Design build entails three steps each with three levels of estimating: budgeting, conceptual estimating, and detailed takeoff estimating. All require different approaches and techniques as each has peculiarities and nuances of its own, and each one is instrumental to our success.
I'm assuming the reader of this article views his or her business as a profit-making organization, and consequently uses good judgement and common sense in the pursuit of success. To make money, the contractor must maintain a continuous flow of work at realistic prices. These projects must be well managed and coordinated so as to recover all direct costs and overhead, while making a reasonable profit.
Why Design Build is Advantageous
The design build cycle starts with marketing to procure either plan or spec projects to bid on, or preferably, projects to design build. The focus of this article is on the design build aspect of the business, which is more enjoyable and affords you the ability to sell value, not price. Design build is also advantageous because it allows you to forge solid alliances with owners, GCs, suppliers, and manufacturers, lending itself to repeat business.
This type of work requires expertise, sales, planning, and design skills, and the ability to provide timely and on-target budgets. Like anything else, practice makes perfect; therefore, you cannot expect to achieve phenomenal results your first time. Dedication and perseverance are necessary to become proficient.
Possible Methods
If you are to be afforded the opportunity to work with an owner towards a design build project, you must be able to budget with accuracy and expediency. Budgeting can be approached with various degrees of accuracy, the least of these being the global cost per square foot method, which is obtained from unreliable or dubious sources.
A more accurate method is the cost per square foot per system (derived from very similar buildings in type and size that we've estimated or completed). Also useful, is the labor hours per square foot per system, since labor hours are not subject to price escalation or inflation. A far better method, however, is the cost of materials per square foot system as we can then apply current labor rates and adjust the material prices based on budgets provided by manufacturers for quoted materials and estimated increases for general materials.
Accurate budgeting is accomplished by keeping track and accumulating cost and labor hours per square foot per system per type of building. Extracting these values from your estimated projects (or better, from your completed projects), is the best and most reliable data that you can use since it is based on your experience, geographical area, people, and expertise.
Once you extract this information and categorize it by specific project type (see table below), you can import it in an Excel spreadsheet and calculate averages.
Listed below are some examples for categorizing your projects:
Suggested Systems Categories |
Suggested Job Categories |
|
Interior Lighting |
Airport Terminal |
Police Stations |
Perimeter Lighting |
Airport Bridge Work |
Post Offices |
Parking Lot Lighting |
Airport Hangar |
Swimming Pools |
Power Devices |
Banks |
Fire Halls |
Fire Alarm Devices |
Churches |
Motels |
Feeders |
Elementary Schools |
Hotels |
Distribution |
Secondary School |
Hospitals |
Etc...
|
Colleges |
Nursing Homes |
Some of the above need to be broken down into more specific descriptions based on size, number of floors, type of construction, etc.
Benefits of the Costs Per Square Foot Method
Having the costs per square foot allows you to present the owners with a prompt and accurate response. Consequently, you can negotiate a contract based on real costs incurred on previous jobs and adjusted to suit the specific conditions of the current project. Once we get to the design of the project, we will base it on our budget. When the design is completed, we will do a detailed takeoff to verify our cost and to provide our field people with a plan of attack.
To successfully and profitably complete projects, you need to have the right material at the right time and place so your crews can attain the labor productivity estimated or possibly perform better. Failing to produce a detailed estimate forces your project managers to re-estimate in bits and pieces, detracting them from management and coordination tasks. This usually results in poor field performance or even worse, a chaotic environment or disastrous losses.
The job should be broken down by system, phase, and labor code (as a minimum) to facilitate purchasing and material coordination, scheduling, and labor tracking.
Presentation
Once a realistic budget with a detailed scope letter is prepared, you need to work on the presentation to the owners. In many cases, this important step is ignored and the package is merely sent by courier. This is a mistake. A properly executed sale requires a professional presentation, possibly with slides, pictures of completed projects, key field people and project managers, and of course, testimonial letters.
A preliminary schedule highlighting the major milestones and completion dates would reinforce your expertise, credibility, and ability to perform. Investing time and effort in the presentation will escalate your chances to land the job. In a design build project, the lowest price is not the deciding factor—reliability, delivery, timing, credibility, professionalism, expertise, and value are the conclusive factors. Good performance in one project most likely results in repeat business.
The Design Initiation
Now that the job is yours, you need to initiate the actual design with all the details and specifications. Calling your chosen suppliers and manufacturers to the table to assist is imperative. Getting input from your field people and involving the fabrication shop manager can also be very beneficial. Investing plenty of time in the beginning stage of the design, paying strict attention to detail, and working with the other trades in a true partnership environment (taking care of interference and scheduling conflicts), is invaluable.
Conceptual Estimate
From the budget derived from a company’s historical data (cost per square foot per system), you may have to produce a concept estimate based on quantities and relate the information in a scope letter quantifying the main components.
Conclusion
Analyze every step to produce good results and make a profit. You can poorly plan and fail or carefully pre-plan and succeed.
Giovanni Marcelli is founder and president of Accubid Systems, the leading supplier of estimating, project management, and billing software for electrical contractors. You can reach Giovanni at gmarcelli@accubid.com and visit Accubid’s website at www.accubid.com.
