra effort involved. However, it is all too often that a great deal of drudgery nets only the following result: (GC) appreciates your participation in the budgetary development of (insert project). Unfortunately, the owner has declined to move forward with construction at this time. We will inform you of any future developments, and we thank you for your effort.
Talk about your pocket full of mumbles.
Vince Bailey is an estimator/project manager working in the Phoenix area.