Vetting & Subbie Comparison
VETTING COmpliant Quotes
"Vetting" is the term where an estimator uses his or her BOQ or an SOW to ensure that a trade package is compliant.
When a trade looks at a set of drawings they want to price everything that they feel comfortable pricing. Now sometime this is really helpful but sometimes if a subbie detours off the requested scope it can be confusing, to say the least. Estimators are looking for a compliant scope based on the documents, a BOQ or an SOW. The problem with that is that you somehow need to ensure that the returning quote is compliant. so the estimators have a list of trade-specific questions / Checklist to ensure that you can check the scope. It is still ok for a trade to price different items over different packages – but an estimator wants a quote presented is a certain way so it is easy to tick the boxes.
Some of the question that an estimator may ask when reading a quote go like :
- Has the trade captured the tender documents in the quote?
- Has the Trade included for all of the addenda?
- Is the trade pricing your documents and not another builder with the wrong scope?
- Has the Trade included for the site-specific issues of the site?
- Have they included for materials handling, EWP and cranes, etc?
- Is the quote Supply or supply and install?
- Is the validity the same as the competition, etc.
- What has been excluded?
- Etc, etc, the questions that are asked are normally traded specific but I think you get the point.
So vetting is the process of getting a quote apples to apples before you can compare one price to a competing price. The best way to do this is to compare the quote to a BOQ or an SOW.
Some colleagues have asked me why do you do a BOQ and then rate the Bill.
This is why...
A BOQ is the best way to vett a scope of works.
Rating is the best way to ensure you don’t blindly accept a price.
You always aspire to a cluster of quotes. Now if you don’t get a cluster, the Rated BOQ becomes a very important number to possibly close off that missing third price. It could be a second or third quote basically to help De-Risk a trade. (So this is why an estimator will always prefer a “first principle”s rated BOQ as you don’t’ know when that first principles number may save your bacon. Even if you do get your three-second principles price that is in a cluster, the added check price may also help you analyze possible margin gains or risk within a trade price.
Again every bit of science helps.
Services trade is often known as the “dark arts” in the estimating fraternity. Their prices are very specialized and the only way a building estimator can check prices is a benchmarking from either current or older projects or ensuring that the services trades fill in the services schedules within disciplines engineering specifications.
The next trick is to provide fitting & fixtures schedules. Over time your record becomes pretty accurate when comparing service trade to another service trade.
The other way is to compare quotes and like schedules with one subbies to another. This way you can ask one subbie a question and subsequently develop a list of questions to ensure the scope is complete.
SUBCONTRACTOR COMPARISON
Back to the process –
At this stage you hopefully have a “Rated” Builders Bill (BOQ), certain trades you have rated using “First Principles” and other trades you are using “Second Principles” and then there a few minor trades you may have benchmarked a price based on a recent job.
You have reviewed a number of prices from different subcontractors and you have walked their number up or down depending on how compliant their quote is compared against the internal BOQ. At this stage, you may need to adjust your BOQ and estimate to better suit the trades descriptions. Maybe you were time-starved and you had done a bit of catch up by using the different quotes to develop a compliant SOW. (Just remember this – if you have issued a BOQ to the industry during the tender and you find a mistake or you change tactics. Make sure you don’t change the BOQ until all the quotes have been received – Then reissue the trade package followed up with phone calls to ensure the subbie meets the closing deadline).
Now it is time to do a Subcontractor comparison. Basically, you line your quotes beside each other including the estimated budget. You then review each trade descriptions again the quantity and price in the estimated budget. I tend to start at the exclusions within the trade quote and then work backwards from there.
You then either select a complaint tender or you create a Hybrid of the most compliant trade descriptions to work up a tender price for that individual trade package.
As a rule - First-principles rating backed up with Second principles Quotes.
Vett Your Quotes against the Budget.
Then Compare Apples to Apples.
This is the safest science.
When looking at the specific quotes you check that the quotes have the scope within your BOQ. Then you look at the quotes exclusions – and either add or subtract money. The third step is to ring, send an email, etc to understand any grey unknowns, It takes time whilst the clock is ticking towards a deadline.
So this is now the challenge – Let’s say you have an average of 5 quotes per trades and you have approximately 60 trades to vett over 16 hours. So you have 3.2 Minutes to plug in all the trades, vett them “apple for apples”, ring and chase up any outstanding quotes, do any preliminaries cost and also attend all final reviews. meeting etc.
If you wish to read more about
Tender Process – Click Here
Subcontract & Supplier Tender Close
The Subcontract Close is a huge Milestone in the life of a tender."
The Push
“The Push” is normally the last two weeks of a medium-sized tender however on Tier 1 projects the could Day and night for months. To explain the process –
Most tenders in the Tier 3 sector (Project $100M and below) need duration between 3 to 8 weeks duration. I would say most of the tenders I have worked on are 4 weeks long. The Tier 2 sector (Projects between $100m – $500M) could be in a number of months to a short year and Tier 1 sector (project over $500m into the Billions) could be a process in years.
Time is always a battle no matter what Building Tier you swim in. When you are tendering, you try to set a subcontractor tender close a reasonable time before the builder has to submit a tender.
Most the industry that swim in the Tier 3 sector – so you try to close the subcontractor tender at least approximately 1 week before the builder’s submission to the client.
(Larger projects in the Tier 1 & 2 sector you would obviously need more time to close depending on how large you tender team is).
Working backward from the tender submission – it is often hard to coordinate everyone’s time to come together. So the final schedules and constructing the bid takes at least a day, The preliminaries and trades take a day or two, Plugging the trade pricing into subbie comparison takes at least two days and the document control of filing the quotes and also chasing late subbies who haven’t submitted takes at least a day.
The Subcontract close is also the Milestone target where you want to have the Non priced criteria drafted and finalized including the Draft clarifications, Methodology, and Program.
So this process for a large project or a small project is roughly the same.
Addenda & RFI close
Phone Keys Subcontractors
Subbie Close
Preliminaries Draft and NPC
Subbie Comparison
Final Tender Review and draft Clarification
Tender submision
Tender Submission
The Subcontractor close is also that time that you realize if estimating gods are going to be nice or kick you in the gut. Hopefully, the Phone calls to the day before have reaped rewards and you look like you will get a few quotes in the trades. If the tender has been bullied by a lot of Addenda, I would normally indicate a subbie deadline as COB however to achieve a basic coverage in all trade is extremely difficult and to extract clusters even harder.
What I am saying is: work with subcontractors and not against them, The seven-day minimum milestone allows the estimator just enough time (mostly) to Plug any coverage holes. Now for a large Tier 1 project, this time would expand accordingly.
Two weeks prior to formal tender submission no more addenda or RFIs should be issued by either party without an Extension of time. This industry practice is not strictly adhered to. This causes a lot of grief for both Builder and subcontractors. The fact is – this common courtesy has been lost over the years. I have witnessed major addenda being issued a few days before the formal tender close and a number of days after the subcontractors close.
If you are lucky with your Trades – often smaller architectural trades come in early, so you can vett then and plug them straight into your estimate. If you are really lucky (and your systems have worked) where you have received a number of subbie Quotes that you can do a preliminary Subbie comparison before the subcontractor close. So goal to being proactive and efficient never goes away.
With most of the document control software today the Quotes from the subbies can come back via the same system that the original RFQ was sent to the subbie. The problem with these document control system is not necceassarily the system, it is normally the fear of the subbie that their quote gets lost in the system.
There are a number of systems out there and the subbie gets use to one system and then that builder that the subbie has just gotten use to – goes quite. So the induction goes on. To counter this subbie insecurity (which is totally understandable) – I normally dont insist that subbies use the document control system. If they are confortable , sure use it, if they are not I offer then standard email address.
"Give the Subcontractor or Supplier options"
Quote
COMPLIANCE
Before you file the Quote attached to the email – Do a high-level scan of the quote to see if it is compliant and site-specific:
- Does it include for the tender documents, Addenda, and site-specific requirements?
- Does the quote include for any client schedules?
- Do the Services trades include the SOW and Schedules within the Specification?
- Does the quote include for all OHS, Manuals & Warrantees?
- Is the quote sent to other competitors? and who?
- Does the quote reflect out internal BOQ?
- Has the quote got any long lead times?
- What is the duration on the site?
Basically, if the quote doesn’t comply in any way – quickly fire off an email, text to correct any issue and then MAKE A PHONE CALL AS WELL to get the information…
DON’T TAKE ANY CHANCES…
Filing
Quotes
So here are some suggestions:
- Set up a folder names Subcontractors and within this folder create all your common trades with a code number and Trade name (Ie 5000_Electricals etc).
- Rename your email in the following Format – Company Name_Trade_Project and file accordingly.
OK – Now you have received a quote there are a few document controls that take time but will help later in the process.
The First issue is that Quotes can often come back as a long-winded email. Often the Emails which have a PDfF quote attached may have additional clarifications on the email.
Second, it is always good to file like trades in the one spot in a filing system.
Third and very important – Before you file the Quote do a high level audit to ensure all the Key information has been answered.
FOLLOW ON
Affect of Bad coverage
You normally compete again at least 4-5 other builders and the subcontract fishing pool regionally is normally pretty finite – So getting onto the phone and doing the hard yards whilst doing your data input to the subcontractor comparison on your estimating software.
If you are really cramming a tender on the back of another tender – You may choose to bill less and use the second principle quotes and try to find a cluster of tenders to reduce your risk.
Now if you don’t find any trade coverage (Second Principles) – your “First principles” estimate becomes very important. So the last minute check of your science behind the number and spending time looking back to past projects and benchmarking with escalation factors applied.
If you wish to read more about
Tender Process – Click Here
Cost Plan & BOQ Formats – Click Here
Supporting Documents & Preliminaries
CAN YOU MANAGE THE PROJECT?
This a perfectly good question that every client asks. So the industry-standard method is the use of supporting documentation in the form of schedules. These schedules are then split into price-related schedules and non-priced schedules. The non-priced and priced schedules in most cases are submitted with the tender submission however some times the client may choose to review the building in a closed tender by selecting a number of builders through a “pre-qualifying” process. Once you have been selected as a preferred builder, you then move onto the pricing round. Even so, the pre-qualified builder would still submit some of the standard Non-priced criteria again as a form of marketing.
So let’s just assume that builders have to submit both the non-priced & priced criteria at the same time when submitting their bid.
SUPPORTING DOCUMENTATION
Within the non-priced tender schedules – most medium to complex projects, any project that deals with a live environment in a public area will normally ask for proof that the builder understands the complexity of the project and any staging that may be required. Then you may also need to summarise your construction method or approach. These are all items required within the Non-Priced Schedules.
- Construction Program – Normally a critical path document (in Microsoft Project or equal) that showing key milestone dates such as construction start-finish etc plus all interaction of the trades and services to complete the project. The program illustrates the design time, construction durations and wet weather duration.
- Site-Specific Establishment / Staging Plan – This is a plan where site sheds, perimeter fencing to safely manage the site. The plan may be also used as a staging plan if a project has a number of separate stages. The stage management plan illustrates the number of sheds, temporary fencing, and hoarding, crane location, and scaffolding and other key items to be measured.
- Methodology – This is a written document acknowledging the stakeholders of the project, how the builder is going to manage the project safely and any detailed understanding to convince the client the builder has understood the complexity of the project. The methodology indicates the number of staff to manage the project on and off the site.
- Construction Management Plan – This may be a standard document with site-specific modifications. Generally, this document is a summary of all the builder’s policies, safety, and systems management processes to manage all projects.
The above documents are the key documents that the estimator would refer to be able to draft up preliminary costs.
Again most organizations these documents can be complete by the solo flying estimator or preferably the contracts team.
As a rule, I always find that if you engage the contracts team to complete the above documents. The main reason is simply to engage the contract team (& reduce your workload) into the project and another set of eyes over the documents is always wise. Hopefully, the contract team may come up with some smarts to win the project. They will develop the program, understand the staffing to safely manage the project. The other advantage is both the contract team and the estimating team get an understanding of each others roles and issues each face.
Estimators – embrace this process. It can be painful sometimes however if managed well can be an incredibly beneficial process.
Now, this is very important – To win a tender your preliminaries need to be skinny. A project manager will always be conservative in their trade processes and run the risk of overcooking the duration time and staffing to run a project.
Project managers normally estimate program duration heavy where a hardened estimator will normally estimate the duration skinny.
Estimators need to challenge every program supplied from the contracts teams in a respectful manner. So you need the bid manager or construction manager to make a final decision. But a skinny approach to preliminaries is always best in winning tenders.
Note – Never challenge any cost associated with safety, Never cut any costs from the preliminaries.
At the end of the process, you have an understanding of management required, staffing and duration. (All these items allow the estimator to complete the preliminary costs for the project).
From a resourcing point of view – if there are no resources to help – the solo flying estimator is the catching glove for all of the above.
PRELIMINARY DOCUMENTATION
Preliminaries costs are basically all the indirect costs you need to pay for during construction that you don’t see when the project is completed. The preliminary cost has different levels of complexity in 1st Tier companies however in Tier 2 & 3 building organizations the structure is very similar.
Preliminaries cost are normally are either time related or based on construction costs and due to the safety culture of the industry – an organization preliminary is directly related to their safety culture. To engage a builder to construct a building clients are now understand that there is a level of staff that is required to service there need and also manage a site aiming for a safety culture striving towards zero harm.
On an even playing field, there shouldn’t be much difference between one builder and another. But there are still companies who price a building with suicide costs on preliminaries to win a project. Or they hide their overheads and part of the preliminary costs within the trade schedules at the front end of these schedules.
It is a game that we play. I am happy to say that many businesses now scrutinizes builder to ensure their safety policies and practices are up to speed.
Examples of standard preliminary costs include but not limited to the following:
- Management cost
- Site Staff
- Living away from home allowances (LAFHA)
- Labouring
- Surveying during construction
- Hoardings, fences & barriers
- Site accommodation
- Temporary roads
- Security & communication
- Plant & equipment, cranes, elevated work platform (EWP)
- Scaffolding
- Safety precautions
- Insurance & bank guarantees (GBs) or binds
- Sundry operation cost (Systems management & accreditation)
- Overhead recoverable (business ruining costs)
- Cleaning & rubbish removal.
If you wish to read more about
Tender Process – Click Here
Non Priced & Priced Criteria
TENDER SCHEDULES
Clients have a few chooses in finding a builder now if they haven’t gone down the Pre-Qualification route. This is when you get a builder to basically submit a resume prior to a tender even being sent out to market. This basically helps the client to match the project to a likely builder.
There are two sides of any tender – Non priced Criteria (NPC) & Priced Criteria (PC).
NPC can easily be explained by all the documentary evidence that can prove you can actually do what you say – Talk the talk and walking the walk. PC is anything associated with pricing schedules including clarifications and assumptions.
So when a client sends out a “Request For Tender” (RFT) the client will often request a number of schedules so they quickly compare one builder to another.
Good for the Client but can be a nightmare for the lead estimator.
As an estimator you will be asked to complete at least the priced criteria however in some companies you will get the added fun of completing all the schedules.
You will find that in most Tier 3 companies the estimator may do all the schedules however in Larger Tier 3 companies and definitely Tier 1 & 2 companies will have a bid manager that does all the administration and decorative items within the non-priced criteria (NPC) and compiling the final submission. So whilst the estimators & cost planners are focusing on the priced criteria, in the background – a bid manager is compiling all the non-priced criteria requested in the RFT.
NPC can lose can win & lose you a tender (especially on government projects). I have won quite a few design & construct tender from second place, then I have also lost a few close tenders as the NPC wasn’t completed, or the other competitor simply presented the NPC better.
I had a tender with a council and at the eleventh hour we had a glitch and one of my colleagues didn’t save a program – So to meet the deadline I had to adapted and did a written program for the submission. We won on price and lost on NPC. heartbreaking stuff.
But if you are flying solo – get these schedules done quickly and up from where possible. All I can say – time management is the key.
If you wish to read more about
Tender Pre-Qualification – Click Here
WEIGHTING OF THE
Non-Priced/ Priced Schedules
The non-priced and priced Schedules Have a weighting dependent on the complexity of the tender and possibly the organization. (So the NPC may have a 25% rating and the PC may have a 75% rating).
So a client that has a weighting on the PC as 95% is obviously looking for the lowest price and the client relationship is price-driven. A client who has an NPC as a rating of 40% is process-driven. The weighting on the NPC/PC will be the importance of the schedules for submission.
Solo Estimators – always ask the question with new clients. If you are flying solo you can then make a judgment call how to manage your time.
NON-PRICED CRITERIA
The information that the client wishes to is very similar to items that would be requested in a pre-qualification process with the exception that all site-specific information of how you would manage the project in the form of schedules. The schedules can be similar from the client to the client however every site has a variable that the client needs to cover off and ensure that their expeditions are met. This is an example where the weighing of the schedules could be important.
Below are some examples of non-prices criteria:
- Construction management plan
- Task appreciation & methodology
- Staging plan and site establishment
- Quality standard and other accreditation
- Past performance & relevant experience
- References and testimonials
- Key personnel
- Current commitment & resourcing
- Insurance details
- Local subcontractors and suppliers
- Aboriginal participation policy
- Drug & alcohol policy.
Again – If you can get the non-priced criteria sorted early in the tender, it is always easier to focus on the priced criteria last before tender submission.
PRICED CRITERIA
As mentioned above – as an estimator, you are either flying solo or you hopefully have some type of support. It is always wiser for an estimator will focus on all the numbers and priced criteria (PC).
After the tender review the estimator would now populate the pricing schedule into the client’s format including the following:
- Tender form including tender price
- Tender pricing schedules
- Design costs
- Authority costs
- Key subcontractors (over $100K in value)
- Progress payment forecast
- Alternative pricing
- Schedule of rates (normally service trades, Civil, stormwater, concrete, external works, and sediment control)
- Compliance schedule of clarifications & inclusions.
The PC is normally the last piece of the puzzle so to speak. Both the schedules are populated and then bid checked and then uploaded or printed and then sent off to the client
If you wish to read more about
Tender Process – Click Here
Post Tender & Client Meetings
The final step is a meeting with the client and/or clients superintendent. If the client asks to meet the contract team who will be running the project things start to get really exciting.
Strategy – I often suggest that an estimator in these meetings is better not to be there. The reasoning is if the client asks any financial queries – it gives the team an opportunity to do a little research and sometimes you can make a financial decision to try to win the project by wearing some costs or blaming the estimator and giving a deduction.
But when you are in these meetings – Know who everyone in the room and their role.
is usually the guy who signs the cheques"
After this meeting is concluded you normally have a small window of opportunity where you can re-submit, clarify, provided an alternative price (this is your last time you would see the client before a decision is made one way or another.
This is pretty important – You need to figure a way to change your price but not be seen to lower your price. This can be done by a late quote that has changed your risk on a trade, better buying from negotiation on another project, etc. But – A client will never engage if he or she believes they are getting a substandard price.
You walk into the meeting at a disadvantage as you want something. The sales part of the job is so valuable at this stage. I have witnessed the anchor of the negotiating team wall into a meeting with no chance in hell of winning the tender to somehow walk out of the meeting with a letter of intent in hand.
This is done by basic manipulating the information to a point that the client is in fear of signing with another builder.
If you wish to read more about
Tender Process – Click Here
Estimating Records
the client will normally tell you where you lost the bid. Warts and all. Keep records, talk to subbies, consultants and get every piece of Intel on the winning bid.
"Don't get mad - Get even by winning the next tender".
The cost of tendering is normally an overhead, however, everything within a building can be tracked even an estimator hit rate. The problem with hit rates – the estimator is an only real impact over the bid is trade coverage and putting the preliminaries together. However, the management data & staff data, labours, duration in the program, ORs and margin that is applied can all lose you a bid. Even at the final step of signing a contract personality between client and closing team can derail a bid.
The risk can also be a symptom on region issues in the past and also how good your contracts team are in procurement plus the turn around time that the contracts team, all have an impact on the final number ( basically understanding the game and your commitments ).
So with so many things that are totally out of you control – your job is to give advice at that close out time of a bid.
There are going to be times of heated debates from time to time, however – make sure you have the best science to understand your decision at the time of tender. Just to throw one other thing at you.
If you have good science behind you – the management does not listen to your advice – that is not your problem. Sometime there may be political & other external things that is unknown to you at play. Do your job – present the information and then step away.
After the Bid is submitted
So this point is pretty simple – It is a waiting game but staying in touch so your company name is always on the client’s mind.
You will then Either get a “letter of Intent” (LOI) which is a precursor to a contract signing.
Alternatively, you get a negative decision and you have lost the job.
Now two things will happen at this stage, The first in the estimator in charge will be absolutely guttered and potentially a few choice words or some furniture may get moved abruptly.
Any Estimator who is worth his or her salt – will be feeling like killing furniture across the room. Now a good estimator will then pick themselves up and jump into action.
the client will normally tell you where you lost the bid. Warts and all. Keep records, talk to subbies, consultants and get every piece of Intel on the winning Bid.
"Don't get mad - Get even by winning the next tender".
This time is never easy for a builder and their estimator prides itself on there win /loss record. A little bit of ego is not a bad thing – but be careful. One of my mentors told me that he was a bit jealous of me winning a tender. I found out later that he hadn’t won a tender for 18 months. He was one of the best QS / Estimator in the game.
I have been in organizations where the hit rate has been as high as 50% and then I have been in companies where you a lot of love jobs and educational works where the hit rate is low as 10%. this win/loss can be a bit of a soul crusher. Scream, shout and then shake yourself off and start again.
With all the things that can go wrong for you as an estimator – remember it is a team event.
I look at the Bid process in Rounds. Round 1 is the Tender, Round 2 is getting your team to the table with the client. Round 3 is a Win. I always consider not getting to Round 2 as a team failure and I want to know why?
Me - with a clear heart I know I have done everything in my limited power to protect their jobs. Trust me - you will get drilled.
The tender bid record keeping is pretty straight forward – You want to know the following:
- Tender stats including GFA & cost/m2, Provisional sums, preliminaries costs, and ORS %.
- How much risk was placed on the bid?
- Extrapolate trades costs into cost plan ratios
- Competitors and all other intel such as client relationships, estimating team size, company size, numbers, etc.
- Was there any trades your competitors may have made an error to win the bid
- Were there any in house errors?
- What staffing did we throw at the bid?
- What other tenders were we working on at the time?
- What subbies coverage did we get?
- was it a shared bill or completed in-house?
- Late bids that would have affected your trade number.
- Did you have site-specific issues?
- Where there other issues?
- Where there any subcontractors who we did get a quote from and why?
A good postmortem is a healthy thing moving forward – historic data in procurement on the wins is also helpful as well. You need to know the wash of your budget drop as opposed to the actual number of the subcontracting contract and hybrid scope. Document control & record Keeping is the lifeblood of any estimating department.
If you wish to read more about
Tender Process – Click Here
Contracts Handover
The funny thing is just before you actually get the award – I always get the feeling that industry has already got a good idea of who won the project prior to the actual award of the project.
You go through the motions and then out of the blue – you start getting quotes that were submitted to other builders who are out of the race. Time goes on and you don’t hear much from the client yet – more and more unsolicited quotes arrive in your email box.
If you are lucky you have pretty much got full coverage and hopefully clusters of pricing across all trades. At this stage, there has been some type of conversation at management level and there has been some type of indication that a contract or a Letter of Intent is pending.
In preparation for the pending hand over the estimate will start to go through all the files and slowly start house cleaning and making sure all the document controls and naming protocols are in order. Then the estimator would make sure tender BOQ is coherent and the packages are coded in the standard procurement codes. Any post-tender contract negotiations are transferred into the contract budget. It is basically an accounting masterpiece that tells a story to anyone who procures the trades. But you can’t go too far into the process as the final button could take some time to land and often there may be some last-minute negotiation.
The reason why an estimator doesn’t go too far into the Handover docs in because it takes a good couple of days’ work which costs a lot of money. So until you get something concrete you don’t waste too much time. So when a project has been awarded the trigger for an estimator to get prepared to pass the ball to the contracts team is either a “Letter of Award” (LOA) whilst the contract is been finalized or a signed contract. As an estimator, your focus is winning tenders – so you are normally in the midst of another tender. So bottom line – You haven’t got a lot of time to spare, but it is also your job to hand the estimate over to the contracts team so that you can best procure the project.
HANDOVER – Documents
The handover form basically a massive checklist that paints a very detailed story of the tender of “What we tendered, Who we tendered for and How we got to the Number?” The Handover document is a number of documents and is summarised by the handover form.
So you need to think what are the CAs are going to need to know?
- Client details
- The tender submission and pricing schedules and any special conditions.
- The tender documents;
- Site assessment/risk
- The history of the tender and how you got to the winning price.
- Subcontractor & supplier quotes
- Trades you have to use “First Principles or Bench Marking”. And obviously any areas of risk.
- They will need to know all the headlines of the contract.
- Then a coded budget for procurement.
Budget – DROp
The tender quote has normally a small percentage padding in the number to compensate with the game that is played during the second round of procurement. Now sometimes the price goes up but the vast majority in the wash of the project procurement drop anywhere from 3% to 9%. The CAs job is focused on negotiating the best number for each trade.
So when the LOA has been sent and the green light has been given – the estimator under the direction of management relocate money to different areas of the budget and generally money is stripped out of all trades and a trade target is set academically.
This recipe is based on past projects and patterns. But preliminaries are normally the beneficiary as you need enough money to run the project safely.
If you refer to the “Australian Method of Measurement” you will note there are some global headings that relate to building elements. Now – to manage costs within procurement each element often has a unique cost code that links to an accounting package.
Most building companies have their own codes to each one of this element but the format is very similar. The recent movement to BIM codes is pushing the larger companies to an industry coding system which I will discuss in later Blog.
HANDOVER – MEETING
Time has a lot to do with how successful the handover process. In a meeting, you normally have the site manager, CAs and project manager (who are also very busy.) Now people process information differently. So if all the contracts team are coming into the meeting cold – well you can right of at least half a day. You may have to explain the one basic thing in three different ways. etc.
What I prefer (but always possible) is to issue the handover document and then give everyone time to absorb the small novel of documents especially the site guys.
Then one to two days later you arrange a meeting around a table and then work your way through the documents and then you table any question at the end of the meeting.
This way the presentation will often answer most questions – then once you have finished the presentation, you need to be very patent and let people move at there own pace.
Then I would suggest another meeting a week later to answer any queries that may arise.
there is no question until the end of the meeting.
It is also the final line in the sand where the estimator has not an active roll in the project including the filing of emails requests etc. Basically, you are setting the profit targets for the project, and stepping away from your baby.
If you wish to read more about
Tender Process – Click Here
The Evolution of the Design Manager in Australia
MY PERSPECTIVE
Before I talk about Design Managers and indirectly Architects, I thought I should give you a point of reference so anyone reading this article as I freely admit that my views are from a subjective point of view. What you need to know is that my first hink i am a builder
My career has taken a few “left and right” turns over the years but I have always been involved with design in one way or another, firstly as a very green architectural & interiors designer. Then as s residential building designer / builder.
I decided to go back to my first professional love. I got a job with a well know architects company in Brisbane and realized that I had turned to the “Dark Side” and made a mistake – I was more a builder now. (Just to give you a timeline – say 2006). I had been away from commercial architecture for close to 15 years and trying to get a leg into the commercial sector once again – started to get offered design management roles that paved the way into estimating and the rest is history. Let’s just say commercial architecture was like an old girlfriend – fond memories but…
Being a design and construct estimator and having both a building and architectural background obviously comes in handy. I deal with design consultant and it is part of my job to find holes in so-called coordinated tender packages. I work beside design engineers and architects to “debunk” tender documents and I couldn’t win a tender without these design colleagues.
I do a lot of hard dollar tenders as well and I can be very critical of substandard poorly coordinated tender documentations. Rather than spending time pricing a project I often spend time in queries and response writing countless emails. That said I am also very fair in applauding good work and understand the dedication some of my architectural colleagues have got to practice their profession as it is definitely not for the money.
So I wanted to give anyone who possibly reads this article a sense of my perspective with my timeline of seeing the commercial landscape in design management change and also appreciate that I have a high expectation of my fellow design professionals.
I have been a specialist in construction documentation for most of my work life from a designer, a builder, and a commercial estimator. When I first started out in the industry there was no such thing as a design manager, they were called project architects.
Being somewhat of a dinosaur – the easiest way to explain what a design manager does – is to compare and illustrate what a projects architect use to do. But times have changed. Architects have changed and the modern design manager has evolved as well.
My career has taken a few “left and right” turns over the years but I have always been involved with design in one way or another, firstly as a very green architectural & interiors designer. Then as s residential building designer / builder.
I decided to go back to my first professional love. I got a job with a well know architects company in Brisbane and realized that I had turned to the “Dark Side” and made a mistake – I was more a builder now. (Just to give you a timeline – say 2006). I had been away from commercial architecture for close to 15 years and trying to get a leg into the commercial sector once again – started to get offered design management roles that paved the way into estimating and the rest is history. Let’s just say commercial architecture was like an old girlfriend – fond memories but…
Being a design and construct estimator and having both a building and architectural background obviously comes in handy. I deal with design consultant and it is part of my job to find holes in so-called coordinated tender packages. I work beside design engineers and architects to “debunk” tender documents and I couldn’t win a tender without these design colleagues.
I do a lot of hard dollar tenders as well and I can be very critical of substandard poorly coordinated tender documentations. Rather than spending time pricing a project I often spend time in queries and response writing countless emails. That said I am also very fair in applauding good work and understand the dedication some of my architectural colleagues have got to practice their profession as it is definitely not for the money.
So I wanted to give anyone who possibly reads this article a sense of my perspective with my timeline of seeing the commercial landscape in design management change and also appreciate that I have a high expectation of my fellow design professionals.
I have been a specialist in construction documentation for most of my work life from a designer, a builder, and a commercial estimator. When I first started out in the industry there was no such thing as a design manager, they were called project architects.
Being somewhat of a dinosaur – the easiest way to explain what a design manager does – is to compare and illustrate what a projects architect use to do. But times have changed. Architects have changed and the modern design manager has evolved as well.
Architectural & Interior Design
Residential Building Incl. Design, Estimating & Supervision
Architecture & Design Management
Design & Construct Estimator Interiors & Full Build
MY OBSERVATIONS
My first memories of the building industry were as a young architectural draftsperson who worked for architects who seemed to do it all – design, coordinate consultants, mitigate all approvals, fire ratings and solutions, tendering and then stepping into the construction and overseeing the construction documentation and any changes that were requested from a client or builder and then oversee progress payments and all final sign-offs. Architects basically served as the eyes and ears of the client.
I had a flair for construction and often found myself as the site architect handling all the document control and any onsite issues. I was a young freelance drafty punching way above my experience but there was no one who worked harder and longer hours. Even though I was young – I put the time into learning everything I could about everything design and building. I was lucky enough to have worked with some incredibly talented professionals who basically took pity on me and trained me well.
I loved the artistic side with manual drafting with pencils, ink pens, and watercolor plus I gain good exposure to the building process talked to every trade professional I could. Over time ink pens gave way for AutoCAD, so this was the start of the love-hate relationship with computers. Design development, solving problems on the fly and construction documentation was my thing.
Ten years into my career I stepped away from the commercial building sector into a custom residential building which became my focus for the next decade. The face of the design process in the commercial sector changed significantly.
I can’t put my finger on any one thing but in Australia, we were watching a lot of TV and saw shows that had people entering lawsuits against one person or the other on American television shows. By the nineties – Australia was second in the world in litigation following California USA. So corporate Australia, the government, insurance companies, all started to close their risk to potential lawsuits. Naturally, Australia started to regulate and legislate.
Around the same time – the industry was also pushing back against red tape and government bureaucracy with the council approvals process. To stop this red tape – the government legislated again. I still laugh about that irony. In the attempt to be transparent, the government legislation now gave clients the option of using a private certifier or councils to speed up the approval process. The term “Private Certifying Authority” was born. Now, this created the new industry and suddenly the PCA had to navigate the logistics getting licenses and dealing with private insurances for “Professional Indemnity Insurance” to able to trade. The government bureaucrats were creating rules in the background and as a result, the building consultant seemed to splinter into specialists in Fire, PCA, and BCA consultants. I gather this was a result of insurance underwriters’ restrictions. Insurance underwriters also drove the evolution of architects. If you want to trade as a business, you need to get insurance, now to save cost you can avoid high-risk projects or special in low-risk projects.
Architects have now let go of many of their traditional domain to reduce risk. There may have been other reasons for this but when I rejoined the design ranks in commercial architecture – architects had become a shadow of their once selves. (The industry had changed and I had also gravitated to the dark side – from that point onward I was predominately a builder).
Then global warming came into play and the government legislated again. Then the “Discrimination Act” was passed into law etc, etc… If someone stubbed a toe – some laws, regulations, codes, was gazetted.
The consultants were changing as well to adapt to their own legislative and risk mitigation challenges. My observations over this time were the consultant team seemed to spend more time writing emails and clarifications rather than get in and get the job done. The process had seemed to get longer and the quality of the documentation was declining. A sign of the times I guess.
Clients were far more educated and started to hire consultants to drive the building process. The way in which the client was contracting was also changing. In my world – the trend was towards a “Design & Construct” type contract – clients realized that they could reduce a lot of their own risk by mitigating the design and building risk onto the builder. Before 2010 – most of the tender contracts were mainly hard dollar contracts and now coming into 2020 most the tender contracts are a design and construct and then they are amended to say the builder takes on all risk.
Larger building companies started to drive the process and architects were contracted to manage one facet of the process. All of a sudden, builders had a choice to use their own architect or an internal project manager to drive the design process but under the watchful eyes of the builder or the client. The ‘Design Manager’ was born.
The design manager who was a specialist in procuring the design – This meant that builders or clients could hire a “Design Manager” . Now if you asked me tens years ago what a Design Manager was – I would respond with a description much like a project architect of the year gone by. Subsequently, many of the good project architects jumped to the dark side working for builder’s or clients’ employments as the financial rewards were hard to ignore. These managers often had a background in Construction Management or Architecture but not always the case.
Recently I have worked in many specialized genres an I have noticed that he design management could also be done by someone left of field, an expert in a specialist building or service. I have met former nurses who have been wonderful design manager for aged care facilities and hospital buildings. I have seen this in resorts, restaurant chains, warehouse chains, etc. Shopping centers owners may have procurement officers that know their product so well – they are the logical choice to drive the process.
A formal qualification does help but not a rite of passage anymore.
In D&C building companies it is common to have a dedicated Design Managers that churn out one type of development and the larger builders in the Tier 1 & 2 genres. It is rarer to have a dedicated DM in Teir 3 to be able to justify their wage against overhead. But Tier 3 builders often have an internal staff member who is multi skilled who would assume this roll when the need arises, sometime they would contract such roles out on a contract basis.
The modern Design Manager has taken over the roll of the project architect from my youth. A good Design Manager &/or “Old School Architect” are worth their weight in gold. In a tenders these days builder manage risk. A good design manager is basically managing their clients risk.. Look at tender documentation and from their experience they can find another path in methodology, finishes and basically change the goal posts on risk etc.
In this day and age where we all buy and sell risk – a design manager is the clients or builders way to reduce their risk, to managing quality and drive a process from start to finish.
If you wish to read more about
Design Managers Role Description
but I have met many great DM with left of field experiences and qualifications as well".
WHAT IS A DESIGN MANAGER
It is a specialized and suitably qualified person who has the experience to manage and procure the design phase of the building process and also could be used to manage the ongoing construction needs of the design. They can work as a consultant or an employee for clients or builders.
Design Managers must have a design flare however not necessarily a design qualification, they need to be able to manage the process. So traditionally most design managers have an architectural, engineering or a construction management background however someone who is an expert in a specialist building or service can be a perfectly good design manager. I have met former nurses who have been wonderful design manager for aged care facilities. I have seen this in resorts, restaurant chains, warehouse chains, etc. Shopping centres may have procurement officers that know their product so well – they are the logical choice to drive the process.
A formal qualification does help but not a rite of passage anymore.
DESIGN MANAGERS CORE SKILL SET
- A solid understanding of different client procurement routes.
- A demonstratable portfolio of commercial projects or equivalent experience
- Ability to organise, plan, programme and manage workloads.
- Understanding of building regulations
- Ability to read technical drawings and foresee design and construction complications and cost savings
- Ability to identify cost savings through improving buildability and procurement
- Ability to translate technical requirement into policies and procedures
- Strong procurement strategy implementation
- High standard and well received internal and external design outcomes
- Experience working with corporate business.
The new age design manager role can sometimes be the client’s project manager. He or she is there not to replace the architect but to work with all the design team to procure and mitigate the design in the most cost-efficient and effective long term solution for the life span of a building. If the DM is working for the client their role is to plug any holes in the documentation and possible check the builder’s design solution.
If the DM works for the builder – Their role is to find holes in the documents to extract opportunities and possible variations to original tender requests. Little bit engineer, little bit architect, little bit estimator and a little be builder makes up the DNA of the modern day role. Depending on who the DM works for you are still trying to save your client money. I good Design Manager is worth their weight in gold. Most larger builders generally in Tier 2 and Tier 1 Builders would normally employ a full-time design manager in their bid team.
These professionals are now the people that I can most compare the construction Architects of times past.
DESIGN MANAGERS RESPONSIBILITIES
The client-side Design Managers responsibility:
- Initial and ongoing procurement strategies
- Review designs, recommend improvements and provide value-adding solutions
- Involvement in appointing a builder;
- Contract negotiations
- On-going design enhancement and improvement
- Manage design consultancies and achieve the best outcomes for the project
The Builders Design Managers responsibility:
- Manage the design process during the pre-construction and as required, the construction phase.
- Fully investigate value engineering and value creation opportunities.
- Interrogation of enquiry documents, in the form of an Employer’s Requirements.
- Production of a Contractor’s Proposal document in liaison with other internal departments.
- Manage our design process via external consultants.
- Drive innovative and cost-effective solutions into the design.
- Progress design issues within a strict timescale & ensure designers meet information delivery dates.
- Review subcontractor design proposals.
- Verify & control the status of consultants and subcontractors drawings and specifications & maintain registers.
- Ensure the consultant scope of services, responsibilities and fees are agreed.
- Facilitate the completion of a project risk register.
- Attend tender launch /tender adjudication and launch meetings as required..
TO ESTIMATORS WORKING WITH
DESIGN MANAGERS
Estimator if you are trying to cut costs, the easiest way is often to cut scope.
Design Managers are mainly focused on maintaining the aesthetic of the building and might get a little irate if you come in an start cutting corners.
The best way when you are trying to save money is to isolate the most important aspect of the design. Protecting these important aspects is paramount to the DM clients client. Now if the DM feels safe that you aren’t going to rape the design they will work with you. If those important elements are protected then everything else is on the table. Working on a budget is far easier if the estimator and design manager play nice.
The final step in the puzzle is procurement – if the procurement team is also on board and asking questions of the budget, If you save money on the no crucial items then you can spend money on the really important character building elements of the project.
