There are hundreds of estimating principles to follow, but I have narrowed down what one could consider the most important ones when freshly starting off in estimating and preconstruction.
1. The key words are “Profit” and “Risk”: You are in this to make a profit, and the biggest enemy to profit is risk. Never forget that! Think long and hard about contingencies based of existing risks.
2. Preparedness goes a long way: Before beginning working on a bid, know what tools you have available and what you lack, and are going to need. If you don’t know make assumptions as per your experience.
3. Allow for enough time, and do not rush!: As a preconstruction manager and estimator, it is expected of you to understand the project in full. Rushing through a bid is a mistake, and it’s an even worse mistake if you win the bid. Take your time in selecting and inviting the “right” bidders.
4. Have a proper spreadsheet ready: A proper spreadsheet will make a difference. Before commencing work on a bid, a proper spreadsheet should already have preassigned sections for any type of inputs and outputs, links and formulas as required. This is time you win upfront (time management) and goes hand in hand with organization and cleanliness.
5. Organization skills count in the last moment the most: Latest, at the very latest your organizational skills (meaning: you got your stuff together) will be tested at bid day (proposal submission day) when time is short, information is vast, and the stress is high.
6. Cleanliness is Godliness: Especially at bid day one tends to omit making proper notes and adjusting the spreadsheets properly. This may come back to haunt you in the future. So, if you were not able to, then do finish making those proper notes and adjustments right after your submission at the latest.
7. “Time management is King!”: One of the hardest parts in preconstruction is knowing what to prioritize and what to let slide in terms of better payoff. You don’t have your time under control, then you don’t have the project under control.
8. Communicate clearly and concisely: Take your time to write meaningful short messages. Sending garbage out is without doubt getting garbage back in. Over-sharing information is as bad as under-sharing, so make sure to find a balance.
9. Form strong relationships with your bidders: A bid is only as good as the proposals you receive to back your own proposal up. Strong relationships with bidders only develop with time, effort and trust. A strong relationship can give you the needed winning edge. Never underestimate the human factor.
10. Yes! – You are a salesperson, too: You want people to provide you with budgets and proposals, hence your demeaner, coming across authentic and emphatic, your communication and persuasion skill, and more, has a huge impact on you succeeding. You are without doubt a representative of the company, and accordingly you will be judged. Never overpromise! Be cordial and humble!
11. Understanding the client is key: Try to think from your client’s perspective. Have multiple and deep conversations if possible. Look out for the cues that the client gives you – Is he after the cheapest price? Does he want a quality product? Does he himself have a deadline? Does he want to see someone specifically involved? Would he be open to discuss alternatives? What are his expectations in general? Even if you are not directly involved in conversations with the client, it’s important for you as an estimator to know how to present the numbers.
12. Human communication over automatic tech preferred: Personal meetings over phone calls, phone calls over emails. Too much faith is placed on automatic communication tech ignoring the daily bombardment of information every estimator is subjected to. I mean to say that before an electronic Invitation To Bid (ITB) is sent out, a call, at best a personal meeting should be conducted informing of one’s intentions. That way they know it’s a real job. Never underestimate the human communication element.
13. Review every document available to you: Do not skip reviewing every document available to you in Request For Proposal (RFP) packages. Documents have been made available to you for a reason. After reviewing all documents, it is then the time to make a distinction between documents in terms of importance to your tasks.
14. Always double check scales in drawings: Realizing you have been using the wrong scale when doing your takeoffs can be embarrassing. Always double check, especially before commencing.
15. Double check your work, and never stop double checking: It is easy to miss something or miscalculate. Use test functions in your spreadsheets wherever possible and keep double checking.
16. Let your work be double checked by someone knowledgeable: Even if you are experienced, let someone else provide you with feedback and a different perspective on the estimate.
17. Keep studying: Every project is different. Construction methods improve and change over time. Even if you are a seasoned construction professional you should never stop learning, and relearning. Visit actual construction sites as much as possible.
18. Always ask for cost breakouts: Asking and working out cost breakouts is tedious but very valuable information to compare incoming proposals better, track costs for certain items and more.
19. Keep good records: One should be amazed on the number of projects believed to be lost or dead suddenly reviving in a heartbeat, and then one wishing to have created good records and stored them properly.
20. There is value in your own takeoffs: We all get it! Proper takeoffs and measurements take time, and often we do not have it. But do think about this: It increases your detailed understanding of the project and allows you to better compare proposals for missing scope and to work out scalable unit costs based of cost breakouts (provided by your bidders).
21. “The devil is in the detail”: Estimating may seem simple, but in fact details are complex and require time to understand. Challenge yourself by developing a more detailed estimate (breaking the estimate up into more line items) rather than developing only high-level estimate ensuring you “thinking the project through” and providing a more comprehensive internal document to your team.
22. Delegate tasks when needed: This goes hand in hand with time management, teamwork and leadership. You cannot do it all; there is simply not enough time in the day. But if you have backup, then use your backup effectively.
23. Do not lose bid interested / momentum!: Bidders are only interested in the project for a very short amount of time. They assign a specific amount of time to the project and submit their proposal, and then jump onto the next best thing – that’s it for them! Getting them back to work on the same project / getting the momentum back is really hard – a real time-consuming grinding effort. Once the request to price the project has been send out it’s your task to keep them engaged as long as necessary for you to complete your tasks.
24. Utilize existing resources whenever needed: Construction is complex. No one knows it all! Therefore, utilize existing resources whenever required. Those can be company internal and external, in form of documents, tools or be human. In fact, your bidders are subject matter experts in their own field, and therefore – with an open mind – let them educate you. Use your own company expertise as well – preconstruction, project management, design, etc. – never stop asking questions!
25. Patience is a virtue: Your patience will be tested by bidders, the client, any 3rd parties, your own team and more – delayed and false information, pushed deadlines, slow answers, unreasonable requests, etc. The solution is to stay on it, to keep calm and cordial, to push softer and harder on a case basis, but to keep pushing. Focus on what you can do, rather than just “waiting for it” and you will notice time flies and you are more productive.
26. Learn to work with information gaps: There is not a single project that is not missing some kind of information at proposal submission day. Do not let missing information slow or stop you from developing costs. Use your resources, focus on what you can do and make assumptions or develop solutions, and stand by them.
27. Finding bidders is a methodical process, and not a skill: First you tap into your established bidder’s network, and then reach out to find more bidders through your selected methodology (project dependent). Requesting recommendations from architects, other bidders for different trades, the client; reaching out to vendors and suppliers, carpet bombing invitations to bid, etc.
28. Make sure your number is solid: Not that important for budgets, but very important for hard number proposals. Your number needs to be backed-up by the market, through – at best – a critical amount of collected hard cost proposals. The right number of collected proposals is case to case dependent, but never just “one”. Keep in mind, a bidder may decide at any given time to jump out of the project.
29. Beware of making numbers fit the budget: There is unconscious bias, external and internal influences such as client and/or company that may pressure, even force numbers on you. You must be the best judge of the numbers and justify those in front of others – this is part of the job description.
30. Ask for price cuts always at the end: The mistake is to ask for price cuts too early. Scope, schedule, and budget need to be defined before you can ask for a final best price. Otherwise, you are wasting negotiating leverage you have as a general contractor.
31. Do not ask for too many price updates from your bidders: Be mindful your bidders are evaluating, same as you, the profitability of the project at every step of the bidding process. If they get a feeling that they have to reprice the project “too” many times for “free”, their stance may become less cooperative – delayed submission, proposals more expensive, etc. Keep in mind, they have to make the money back they put into pricing the project.
32. “You are definitely getting the job”: is a phrase one hears too often, and one should never believe until actually seeing a signed contract. Take emotions out a bid and focus on the “mission” as a whole. Everyone is in it for the win: owners want to buy as much “free” work as they can get, while contractors want to make an excellent profit. We are all sales representatives at the end of the day.
33. Coping with a win: Rejoice but stay humble at all times. It’s a time marked with fear by the question – what did I miss!? You should have your subcontractor purchase strategy worked out by then. Make sure to provide a written and very detailed purchase strategy to whoever takes over the project (if not you), and at best spend good amount of time with the new leading manager working him through all details. Keep bidders informed, but make sure not to lose any negotiation leverage while doing so.
34. Coping with a loss: Losing a potential project having put real hours into its development is frustrating, but part of the job description. Many make the mistake of moving on too quickly to the next job (already waiting in the backlog). Do take a little bit of time to reflect (on you, the project, the process, etc.) and make some notes, so you can improve.
And final:
35. Know when NOT TO FOLLOW the estimating principles: A good estimator follows the estimating principles at all times, and an even better estimator knows when occasionally not follow and break them. It can make the difference.
Estimating-Mindset 