Health Care: An Estimator’s Dream/Nightmare

Vince Bailey / June 2016

But the dreams I’ve seen lately keep on turnin’ out and burnin’ out…—from ““Take It to the Limit” by Randy Meisner (The Eagles)

Back in early 2008, when the proverbial poop hit the paddles, there were a precious few industries that continued to thrive and expand to the degree that they still required new construction in spite of the nose-dive in the general state of the economy. Of course, housing went bust and took a great number of healthy residential construction contractors to an early grave. Light commercial took a similar plunge, with the possible exception of a curious outlier surge in liquor store starts. But a significant number of large commercial drywall firms survived on the activity generated by the perseverance of those precious few thriving industries. Energy, insurance, gaming and health care kept many commercial drywall firms afloat during those trying times. Of those tenacious industries, health care remained the most robust by far.
    
Even to this day, as the economy experiences only a sputtering recovery, health care is expanding in leaps and bounds. As expected, there are multiple causes for this welcome anomaly, but the fundamental condition that’s driving this boom lies in a simple demographic fact: The largest segment of the U.S. population—baby boomers—has now come of an age in which they require more and more medical attention as they age. As this 52- to 70-year-old demographic matures, new construction and renovation of hospitals and medical office buildings are initiated to meet the rising demand.
    
This economic phenomenon has been a potential boon to larger, more sophisticated drywall outfits that are uniquely qualified to perform new hospital projects, hospital additions and renovations. One of the most positive attractions these projects offer is volume. The size and scope of a hospital project can often engage the majority of a commercial drywall contractor’s work force for an entire year or more. During a slow year, the award of a sizeable health care project can be a struggling drywall company’s saving grace—a dream come true. Yet the competitive nature of our bidding method of delivery sometimes allows a spoiler into the mix.
    
The inherent sophistication associated with health care construction gives a firm with experience in that field a definite edge in both estimating and performance. Typical conditions that are peculiar to health care include such components as full-height and fully caulked smoke walls, upgraded sound-absorbing assemblies, wall protection (corner guards and crash rails), impact-resistant board, security mesh for pharmacies, lead-lined board for X-ray rooms, mold-resistant products, gasketed ceiling grid, clean-room ceiling tile, backing for curtain tracks and prefabricated headwall details, just to name a few potential stumbling blocks for the less experienced contractor. Such components that are somewhat unique to the field may not receive the emphasis in the drawings that a neophyte estimator would notice or expect, but a bidmeister who has a comfortable familiarity with health care work would see that they are implied in the documents and would include them as a matter of course.
    
Similarly, the above-ceiling MEP work on a typical hospital project can best be described as an overhead train-wreck. Expansive HVAC systems, supplemental plumbing for med gases, extensive data cabling, structural assemblies for special lighting and hundreds of miles of electrical piping to power it all present a formidable obstacle to erecting all those full-height smoke walls required by the architectural plans. Granted, BIM modeling sessions are frequently mandated in the preconstruction phase of these projects, but these sessions are typically scheduled after a bid award, so a drywall estimator must either study the available MEP plans (oh please, there’s never time for that) or project the extra man-hours involved with added above-ceiling work—offset framing, horizontal shaftwall, trapezes for ceiling suspension, countless drywall penetrations—based on historical data. Of course, historical data involving overhead productions in hospitals only comes with experience in health care work. An estimator with little or no experience with hospital overheads might base his productions on something less substantive—like wishful thinking.
    
So this is where the dream can turn nightmarish. While bid invitations to sophisticated hospital projects are typically restricted to qualified contractors, the defined term qualified can sometimes become maddeningly murky. Owners’ reps often require a bid lineup that includes at least one less experienced contractor who will predictably bid the work lower than health care veterans due to a lack of insight into the intent of the plans. And while GCs will rarely risk awarding to a low outlier, a false low read can pull a budget down to where an experienced drywaller will have to price the job with very little markup for buffer if he wants an award—and, of course, he wants an award.
    
Now, review all those potential risks involved with the typical construction conditions associated with health care as exhibited in the fourth and fifth paragraphs of this piece. I believe it’s plain to see that accepting large hospital work without the buffer of a healthy markup can quickly turn a pleasant dream into a burnout nightmare.

Vince Bailey is an estimator/project manager working in the Phoenix area.