Evolving Estimating Challenges in the Post-Pandemic Era
Daniel G. Frondorf, CPE, CDT
Posted: March 3, 2023 | Estimating
By Daniel G. Frondorf, CPE, CDT
In early 2020, as the COVID 19 pandemic erased any concept of normalcy on every continent, in every country, and in every kind of business and profession, the world wondered what normalcy would look like on the other side of the pandemic. This was certainly true in the design and construction industries, as architects, engineers, contractors, planners, estimators, and construction managers were left to wonder. Projects were halted, workforces diminished, and supply chains were interrupted — if not broken completely. Those of us in these fields watched with uncertainty where things would land one day when mankind had the upper hand on the dreaded Coronavirus.
Fast forward to winter 2023, and many of those questions are beginning to be answered. Construction cost estimators (like me) have a new set of old challenges with which to deal, and maybe the only thing good about them is their familiarity. Let’s examine a few of them.
Staying on Top of Material Pricing
Estimators have always had the responsibility of keeping our fingers on the pulse of construction material costs and trends. We still have that chore, but the volatility of pricing and supply chain interruptions have led to a greater necessity to pay close attention to what materials cost, in dollars and in time. Some of this uncertainty can only be indirectly linked to the pandemic — but relying on data that is even six months old can be risky. Calling vendors for updated pricing now eats up a lot more of our time, but is a necessary expenditure if we are going to provide accurate costs to our clients and employers.
Producing Production Rates
Long considered to be on the “art” side of the construction estimating profession — the quantity takeoff being on the “science” side — making a well-informed guess at how fast any particular task can be performed, and the crew and equipment resources to achieve it safely and profitably, has often been the difference between a well-funded project and a blown budget, between a low bid and a profitable job, between a hassle-free project and a cringe-worthy one.
Three things are different these days:
1. A smaller (and sometimes less experienced and less competent) craft labor pool from which contractors can staff a project;
2. A lesser availability of raw materials and finished products;
3. Longer lead times for certain installed items.
Factors such as these can impact what once were reliable production rates that estimators could depend on when preparing a bid or a budget. The good thing about pre-pandemic production rates was that they were time tested and field proven, making the use of historical cost data a reasonable predictor of future cost. Estimators now often have to re-think means and methods that are practical in the postpandemic world that have been affected by all these changes, but so far not enough time has passed to see how these new methods and production rates bear out over the long haul. Sadly, the long haul is just getting started, so even though keeping track of costs, a fundamental practice of estimators, is still something we all must do, arriving at the point of reliability is still in our future.
Where Did all this Work Come From?
To me, this is the most significant challenge: the sheer volume of work out there for estimators to handle. During the last substantial economic downturn for the construction industry, the mortgage crisis of 2008-2009, the volume of new construction work significantly dwindled. Layoffs, fewer jobs on which to bid, and increased competition from the smaller project pool led many contractors to learn how to do more with less, mostly from a human resource point of view. Survival demanded a change in course as contractors tried to stay afloat.
Without any hard evidence on which to base my theory, I believe this kind of thinking is what helped many contractors survive the pandemic period of 2020-2022 — well, that and a huge shot in the arm for many businesses in the form of PPP loans and similar programs — but coming out of the pandemic in the past 6-12 months has shown that many contractors did in fact survive.
It also seems that many businesses serving the public had to either decrease their activities or shut down altogether, meaning that many of them weren’t spending on new facilities, upgrades, and even regular maintenance. Accordingly, once the pandemic showed real signs of substantial decline, many businesses roared back in a big way: now in a better cash position to make those improvements they had put off, hiring new workers (if they could find them), and even expanding.
Travel came back to life, and airlines and hotels followed. Low unemployment pushed wages up, driving demand for consumer goods and leading to increased manufacturing. New restaurants and retail developments have come back as well, and despite high fuel and food prices, the economy seems to be coming around.
Federal infrastructure and tech sector mega projects (data centers, chip manufacturing plants, and all the things that go with them) are making huge demands on the already smaller craft labor pool. Some construction economists have suggested that the large volume of project starts in the pre-pandemic era — as well as the post-pandemic time frame so far — will help the construction economy to better weather any potential general recession the overall economy may face in 2023. Basically, this means there is enough water in the pipeline to keep us hydrated in any dry spell that may show itself this year. It doesn’t seem like the supply of new projects will abate any time soon, and I hope there is a basis for this theory.
What does all this mean for construction estimators? It means work, it means being busy, and it means constantly evaluating new projects for bid suitability — plus working up the ones the bosses decide to chase. In Ohio, where I’m based, it seems new fast food joints, oil change shops, car washes, and multi-family residential projects abound, and we have our fair share of the mega projects too. I’ve seen a number of industrial projects re-emerge as well in the past few months.
Smaller contractors are testing the waters of bigger projects, because general contractors are finding it tougher to secure subcontractors for every trade on every project. Owners have money, and want to spend it, and that means more work for (and demands on) estimators. The new unreliability of past historical cost data and production rates has caused owners to look to their design consultants to provide not only design work but also cost estimating and scheduling as ancillary services. For independent cost estimators like me and others who belong to trade associations like CERT and ASPE, proposal writing has become a significant task in our workdays, and working for owners, architects, and engineers has become a greater part of our workloads.
The clientele in my practice is pretty diverse — we work for small subcontractors, large CM firms, design firms, owners, and developers — so I think we see what is emerging in the post-pandemic world better than most. My career was never busier than it was in 2022, and I’m not sure I can pull it off again in 2023. If I look at one more Chipotle bid, I may turn into a burrito myself! The longtime challenge of work-life balance for estimators is still there post-pandemic, but it has gotten tougher to maintain.
These challenges are familiar … but different. Evolution is the kind of thing that is thrust upon a person or a business or even a whole economy. For estimators, not evolving is a quick way to be left behind. Happy estimating, all!
About Daniel Frondorf: Daniel Frondorf, CPE, CDT, is a Cincinnati-based civil construction cost estimator. He operates DG Frondorf and Associates, a civil cost estimating consulting firm, and is a member of ASPE, CERT, CSI, and AACE. For more information, visit www.dgfrondorf.com.