PRODUCT SPOTLIGHT:
Is ‘software assisted’ estimating in your future?
When is the right time for a low voltage cabling contractor to switch to formal, software-based estimating system?
If speed, accuracy, consistency and professionalism are important to you, maybe 
now is the right time to switch to a formal, software-based estimating system. Whether you’re just starting out, or if you are an established company looking for growth, all of the above factors play into your overall effectiveness and profitability. Before you invest thousands of hours and dollars developing a customized spreadsheet (or even if you already have) you might want to consider the following:
Once a project is awarded, construction scheduling or phasing is established. Profits are linked directly to the successful management of labor, materials, subcontractors and equipment based on the construction flow of each project.. Producing an estimate that includes these details will provide project management with the ability to ‘hit the ground running’ on every project, saving a considerable amount of time. Being proactive rather than reactive is the best strategy in reducing errors that can plague the process of tracking your estimate against construction delays and change requests from the client. If organized and presented in a professional format, the client can easily review, approve, and budget these costs into the project when presented with a detailed, computer-generated estimate of the job. A formal software-based system will bring the following efficiencies to the table: Speed The foremost benefit to using computerized estimating is speed. No other software product in your business will save as much time and money as your estimating system. Specialized Tools A formal estimating system will have:
- A database of industry-specific materials and labor from which to draw for each and every estimate. Flexibility in modifying your materials database will allow your company to fine-tune the products and associated labor to develop a company standard from which all users can benefit.
- The ability to update material pricing directly from local suppliers over the Internet, allowing the power of technology to work for you.
- Prebuilt items grouped together into commonly installed ‘assemblies’ or ‘kits’. These save a considerable amount of time when compiling an estimate. In addition, you will have access to a database of assemblies to which you can add, modify and develop custom assemblies to reflect products that your company uses.
- Bid closing sheets or Bid Recapitulations that include templates to store company-related information such as labor rates, tax rates and other costs specific to a state, city, region or customer.
Accuracy Many estimators and projects managers who use customized estimating spreadsheets have asked me, “What am I doing wrong? I have a material and labor database, and I am still getting into trouble on some jobs where I’m falling short on hours. It feels like a rollercoaster.” It has been my experience that when multiple estimators bid the same project, the bills of material tend to be very close (pending the occasional mistake), but the differences typically originate in the labor.
A software-based program will allow the project to be broken down into various tasks. A good estimating process, prior to starting an estimate, is to look at each project and determine the network structure, the building structure to which you will install the network, and the environment of each area of the project such as ceiling heights, occupied premises, physical access, etc. By laying out your estimate in this fashion, you are essentially bidding the project just as it will be constructed. Using this approach, you will be able to zero in on each task and adjust the labor to suit the specific conditions. The true test for an accurate estimate is to examine the actual costs after the project has been completed. Being able to track material, labor, subcontractors and equipment effectively and efficiently starts with a well-built estimate. These actual costs become your company’s report card on its ability to 
complete a project on time and on or under budget. All contractors are not the same. Onsite staff expertise can vary, and the company’s management techniques and processes can greatly affect actual costs. If a project is tracked to 100% completion, a good estimating and project management system will look at similar jobs, completed historically over recent times, and adjust your current estimates labor to suit your company’s actual ability and likelihood of similar results. Over time the variances between the budgeted estimated hours and the actual hours can be very tight, thus eliminating or reducing the ‘rollercoaster’ effect. Consistency Having an item database of materials and labor as well as prebuilt assemblies to draw from will not only provide speed and accuracy but also allow for consistency within your estimates. Without a good estimating system and process in place, even a seasoned estimator will sometimes introduce inconsistencies on installations of a similar nature. Now let’s add multiple estimators within a company to the scenario, and the level of inconsistency increases. When new estimators/project managers come into the company, they also will have their own way of doing things. It is very difficult for management to account for each individual estimator’s idiosyncrasies and then try to decipher the true costs of a project. You might meet your profit expectations on some jobs while losing, breaking even or even exceeding profits on others; and while exceeding profits isn’t a bad thing, not knowing why or how you exceed those profits could ultimately cost you projects down the road. Consistency is your best line of defense! Procurement With a well-built estimate that is broken down similar to the construction phasing of the project, the project manager and the purchasing department can schedule labor and manage purchase orders more effectively. Knowing how much material, labor, subcontractors or equipment is needed, as well as where and when they are needed at any given time, has numerous benefits:
- When requisitioning for material without a detailed estimate, you will likely start the job off by ordering too much of one product, not enough of something else and nothing of another product. This will lead to your project manager, purchasing agent and onsite personnel wasting valuable time chasing down material.
- Generally, if material is on-site but not installed, you will not be able to bill for it. The longer product sits on the job, the more profits will be lost due to financing of the materials. You also run the risk of having the uninstalled material stolen from the jobsite.
- Labor resources can be managed more effectively as well. A well-built estimate will allow the project manager to break down the tasks by hours. Instead of just ‘throwing’ resources onto the job, which can quickly lead to cost overruns, the project manager, knowing the right hours for the task, can assign the appropriate crew to that task. Having the estimate broken down into construction phasing or tasks, the project manager also has a gauge by which to monitor and track the budgeted estimated hours against the project’s actual hours. By becoming aware of any labor overruns to any specific task as early as possible, the project manager now has an opportunity to make necessary changes to the project, or to work with the owner to determine if the scope of work has changed. With a well built estimate, the project manager can be proactive rather than reactive.
Professionalism Using a software-based estimating system to produce estimates with speed, accuracy and consistency will make you a leader in the market. Contractors that do not have a formalized system or process in place may present themselves in the market as disorganized, and tend to be scrutinized much more by their customers. Being organized within the office is important, but presenting yourself in an organized manner to the industry in front of owners, architects, and general contractors can be invaluable. Plus, customers like contractors that appear to be organized. It tends to take the burden off the customers shoulders knowing that their contractor is on top of the project and all its requirements. Everything else being equal, the customer will always award a project to an organized contractor over a disorganized one.
In summary , if speed, accuracy, consistency, procurement and professionalism have become more and more of an issue for you and your company to achieve, then looking at a formal estimating and project management software solution should be at the top of your company’s shopping list. Contractors are always buying newer and better tools for the jobsite, an expense that is well justified if it makes the labor force more productive and competitive. So if your estimators and project managers are considered the ‘hub’ of your company, it is equally if not more important to provide them with the right tools by implementing a formal, software-based estimating system into your company…today! Without it, your company’s future will be plagued by lost opportunities. “Reprinted with permission from Cabling Business Magazine, July 2007 issue. To view a full text version of this article or to order an electronic copy, go to www.cablingbusiness.com”
