Conest Add To Your Bottom Line With Accurate Estimates

Add To Your Bottom Line With Accurate Estimates
PLAN YOUR ESTIMATE! Estimators who start an estimate without a procedure find themselves confused and frustrated. That's when shortcuts begin. The end results are an estimate lacking substance, and most likely a loss in profits. We cannot emphasize enough that before starting an estimate, you must have a procedure.

You can develop a procedure that can be used for new buildings, while other projects may require additional time for study in order to begin. Always be aware that not all drawings are complete enough for accurate and speedy estimating. In the absence of complete drawings it becomes necessary to prepare the drawings by showing all equipment and wiring. These need not be a finished product. As you work through the following procedures, be creative with cost saving ideas. Apply local codes as they relate to the estimate and remember, no drawing is free from error. Your competitive edge as an estimator is your ability to find a more cost-effective installation and identify design flaws.

Following is our recommended schedule for the preparation of an estimate:

1.    Read specifications
2.    Study drawings
3.    Establish the phases of the project and record Job information and take notes
4.    Prepare drawings
5.    Take-off: Count systems that require vendor quotes...branch circuit wiring
       and fit-up...service entrance...feeders...special power systems...low
       Tension systems...Alternates
6.    Summary
7.    Bid re-cap
8.    Analyze bid

The factors determining the order of phase take-off warrant some discussion. There are reasons for this order. By first counting systems that require quotations such as fixtures, switchgear, fire alarms, etc., the estimator now has time to become acquainted with the more complicated phases. Secondly, this information needs to be priced by suppliers. Next, the branch circuit wiring and fit-up is taken off. As with counting systems, this is a simple part of the process; however, no other installation so completely covers the whole building. As the estimator takes-off lighting and device outlets and measures conduit and wire runs, he or she can check the drawing notes, become familiar with the building layout and construction, and note the locations of feeders and panels. These steps provide a thorough picture of the job.

Most estimators take-off from one drawing sheet at a time. Subdividing the phases of an estimate depends on how costs are tracked within your company and how the project milestones are managed. If more divisions are required, the estimator can create additional phases of take-off. Remember, after the contract has been awarded someone must manage this project. Take-off accounting should be broken down into as many phases as required, not only for the ease and benefit of the estimator, but also for project management.

There are two separate and distinct operations occurring during the bidding process. The first is the estimate and the second is bidding. Estimating develops costs and creates project budgets for material and labor while bidding determines the selling price. There are a pair of benefits resulting from this estimating process, including

1. Material requirements by phase
2. Labor requirements by phase

When materials and quantities are accurately listed, the material procurement is easier and deliveries are timelier. Remember, “the right material in the right quantities at the right time” equals increased productivity. When labor requirements are known, resource scheduling can produce a more efficient installation.

ESTIMATING AND PROJECT MANAGEMENT

Estimating software is a tool just like any other tool you purchase for your business. The right program will save time, and we all know how much time is worth!

Time Equals Dollars $$$$$$ Dollars Equal Profits

So often we hear, "...I can't justify the cost of an estimating program. I can unit price a job just as fast as a computer..." Unlike the Unit Price Method of estimating, a detailed computerized estimate calculates the exact labor hours to complete the project. Successful project management begins with a plan for utilizing labor resources to their optimum potential. By first knowing the true labor requirements for a job, you have the information to set a plan into place. Estimators that unit price typically only respond to crisis management by throwing bodies at a project just because it feels right, or by playing catch-up on a job that's not meeting the deadline.

Here's an example of the importance of properly managing labor resources. If you were asked how many electricians would be needed for a job estimated at 200 hours with a five day completion, your answer would obviously be five. Not knowing the exact labor hour requirements for a job, however, can result in under or over staffing a project. Over staffing a job results in lower productivity and costly additional labor hours. For example, if we start this 200 hour project on Monday with five electricians, completion is assured by Friday. However, if we start this project on Monday overstaffed with six electricians, completion will still be Friday, but now the end result will be a cost over-run of 40 hours! Likewise understaffing has the same effect of lower productivity leading to cost-over-runs.

With this 'man short' method of project managing, you set milestones using your estimate by intentionally understaffing a job at the inception of the project. We then strategically increase the staff if the project is not meeting the schedule. Our theory is, productivity is something less than one hundred percent. By understaffing but using goals that are attainable we can increase productivity by 5% or even 10%. Even the lowest producer will respond to this challenge. Using the above project as our example, we start four electricians on Monday. If by Wednesday the project is falling behind, we increase the total number of electricians to six for Thursday and Friday. Now the total number of hours to complete the project is 192 instead of the estimated 200, a savings of 8 man-hours!

Each company should select a database of labor units as their standard, whether published or company-created. I recommend the NECA labor units, as they are the benchmark of the electrical construction industry and are periodically updated. Most published labor unit databases available today are directly affected by NECA.

Labor units are established for certain construction periods and conditions, usually the most favorable. Unusual weather conditions can have direct affect on productivity. Higher temperatures affect the performance of workers who are accustomed to colder climates, while workers from warmer climates are affected by colder weather. This factor cannot be analyzed from tables of labor units and are best appraised based on training and experience.

Here are some examples of factors that increase or decrease the difficulty of an installation which directly affect the labor unit:

Mounting Elevations take into consideration such things as ceiling heights and the floors of a building. All of the factors increase the labor unit. The standard labor unit is increased 5% for installations over 10 feet and 10% for installations of 16 to 20 feet.

Weight is always an important factor in labor units. Estimators should obtain weight data on special equipment. Time studies for installations on hours per pound are not consistent. The estimator should develop criteria using job experience data for specific equipment. Equipment manufacturers are a good source for labor requirements on special equipment.

An Occupancy adjustment factor should be considered to compensate for the excess labor required when working in occupied areas. The standard labor units for occupied areas should be increased 50 to 100 percent.

Duplication occurs when multiple installations of like products results in saving installation time. Fixtures in the same concentrated area, parallel conduit runs and multiple conductors in a raceway are examples of possible deductions for duplication.

Your estimating program should provide several columns for different labor units and the flexibility during take-off to adjust those units when encountering different factors. An estimating program that provides your estimator with this advanced technology will enhance the accuracy of your estimates and increase the profit margin for each of your jobs.

Electrical estimating software systems are evolving into smarter and faster tools that help the estimator make decisions such as automatically adjusting labor units by calculating the installation difficulty for each item, rather than using one factor for an entire installation. They have lessened the estimator’s workload and liability while increasing accuracy and profitability and have cut overhead by up to 75% while freeing employees to concentrate on revenue-generating activities.

In summary, successful project management is only possible with labor hours that have been estimated accurately. Once the bid is successfully won, all detailed estimate and bid data must seamlessly transfer into the Job Tracking application to provide maximum flexibility, optimal scheduling and the most efficient resource allocation. Your estimating application will need to provide accurate task budgets that equal your bottom line bid.