Estimating – An Important Tool

Estimator Tools 660x581The estimating phase of construction is the solid foundation a successful project is built on.

As the programming and design phase of a project progresses, it is important for a cost estimator to be involved. Forecasting the overall cost of a project is vital information that owners and architects need to determine project scope and feasibility of all options being explored. Knowledge of recent building trends, alternative construction methods, the subcontractor market, and associated cost implications help guide the programming phase of design.

Once the design and programming phase of the project is completed, the estimator is tasked with establishing project costs for the owner before beginning construction. The goal of an estimator is to establish costs that reflect the actual costs of the project upon completion. Being able to accurately project these costs will provide the owner with the confidence they need to proceed with their project.

Determining the feasibility of a project from a financial perspective will help provide an owner with a plan to finance the project appropriately to guarantee successful completion of a project. This provides a solid foundation to build a project on.

Brandon Kohls has over ten years estimating experience in a wide variety of construction projects. 

 

 

 

What’s the Difference between a Budget, an Estimate, and the Price?

The first thing almost every owner asks is “How Much?” It doesn’t matter if you have a fully designed set of construction documents, or an idea that was sketched on a napkin. The “How Much” question invariably falls to an estimator. By working with an estimator you trust you can begin to move your design forward.

Start with the end in mind. Make sure you try to think of the full program of cost while constructing a budget. An owner should go over the information provided to make sure the budget includes everything for the project.

Manage expectations. Owners need to understand the difference between a Budget, Estimate, and a Guaranteed Maximum Price (GMP). A budget is a preliminary look at the project based on information available, which is often incomplete or not fully known. An estimate is formulated once the plans and specifications are further along. Building type, location, scope of mechanical, electric, plumbing, and fire protection systems, site challenges may all be more in focus when an estimate is created. Once the plans are fully formed, issued, reviewed, and bids for the different areas of work are submitted a GMP is formulated. This is what the project will cost if there are no changes to the scope of the work.

The devil is in the details. When putting together a budget or an estimate, the estimator can only provide information based on the information provided. If there are any gaps or vagueness in the information an owner needs to be ready to discuss details of what they see for their facility.

Have honest discussions. Think of the overall project cost, not just what the construction manager/general contractor will handle. Budget pitfalls often include items that an owner might have thought were included. Examples include furniture purchasing, real estate costs, legal, and potentially storage facilities if the project involves remodeling. It may not be necessary to include this in the construction costs, but make sure to have an open discussion with your contractor to ensure that these costs are being covered somewhere.

Ellis’ estimators have years of experience and hundreds of subcontractors and suppliers to call on for a project. This network of subcontractors and suppliers provides the owner the best pricing and the latest techniques for the work. Our experience means a more accurate estimate and budget so there are no surprises.

Erik Carlson, Executive Vice President, has experience in all aspects of construction – from working in the field “swinging a hammer” to estimating and project management. 

 

 

Estimating Key Points

IMG_0854 - 400x300There are several different approaches to the estimating process. The five key points below are the most critical.

  1. Review. When an estimator receives a project, the first task is to study thoroughly the plans and specifications book. The estimator achieves two things:
  • Identifies which subcontractors and suppliers need to have access to the plans and specifications so they can get you a quote;
  • Identifies any discrepancies in the plans and specifications and get questions submitted to the architect for clarification.
  1. Invitations. After the review of the plans and specifications, the second task is to send out bid invitations to subcontractors/suppliers and to do a quantity survey. A quantity survey is a count of various items such as light fixtures or doors, to assign material and labor costs associated with self-perform work. The quantity survey is important to assign accurate costs for material and labor in all different trades and to determine work that could be self-performed. The estimator will then send out the invitations early enough to provide time for the subcontractors/suppliers to review the bid documents and get answers to any questions they might have.
  2. Preparation. Once the bid invitations are sent out, and the quantity survey is started, estimators turn their attention to ensuring receiving multiple bids in each category of work. The estimator must follow-up with subcontractors/suppliers using reminder emails or telephone calls to see who is planning on bidding to get a feel for what type of bid coverage the work will get. Receiving multiple bids aids the estimator in validating the lowest bid and confirming everything is included for the project.
  3. Bid Day. Once the quantity survey is completed, and follow-up emails/phone calls have been made, the estimator is ready for bid day. The day is usually very busy because this is the time when the estimator receives all of the subcontractor/supplier bids. The estimator will evaluate the bids, using the best bids when putting together the project estimate. If there isn’t a bid for an area of work the estimator must use their best judgment and experience to determine an estimate for the work. Most of the times a bidding gap is avoided by the estimator being in touch with potential subcontractors/suppliers before the bids are due. The deadline for subcontractor/supplier bids is about an hour before the general contractor bid is due. During this hour, the estimator assesses the received bids and assembles the best possible combination of subcontractor/supplier bids and self-perform work. This assessment includes making sure there are no overlaps or gaps between the bids and self-perform work.
  4. Bid Submitted. Once these tasks are completed, the bid is submitted, and then it’s up to the owner to select the best bid for the project. The estimator’s goal is to account for everything and at the same time put together the lowest number possible to get the job.

Following the steps above provides the owner with the information about the cost and work necessary to complete the project, as they make the selection of a Construction Manager or General Contractor.

Jason Wilatoski comes from a construction background and brings real-world experience to the estimating process.