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How Do You Estimate New Material?

One of the several projects I am currently bidding has a specification
requirement for a material that we have not used before.
It is actually a fairly new material that has been out on the market
in our area for only about a year. Since we have not used it,
I am not really sure how to properly bid using it. We all have
been in this position before and will be again. The question of
the day is, what are the procedures that we should use to properly
evaluate and then bid a new material? If we are not comfortable
with the costs of a material or technique, what are the
steps that we can use to bid in such a manner that we remain
competitive, yet properly priced? Here is what I try to do.

Once I read the specifications and identify that this project
requires something I am not used to, I immediately contact the
local suppliers. Most of the time, I contact three or four of them.
I get from them the manufacturer and the basic pricing information.
I also ask them for help contacting the manufacturer.

I then contact the manufacturer and request a presentation. Naturally,
coordinating this takes time as the local representative may
have to defer to a national representative, or just may not be able
to accommodate my schedule and/or the bid schedule. Most of
the tie, however, I am able to get a presentation. I specifically
want to know from the representative the installation techniques,
performance capabilities, installation dos and don’ts, and warranty
information. I know that the information I get will be
biased, so I try to gather as much as I can. I also specifically ask
for references and specific projects that have used this material.

The next step is to identify a subcontractor who has already used
the material. Maybe there is a local competitor that I am friendly
enough with who will go over the information with me. Of
course, if the competitor is local, the first question I ask is if they
are bidding the same project I am. If not, I ask for their help. If
so, I move on as our conversation would put both of us in a compromising
position. Several times I have had to contact a sub-contractor
I do not know. He may be in a completely different
part of the country, for example. (That is one reason why we are
AWCI members.) Whichever the situation, my personal experience
is that the information I obtain from a fellow subcontract is
usually very good and reliable. Several times I have helped my
competition with conversations like I explained, and several times
I have been the benefactor of another’s experiences.

Another valuable source of information is the workers themselves.
You might be able to find workers who have worked for
a different company using this project. I ask my foremen to find
out as much as they can. I give them a list of questions that I
would like to have the answers for in order to properly evaluate
the costs associated with the new material. Many times, I
get information back from the field within a day or two.

The last option for us is to construct a mockup. This is always
my last option because it is very time consuming and costly. If
I have to construct a mockup, I again ask the manufacturer for
help. I expect the rep to assist with the costs of the mockup as
well as be actively involved in the entire process. We construct
a mockup that will allow me to compare the new material with
the installation of a material that I am comfortable bidding.
By using a comparison material, I can establish production
information that I will need to price.

As soon as I gather enough information, I make my assumptions
and put my bid together. I do one thing differently,
though, when putting the bid together. I isolate the new material
costs. I then evaluate the risk of this material as it affects
the overall bid. If this material has an overall labor and material
value that is consequential or is a sizeable part of my bid,
then I markup the bid accordingly; the greater the risk, the
greater the return. However, if the new material isn’t an impact,
then I mark up the bid according to that as well.

I wish there was a better way to gather, analyze and price new
materials. We all know the problems and risks associated with
new materials and techniques. As experienced estimators, we
all handle these situations all too frequently these days. While
I do not have all the answers, I do hope that this information
might assist you in some way with your day-to-day bidding.

Comments? Send your e-mails to [email protected].

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