Estimating: Aiming for Accuracy
David C Phillips / September 2020
Construction cost estimating is part science, part art and greatly assisted by extensive experience.
To quote AWCI member Bill McPherson III, president of Central Ceilings in Massachusetts, “Estimating is a touch and feel of the project beyond the numbers.”
Gabriel Castillo, director of business development for Pillar Construction in Virginia, observes, “Estimating is precision work with a hint of astrology.”
From the contractor’s point of view, accurate estimating is crucial to winning profitable bids and walking away from ones that are doomed from the start. As Scott Christensen, area manager for Gallegos Corporation in Denver, puts it, “Accuracy is of particular importance in this plentiful, yet still competitive, market. Being able to trust your cost models allows you to make decisions on which jobs to target without undue concern for surprises downstream.”
The dividing line between estimating and bidding is often blurred. While it is an integral part of the bidding process, estimating is simply working out as closely as possible how much it will cost to build a specific project or part of it. Then comes the bidding, which can involve considerable judgment, taking into account overhead, profit margins, customer relations and how badly the contractor wants to win the job (in a competitive bid situation). Successful bidding depends on accurate estimation. This article focuses on achieving accuracy in estimating.
We asked AWCI member contractors for the main challenge they face today regarding accuracy in estimating and how they successfully overcome this challenge.
The answers were quite varied, providing some keen insights and practical advice from experienced estimators, contractors and GCs who know their business, and showing how the subjects of estimating and bidding have changed.
Guesstimating or Estimating?
For the majority of the contractors interviewed, incomplete architectural and structural drawings and lack of clarity on scope delineation came up as the major challenge to accurate estimating.
“Many plan documents are missing essential pieces, such as a proposed project-schedule or a room-finish schedule or, specifically in our business, wall types not noted,” explains Scott Bleich, principal of Heartland Companies in Des Moines, Iowa. “This makes for guesstimating instead of estimating.”
Shawn Coates, vice president of sales and estimating at WPI in Oregon, notes how this situation has deteriorated: “As recently as five to 10 years ago, 90% to 100% of construction drawings (CD) literally meant the bid documents provided 90% to 100% of the detail we needed to bid a job, and the specifications had very little scope overlap. In today’s world, 90% to 100% CD generally includes only 50% of the detail needed for an accurate estimate, and it is common to find the same scope referenced in multiple, different specification sections. Specifications are often generic and don’t apply to the specific project or the applications and execution of the work. More and more, it seems, the owners and architects of major commercial projects are proceeding with scope procurement despite incomplete design.”
Castillo points out, “Copy/paste detail production is leading contractors to guess and assume more, and count and assemble less.”
Stan Kasper, president of The Rockwell Group in Illinois, sheds some light on causes: “Architects are being rushed to send out bidding documents, so most blueprints are only 75% completed, with most plans missing needed information and details.”
Before we look at the other major challenges mentioned, it’s worth examining how different contractors are dealing with incomplete plans and bidding documents.
“We [WPI] leverage our experience and expertise in estimating to apply logic where detail is lacking,” says Coates. “We submit pre-bid requests for information in an attempt to give all bidders equal information. When the answers to RFI questions are vague or inconclusive, we specify our assumptions using clarifications and exclusions in our bid proposals and hopefully carry them forward to our contracts. One effective handling has been to provide design-build/design-assist services as an architectural trade partner.”
Michael Gutierrez, vice president for estimating and reconstruction at California Drywall, says, “We’ve learned over time that we should give a baseline bid that includes everything that is on the drawings and in the bid documents, and list as alternate adds any extra scope we feel is needed to turn over a complete project.”
Castillo explains that Pillar Construction employs “constant dialogue and collaboration during the pre-construction process to clarify the details and increase the quality of the final product.”
Mike Holland, chief operating officer at Marek Brothers Systems, Inc. in Texas, shares his company’s approach: “Some of the old and some of the new: Relationships and actual human contact—talking with the contractor about the documents to discover the best answers for the project that all bidders can rely on. The new is the use of digital-estimating platforms and models to help the contractors understand and quickly see the gaps in scope on the drawings and offer solutions.”
Other Major Challenges
While incomplete bidding documents came up as the biggest challenge for the majority of those interviewed, there were several others.
Paul Brown, senior estimator/team manager at California-based J&J Acoustics, Inc., explains their challenge: “Due to the limited availability of resources for the skilled craft we employ, it has become more difficult to forecast field productivity, especially for some of the large-scale projects with a long life cycle. This factor is more challenging today than I have seen in the last 25 years. We really need to have a full understanding of the construction schedule that might be required due to manpower shortages and/or fast-track schedules, and so have a realistic productivity approach for the type of project we are pursuing.”
Adam Barbee, estimator/project manager at Daley’s Drywall & Taping, also in California, says, “Ultimately the challenge is production—labor. If, due to unforeseen circumstances, you don’t estimate your production correctly, you won’t make money.”
Robert Sutton, senior project manager and estimator at Reitter Stucco in Columbus, Ohio, says, “It has always been a challenge to receive accurate feedback from input resources. The timeliness and accuracy of the data is so important to creating realistic estimates. We maintain constant communication with the field in order to understand their challenges so they can help reduce the ‘guessing game’ when forming accurate estimates. Post job reviews are a must for obtaining good feedback and great information to use on similar future projects.”
Phil G. Ruffin, president of Pontiac Ceiling & Partition Co., LLC in Michigan says, “Our single biggest challenge by far is figuring if the schedules of the projects will be maintained. In conjunction with recent manpower shortages, schedules have not changed to adjust to the shortages of precedent trades to the wall and ceiling contractors. We find ourselves managing all precedent trades so that we are not adversely affected. If schedules are managed and maintained from Day One, the projects should finish on time.”
“Last-minute addendums to clarify drawings, when every minute counts, result in not having time to redo takeoffs when we expect to move onto the next job,” says Chad Oates, director of operations at Koja Construction, Inc. in Illinois. “Unfortunately, we have started delaying our takeoffs until closer to bid day, which in turn can cause us to rush through bids.”
Dave DeHorn, chief estimator at the Brady Company/Los Angeles, Inc., paints a clear picture: “We are given shorter and shorter times to bid a project, typically two weeks. To do a really accurate estimate with regard to our specific trades (metal studs, drywall, lath and plaster, EIFS and spray applied fireproofing) our estimators have to look at the architectural, structural and mechanical drawings, and sometimes all of the other drawings. We measure all of the items for our scope and build each condition in our estimating software. A typical job for us has over 100 conditions; larger projects can have more than 300. We also send out material pricing to several vendors. We may be asked to carry subcontractors such as insulation, scaffolding, ABAA waterproofing, finish caulking and engineering of the metal stud systems. It takes time to invite and distribute the bidding documents to our subcontractors. Addendums on a project each require correction to the takeoff. Once the estimate is finished, we go through an extensive review process with several eyes looking at the drawings, specifications and our estimate. That’s a lot to do in two weeks. So we ask the client for more time and sometimes involve more than one estimator in a project. We recently had all four of our estimators working on the same project.”
Christensen says, “Our biggest challenge is keeping up with budgeting/bidding pressure in a busy market. Many projects are being presented multiple times prior to the final bid stage. We handle this by spreading out the jobs that may see multiple rounds to different estimators.”
“Getting every architectural-design detail accounted for in a takeoff and still having the lowest number is our biggest challenge,” says Anthony J Brooks, president, Platinum Drywall, Inc., Little Rock, Arkansas. Ultimately, if we are competing for work that will go to the lowest bidder, the only way to win is to estimate the project with an eye for how your competition will see the design elements.”
Vince Nihipali Jr., president of Ka Mo’i Construction/V&C Drywall Contractors in Honolulu, mentions another problem: “Estimators [competition] who don’t know what they are doing miss out on things that add up in cost when you truly job-cost a project. For example, assuming trims and beads fall under the allowance of SF pricing for taping or drywall. Caulking is another one that is missed a lot. It’s not knowing the details of how something is built. Super-low bidders then ruin the marketplace because they don’t know what they’re doing. So we try to find the right projects where we are up against reputable competition.”
Ken W. Ottinger, senior field technician for Kitchell Quality Assurance in Arizona, provides a QA viewpoint. “The greatest challenge in estimating, viewed through an end-product, quality-related lens, is that many specifications, relied upon for estimating purposes, offer a range of products in multiple categories that are not always compatible. You can’t throw all the ‘accepted per spec’ products into a bag and assume they all work correctly together. Broad specs and myriad possible product combinations make estimating (to target a competitive bid at least) an absolute nightmare. So, the builder who has the best-educated, most-experienced estimators is pitted against those assembling bids as described above. The inaccurate bid is the lowest. I’ve been told a number of times in years past working as a consultant, ‘If we bid it how it should be built, we’ll never be awarded the project.’”
We also asked general contractors the same questions.
“Our biggest challenge is throughput,” says Mike Espeset, president of Story Construction General Contractors in Iowa. “If we knew we would have great, reliable subcontractor coverage for a project, we could quantify (estimate) fewer items and increase our throughput without sacrificing accuracy. While we canvas the market for bidders, we have defaulted to quantifying more things for bid and historical reference. It helps us with certainty but has a cost related to our throughput.”
Aiming for Accuracy
So how important is accuracy in estimating?
“One time our estimator, who worked manually on spreadsheets, inserted a line on the spreadsheet that didn’t calculate in the total, so our final bid proposal amount did not include the missed line item of $150,000,” recalls Ron Karp of Advanced Drywall Systems in Sarasota, Fla. “The GC was not sympathetic and insisted we contract for the number we submitted. We started the project in the hole, and that’s where we finished.”
Bleich says, “We always say at Heartland that ‘we either win or we learn, we never lose.’ That being said, we learned a lot on a few occasions when the estimator entered the wrong scale for the plans …”
Speaking from experience, Adam Barbee says, “If you do a job and lose a couple of million dollars, your investors and everyone else around you will be impacted by it. It’s a domino effect through the bank, through the company. We did have one job like that several years ago…” The experience led to major changes in estimation and bidding procedure at Daly’s Drywall—it has not been repeated.
Ariana Marsiglia, speaking from a GC viewpoint, says, “I believe the real tried-and-true accuracy of estimating comes from superior minds being able to build the project in their heads during the bid process. Estimating is far more complex than just knowing your labor rates and material costs from memory. You need to know how to build and who will do the work. Perhaps your carpenter can do the exact same thing as your framer but at half the price. Flush everything out, go through the responsibility schedules, detail notes and legends.”
“The starting point for an accurate estimate really comes down to the individual(s) mindset and processes in reviewing the bid documents,” says Brown. “You need to have a process that you adhere to for every single bid that goes out the door. With so much money on the line as well as our reputation for quality and value, the estimating piece of the puzzle is critical to our success.”
“Always do the very best job at estimating that you can possibly achieve,” advises Fritz. “Think out of the box for material lengths and cutoff reuse; think about which stages should be started first in order to reduce lift usage; schedule materials delivered on site so there are no delays.”
Gutierrez recommends, “Write pre-bid RFIs whenever scope is unclear. Always perform a thorough review prior to bids going out. A second set of eyes is always beneficial.”
“We’ve learned that the key to accuracy when estimating is providing our estimators with sufficient time to do an accurate takeoff, and then making it a team effort when it’s time to review the estimate,” says Karp. “Beyond that … when a project does well, on or below budget, it’s always ‘the field made it happen.’ But, when a project goes badly and over budget, it’s always ‘a bad estimate.’ And so it goes—being an estimator is a lonely profession, but we recognize that and do all we can to provide the support it takes to be a successful estimator.”
“Your estimates must be accurate and just about perfect,” says Ruffin. “Any missteps will immediately fade a project’s profitability. There is a very slim margin for error.”
“Being accurate is one of the most important traits an estimator can have,” concludes DeHorn.
David C Phillips, a freelance writer and photographer, is an original founding partner at Words & Images.