The Up Side of A Slow Economy & How It Can Improve Your Estimating Department
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By Ed Walsh
with the permission of the American Society of Professional Estimators
First question most of you will likely ask is “what upside is there to a slow
economy”? I’ll admit there can be a challenge to finding it. The truth is most
construction companies have been running so flat out for the last four to five
years they have not had time for much housekeeping, and often lack of good
housekeeping can cause long term problems.
When we talk about housekeeping we aren’t referring to cleaning windows
obviously, we’re talking about training staff, hiring better qualified personnel
and upgrading technology to get work done better and faster.
If a piece of equipment on a job site gets broken, chances are its fixed
immediately or replaced because it causes too much down time and inefficient use
of field labor. On the other hand when a company runs flat out they may limp
along with lower skilled workers in middle management, less skilled estimators
and estimating software that has limited capacity. I’ve heard from many
employers who echo that scenario.
I have talked with human resource directors and often software vendors who relay
what they observe and in many cases, what they see is what I just mentioned
above. I had a company president tell me he had no issues with the cost of a new
software program, his issue was not having staff he felt comfortable with using
it. In another situation I heard from a chief estimator who commented that they
needed to upgrade their estimating capacity but didn’t know when the best time
to stop doing things “the old way” and move on to a new system.
In my opinion a slow time in the economy is the perfect time to upgrade
software, hire better staff, train that staff and get ready for the next busy
cycle things don’t stay locked down for very long in the construction industry,
a busy cycle is just around the corner.
Keith Jones, President of E-bid Systems- Seattle commented-
“While I won't profess to be an expert in how to run a construction company, I
think there are some universal truths to any company that is operating in
environment of softening demand for its services. I am first reminded about the
seventh habit from Stephen Covey's The Seven Habits of Highly Effective
People; Sharpening the Saw.
It goes like this: Suppose you come upon someone in the woods working feverishly
to saw down a tree. You can see that he is exhausted and that the blade is
smoking so you ask him whether he might consider taking a break and spending a
few minutes to sharpen the saw, explaining that this would make the job go
faster. He replies that he doesn't have time to sharpen the saw because he is
too busy sawing. So it has been in the construction industry, no time to sharpen
the saw, but now there is an opportunity to take a critical look at people and
processes to come up with ways to make each more efficient.”
“The other thing the estimators understand more than anybody in their business
is win-loss ratios and their importance to business survival. In an environment
with fewer opportunities, there are only two ways to keep pace; either increase
the win ratio or bid more jobs. Increasing the win ratio is particularly
difficult in the face of even greater competition for each project. Bidding more
jobs may be the more achievable option but it requires that each estimator be
able to handle a greater volume of work. This is where "sharpening the saw"
applies. By providing training, new software tools, and incentives for winning
more work, companies can better leverage their estimating resources.” said
Jones. “As a construction software vendor, we have heard from a number of
construction companies over the last few months that are consciously using both
the seasonal slowdown and general market downturn to look at software tools for
making their estimating processes more efficient. We have also heard from
companies that are internally conflicted about making change, with some
employees embracing it as a personal challenge that can also help their company
as a whole and others who are fighting for the old ways. Some of those who are
fighting change we are told do
so because they fear that being more efficient potentially jeopardizes their job
security. However, we only need to look at the US automakers for a lesson as to
what can happen without embracing the need to change.”
Camille Filling, Internal Search Consultant, Tetra Tech EC, Inc. in Northern
Virginia adds these comments;
So, we are in an economic downturn – old news. Many organizations are downsizing
via layoffs, early retirements, talent consolidation – and the list goes on. The
question is: What ARE YOU doing, and what CAN YOU do for your
organization during this uncertain crisis in our economy? You can either look
ahead, or at your feet.
Typically during such a crisis, estimators are asked to either bid everything
that becomes available, working and reworking their numbers, playing the odds
game that if you bid enough, you eventually have to win something or working and
massaging the relationship with the client who has money in his pocket. “Sure we
can do that, no problem; we can work that in the design.”
Other organizations are taking a hard look at their portfolio and the future of
their organization. How diversified is the portfolio? If you only base build
hotels and restaurants, then you might need to take a look at renovations or
another market that can stay above water during these tough times. However, you
are now competing with organizations who have done nothing but – hotel and/or
restaurant renovations, and you are competing with a known entity who has built
solid relationships for years in that market. Lesson learned? This is also the
time to take a good look inside the Estimating Team/Division. “How can our
Estimating Division/Team take advantage of this slowdown?” Here are some
1. Review your process. How can you become more efficient?
List step by step what your organization does from BD/Marketing to Final Bid.
Get a consensus from the Estimating Group, or if you are not a standalone
department, involve your Project Managers, as to where the snags are when you
are in full swing. Is it getting subs to adhere to your deadline? Is it vendors
dragging their feet? Is it incomplete scopes? From bid to bid, what are the most
frequently asked questions? What will motivate subs to get their numbers in on
time so you are not crunching at the 11th hour? Once vendor and or sub numbers
come in the door, are they reviewed immediately or put off till all submissions
are in? Are these submissions actively monitored with a time-sensitive approach?
Can templates be made to save time with repetitive functions? When was the last
time someone updated or checked the Excel Sheet formulas? How effective is the
Change Order Process? Do
we have a need for a dedicated Change Order Estimator, or can we consolidate
that with another function within our division? Do we have Checks and Balances?
2. Are we using the right tools? Are we technologically savvy?
Can our current staff manipulate the Excel Sheets accurately that were initiated
by Mr. X 15 years ago? Is there more room for error than efficiency? (I’m not
down playing Excel, because many organizations use
Excel quite effectively; however, staff does change, and we often do not have a
match of capabilities.) Are there more productive solutions that will save us
time and money in the long run that is easy to learn that our team can embrace?
This is not to suggest throwing away what has been useful; however, it is a good
time to take a look as to what else is out there when you have the time to
thoroughly engage with potential
software applications as well as to HONE YOUR SKILLS WITH THE SOFTWARE YOU
ARE CURRENTLY USING! Is the latest version installed? How about setting
aside some training time so the estimating staff can become savvy enough to
effectively use the new modules? Just because Ernie the Estimator has the
longest tenure, it does not mean he is best to tutor the software. How about
asking someone who has the genuine ability to impart their knowledge? How about
the vendor? Is it part of the agreement? Don’t know? Check it out!
3. Have an “If only I could” discussion with each team member.
Perhaps there are people within the team that would like to learn more about the
MEP divisions. Maybe the Division 2 Estimator would like to branch out. A
well-rounded team has long-term benefits.
4. Succession Planning. It is a cold-hearted fact that no one is
irreplaceable. We all like to think that we have talents crucial to the overall
success of an organization; however, team members do become
ill, team members resign and move on, and often the organization suffers due to
lack of succession planning. Ensure you have identified someone who can pick up
and take over for key positions and areas. Write it down and put a
training/mentoring plan into effect to make it happen. Have a consensus of who
will do what – involve the team. When team members genuinely feel they are part
of solutions, solutions happen.
5. Training/Mentoring. Discuss before assigning. A key failure of
mentoring programs is that the “chosen” mentor does not want to mentor nor does
he have the personality or capability to do so. Discuss with qualified team
members if they feel they would like to undertake this responsibility. Be
prepared for perks or incentives for a job well done.
6. Do we have the right players performing key functions?
Is our most experienced estimator with nose to the grindstone the one who is
asked to meet and greet potential clients because “He is the one who habitually
burns the midnight oil?” Remember that we have what most people call, “Front
Room” and “Back Room” Estimators. Front Room are those who like to pump hands,
smile, help bring in the business and talk conceptual numbers. Back Room are
those who often just want the plans passed under the closed door with a huge
table and plenty of light and left alone to do their job. These professionals
often hone the winning numbers; seeing the project through the blueprint. They
are not big on talk, but are big on talent and are just as necessary as the
hand-pumper. But – do you have the right player in the right position? Time for
a reality check. Better yet, an informal talk with key players – are they happy
with their role – how do they envision improvement?
7. Do we have all areas adequately covered, or are we lop-sided?
Ask team/division members to write down their daily, weekly and monthly tasks.
Compare with job descriptions. Is there a large gap? Have the responsibilities
changed so drastically that the job description needs to be changed, or has the
individual assumed responsibilities that he is comfortable with rather than what
he is responsible for, and has passed those responsibilities on to others within
the division? May be a time to perform Efficiency Engineering.
8. Physical layout. Is the current position of offices, desks, etc., and
overall space planning the most effective for efficiency and productivity? Do
you have to walk a football field to get to the plan room to talk with subs? Is
the noisy kitchen or water cooler adjacent to the office of the “Back Room”
Estimator? Are the Estimators constantly having to pick up their division phone
causing constant recalculations?
9. Manuals. Do you find that every four months someone is retraining on
estimating protocol for the organization? How about documenting those
procedures? Have an Admin become part of those discussions to document, or have
someone who was recently trained write up their understanding of the procedures
for peer review and go from there.
10. Getting to Work. The best seller for an organization is their talent.
Time to brand and/or re-brand to sell your organization not only to potential
clients, but to potential employees. There are a lot of individuals who have
open ears right now. They are unsure of their future; they are holding on and
nervous. They want a back-up plan. Regardless if someone is ready to make a move
or not, they will remember you by their first impression of you and your
organization. Clients are trying to hold hands with their financial backers;
they have more time on their hands because projects are on hold. They have more
time for networking and finding new sources of projects, and those that can
build and/or develop them. Some key points:
• Don’t slander the competition; state and consistently reiterate what you
do best/differently/efficiently. Clients listen to positive and productive
• Let your talent, sell your culture/company (The right people in the right
• Make the most of your company website and personal internet space. Take a
look at your competition’s website. Are you aware of all available
professional networking tools beside Linked-In?
• Embrace Technology and all networking media. Master technological
innovation and you drive impressive results. Creating company profiles,
professional associations, or network groups using some of the latest
communication tools are just some of the most cost efficient ways to a)
establish your brand, b) generate press and c) establish a base for
recruiting future employees to your firm. Technology drives communication.
Social networking builds a reliable base to communicate and assists in
ensuring the clients/future employees you are looking for, can also look for
The adage of turning negatives into positives has been around forever; now is
the time to put it into action, and be productive in economic downturn.