Although no money is made while performing a takeoff, the information gathered will influence the estimate and the bid, which, if it becomes the winning bid, will determine how much money your company will make.
“You need to be as precise as possible,” says Jenny Williams, owner, Williams Dirt Service, LLC. “Unknowns in your estimate can haunt you and hurt your bottom line.”
Williams Dirt Service has been in business for 15 years providing earthmoving and then drone services. “At first, we either did measurements by hand or paid a third party to perform our takeoffs for us, which was getting expensive,” says Williams. “At the time, we were typically bidding on two to three projects per month. Then, we invested in InSite Software for takeoff and estimation and we now routinely bid on more than 10 projects per month at less cost than paying an estimator.”
Here are seven tips for making your bids more accurate:
1. CHOOSE YOUR ESTIMATION PROCESSES
Prior to creating individual estimates, you need to formalize a process for creating estimates. Each process brings different benefits to creating more accurate estimates.
- Analogous estimating: Use historical data, such as estimates from previous, similar projects, for time, labor, and resource needs.
- Parametric estimating: Also known as statistical modeling, uses historical data of key cost drivers to calculate costs under different conditions.
- Bottom-up estimating: The people who perform the work come up with estimates for their portion of the project and the estimator compiles all estimates.
- Three-point estimating: Create three estimates based on three scenarios: optimistic, pessimistic, and realistic.
2. CHOOSE THE RIGHT PROJECTS
Companies usually create fairly accurate estimates for projects that are similar to projects they have completed in the past. When companies bid on projects that include a lot of tasks they don’t normally perform, estimates tend to be less accurate.
Choosing projects that are right for your company is one of the biggest obstacles to creating accurate bids. Using a digital earthwork takeoff solution, such as InSite, can help contractors bid on the right projects by improving accuracy and verifying earthwork quantities with shareable graphics and reports.
Digital takeoff solutions also decrease the amount of time it takes to create a great bid and helps boost contractor confidence in their bids; lack of time and lack of confidence are two more of the top obstacles to creating accurate bids.
3. BREAK DOWN BIG TASKS
Once you’ve chosen a project at which your company can construct, you need to define the work breakdown structure (WBS) to make the project more manageable. Break down tasks into smaller tasks that are easier to assign time, material, and labor elements. If tasks are too large, you are more likely to miss something. Each task should be granular enough to be comprehensible, manageable, and assignable.
Also, spend extra time on the portions of the estimate that are associated with the largest costs. If, for example, the project calls for a lot of concrete, make sure you have the price of concrete accurate.
4. FILL IN ALL THE BLANKS
Unknown factors can decimate an otherwise fair estimate and accuracy is achieved by eliminating unknowns.
“We use InSite’s training videos and 24/7 support to help us quantify our unknowns and increase accuracy. When we have a question, help is a quick phone call with a knowledgeable staff member,” says Williams.
5. USE THE BEST CALCULATION TOOLS
Manual tallies and calculations performed on paper contribute to human error and less precise calculations. Digital models populate more accurate quantities, which will lead to more accurate calculations. “InSite makes verification easy with tools such as Scale Check, which ensures the scale is proportioned correctly, and 3D Live, which ensures the elevations have no typos,” says Williams. “InSite’s precise user tools allows for accurate digitization of the contours; the Snap feature and the Offset tool help keep quantities tight and as competitive as possible.”
6. PAY ATTENTION TO MATERIAL PRICES AND DELIVERY COSTS
Commodity prices aren’t a constant; their price at the time the estimate is made won’t necessarily be the same price after you’ve won the bid and you need to purchase the material.
If you use current prices, and prices increase significantly, project costs will increase, and this will negatively impact revenue. If you use current prices and prices decrease significantly, your project costs will be under estimate, but you could lose out on winning the project to someone with a lower bid.
Consider any factors that could negatively impact material delivery. Contact suppliers of specialty products to ensure they can deliver the products in the desired timeframe.
7. REVISE YOUR ESTIMATES
Estimates don’t go away once you’ve won the bid; they are used as a baseline during construction for determining whether the project is being completed on time and on budget. As work is completed, substitute estimated values with actual values or even with more accurate estimated values.
CLOSING THOUGHT
“We increased accuracy while decreasing the time and cost necessary to perform quality estimates by revising our estimation process when we adopted InSite. And, the consistent creation of more accurate estimates has translated into more bids won and more revenue per project.”
For More Information
Jenny Williams and Matt Williams are co-owners of Williams Dirt Service, LLC.
InSite Software, based out of Rochester, New York, is the industry leader in earthwork takeoff and GPS modeling tools, giving estimators the tools required to be competitive, accurate, and profitable. InSite Software is recognized for its software innovations and continues to expand its product offerings to meet the growing productivity needs of customers. For more, visit www.insitesoftware.com.
Modern Contractor Solutions, May 2021
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