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Exacting Budgets

Some of my coworkers say I am too detail oriented. Some say
I am too “anal.” Others say I am just too much of a pain in their
ass. Ask me if I care. I am an estimator/project manager. When
I sell a project, it is my livelihood that is on the line. I sold the
project based on my estimate, and I have to supervise getting
the project done. Ultimately, the profit that is generated for the
company by my projects is how I am judged.

The reason I am considered to be too “detail oriented” and
“anal” is because I expect my field supervisors to know how
much money they will need to get the project done. That means
that they must know how much money, therefore labor hours,
they will need to do every individual aspect of the job. Is that
too much to ask? I don’t think so.

When you take your car into a repair shop, imagine if the manager
tells you to just give him $2,000 and he will fix the car. You
might think the car needs a significant amount of repairs, and
you might think this amount fits your expectations. Even if it
does, wouldn’t you expect a detailed budget?

And let’s just say you were really busy, and you had to get the
car fixed as quickly as possible, and you didn’t want to take the
time to approve any projected costs. After you gave the manager
carte blanche to do whatever he “needs to do” to fur the car,
wouldn’t you, at the very least, expect a complete breakdown of
the costs of the repair?

I don’t care what it is, when we spend our own money, we
expect and, all the time, we demand an item by item accounting
of the costs. Continuing to use an auto repair shop as an
example, they would have a different budget for every item on
a car; furthermore, they would have a different budget for repair
to the same item on different makes and models of cars. Why
should we estimators be any different?

When I approach my estimating and project management
responsibilities, I do the same thing. I break down every soffit/
type of soffit, every type of wall framing, etc. I do things like
differentiate hanging and finishing into several categories. In
short, my budgets itemize many different labor codes. For example,
on one sizeable project, we had almost 1,000 codes that
were in use.

You can’t imagine how many times I have been told that my
expectations are unreasonable. I have been told that field supervisors
can’t be expected to provide that level of detailed accountability.
Boy, doesn’t that statement scare you?

We hire an individual to construct a project that is constructed
using very detailed information, but we can’t get the same
individual to keep detailed records? Bunk! It can be done; you
just have to demand that it be done.

There are advantages and disadvantages for my methods. The
disadvantages are basically summed up into one phrase: costs
of accountability. There are costs involved, financial costs and
personnel costs. To keep records, we have to have someone
assigned to that task. That individual must coordinate with the
field supervisors, which takes time and obviously costs money.
The other costs involve “good people” who just will not adapt,
and must be replaced. Personally, I choose to view this as an
upgrade and not a cost, but I know that many of you will hate
to lose those types of individuals you view as gems.

So what are the advantages? That is easy to explain too. First is
accountability Right down to the individual doing the work,
everyone has a goal and everyone knows what that goal is, and
everyone is judged by their production compared to that goal.

There is a huge advantage to being so detailed, but this one is
even bigger—knowledge. When we keep track of what every
different soffit costs to frame, to hang and to finish, we gain
valuable knowledge that can be incorporated into every bid,and every budget that follows. After a
few years, you will have more knowledge
than any of your competitors (except me
of course), and you can be more exact
on your bidding.

The best reason to be extremely detailed
is to maximize profitability. This will be
accomplished due to increased productivity,
by better record keeping, and
therefore, better identification of change
order items and costs. Finally, by being
very detailed, any litigation issues that
may arise in the future will be easier to

Not convinced?

Then think about this: Let’s use an example
of a $1 million project that will take
about 6 months to build. In that project,
you would expect to use about 60 percent
labor, of which about $480,000 is
costs. I think any company can easily
imagine their productivity being 10 to
15 percent more efficient, which means
a savings of $48,000 minimum.

In addition, you will get a few more
change orders that, say, generate another
$10,000 in profits. For $58,000, can
you put a person on site to keep records
and work with the superintendents on
this project?

Dumb question, right?

Now for the biggest dumb question: If
the price of generating more information,
more accountability and more
profits is that you are referred to by some
as “anal” or “detailed oriented” or even
as a “pain in the ass,” is it worth it? Or
how about this one: If the rest of the
world itemizes their budgets and costs,
and they do that because it is a more
profitable and beneficial way to do business,
then why should construction be
any different?

Comments? Send your e-mails to porinchak@, or fax to (703)

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