Saturday, March 3, 2012

Measure Twice, Cut Once - Maintain Quality in the Estimating Process

Work is hard to come by these days, with all the bidders on jobs and razor thin margins, building quality backlog is not an easy task.  In talking with contractors, I've heard that it requires increased bid activity/volume in this competitive environment to win the work needed to keep the business moving forward.  On the face of it there doesn't seem much to take issue with regarding that statement.  I'm generally in agreement with it as long as the quality and integrity of the estimating process is maintained.

If it takes 100 hours to properly estimate a certain job in the "normal" times, it should take 100 hours to estimate that same job in these more challenging times.  What I've heard from some contractors in recent months is that because they are increasing bid activity with the same or even fewer estimators, the per job bid time is sometimes significantly less.  Some bids that should have taken, say, the 100 hours referenced above are getting bid in as little as 30 or 40 hours.  In order to get the quantity of bids higher, the amount of time per bid has dropped decreasing attention to detailed specifications being called for.  Mistakes are being made.  Whether it is a full line item/trade missed, or parts of the scope of a trade, missing scope of work in your bid will certainly unintentionally improve your chances of winning the job.  The obvious problem becomes how to figure your way out of the hole and mitigate your losses or hopefully make nominal profit.

It is far more important, as with most things in life and business, to maintain quality over quantity.  There's an old saying in the construction business that every contractor is one or two bad jobs away from going out of business.  This is especially true when balance sheets/capital structures have been weakened these past few years by losses.  Be sure to maintain quality in your business processes to ensure mistakes you can ill afford to make are avoided...Measure Twice, Cut Once.

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