ANSWERING TWO QUESTIONS – IS WHAT we Do.
Can It be built
Design Management
HOW MUCH Is IT GOING TO COST?
Cost Planning; Tendering; Estimating & Procurement
This website originally was platform for me to blog & write articles on the trilogy that exists between Design Management, Estimators and Procurement. Then the coronavirus hit that basically forced me into self employment offering estimating services on the back of the website.
FREQUENTLY ASKED – QUESTIONS
The short answer is Mortality.
I was talking to a good friend who is also in industry (He is Tier 1 Estimating Manager – probably one of the best in the game), We get on our soapbox every so often and shoot the breeze because we are geeks with common interests and our families are not (Total disinterest would be closer to the truth). Ok two Dynasaurs talking building… and crying in their drinks.
- We were talking about how hard it is to get good estimators who wish to develop and stay within the estimating ranks.
- We also complained about some of the younger people coming through the ranks that seemed to have a disconnect with a depth of building knowledge.
- Then we also acknowledged some colleagues that left this world far too early.
The watershed moment – We realized that when people like me and my mate leave the industry – our knowledge will go with us unless we get busy and start handing down the knowledge. I have been lucky over the years where I have met some very educated and generous professionals that I call my mentors.
All Things Estimating is my way to pass the knowledge on and say thank you to my mentors.
So through 2018 I was writing articles for the blog and in late 2019 my family moved to Tasmania. I set up shop to work remotely and added the services pages on my menu bar.
The coronavirus hit and it force me into action.
Firstly – So I got a piece of paper to open a door and then got a job before I finished the course to get a jump on students flooding the market.
I did architecture & Interior design to pay the bills whilst I figured out what I wanted to do when I grew up. (Yes, I am still trying to grow up). The industry slowed down after the 1988 world stock market crash. In took advantage of a recession in the early 1990s and did some up-skilling by getting a two Buiding qualification that helped me get senior architectural and client-side project management roles.
Second – In 1996 I started the transition in residential building and then in 2006 moved towards commercial Building firstly as a Design Manager and then into a D&C estimator who wore manage hats. I still use my design & Building back ground everyday – But today I mainly focus in Design Cost Management.
First – I would not have done my HSC. I would have left in Year 10 (school certificate), and then did a training ship &/or and apprenticeship in carpentry. The training ship means you get a lot of the study knocked over quickly and when you finish your apprenticeship you would be turning 20 years.
Second – I would squeeze in any sales course. (or any business course to stay fresh with computer skills).
(From here you could go the architectural route, Structural & civil engineering route).
Third – I would start my Associate Diploma or a Degree in Building in the last years of apprenticeship or take a year off and knock over the Building course as quickly as possible or complete it over four years P/T. (Remember you would already have 3 to 4 years experience in the site as a carpenter).
If you were working in the 3rd tier building sector or residential (or regional areas) – I would suggest the Associate Diploma first. But if your ambition was set on larger 2nd and 1st Tier building companies – go the degree.
If you take the Part-Time option go and find a Project engineer role or Contract administrator role and master Systems management & OHS on site whilst you were studying. You would now be 24 to 25 years old with both carpentry and building qualifications in either an Associate Diploma or degree with 8 years of experience.
From here you would now be able to split into Site management, Estimating, Contracts management or project management roles and your wage would be well over Six Figures.
Or you could become a builder in the regional market of the residential sector with that experience. The degree does open a lot more door but the site experience is gold and would even out getting your foot in the door.
Don’t do it – Seriously I have had a good life working in both architecture and building but it has had its ups and downs where if you are a sole trader or a contractor, life can get very hard very quickly being out of work.
But You get to see things built that You can say -” I helped build that building and the is a very tangible and satisfying thing.
If you are seriously looking at the building industry you need to look for multiskilled organizations where you can get exposure at different roles & disciplines:
- Do as much work experience as you can and talk to everyone you can?
- You must understand you must like learning and adapting for the rest of your career to keep relevant.
- If you get a chance to do a sales course – The salesperson of any business is the most important person in any business. At the very least it will help you do interviews.
- Qualifications open doors but someone with practical life experience and the ability to listen and learn, and get out of the hole is key.
- Try to finish everything you start to the best of your ability.
- Try not to chop and change your career path but rather step left or right off-center. (You are basically building on core skills so in time you will find a career will choose you.
- It doesn’t really matter what you do, but just lean into everything you do and listen more. You will find by the time you hit 25 years, you will find that you will grow into a person with a good work ethic. The career will follow.
- Read everything especially management, business and sales.
- Understand Your Clients client.
- Business is about buying and selling risk.
Through any approval process, any authority will have fees to pay for approvals and also inspections. Often at development application, the client would pay for most of these type fees however any bonds may be a part of the tender price.
These fees would include but not limited to the following:
- The common council fees are associated with Development Applications (DA), Construction Certificate (CC) & Occupation Certificate (OC).
- After to gain OC you also need to pay fees so The Fire Department can review alternative fire solutions and then final inspections.
- The building industries Long Service Levy must also be paid.
- Then the services fees need to be paid for both designs of connections and final approvals.
- Then you may also have regional fees that need to be paid. In areas where mining has been historically been, you may need to submit a fee with the land subsidence board.
- As noted Private Certifier (PCA) would also come under this banner.
ORs is an abbreviation for “Overhead Recoverables.” This is an “indirect cost” of construction and are not site related cost but is a percentage of the project for the running of offices, utility costs, systems management costs, banking and charges, office staff, accountancy, internet fees, marketing, franchise fees, etc. Generally the cost of doing business.
When creating a business plan most businesses have a hit rate of small, medium and large projects that are awarded at different times of the year. It is obviously desirable to have your brand seen in the market. So the decision can be made to do a number of smaller projects or a mix of the project at reasonable profit expectations. Basically, the math is to do more work of the market pie with less profit however as you are doing more of the industry pie, the overall profit in a financial year is higher.
This is a strategy that obviously needs to closely monitored as the possibility of falling into a leapfrog situation must be avoided.
In my experience, this can also be done on the back of a Construction Management contract (Cost Plus) where a smaller profit is negotiated however the staffing and quality of the project are secured and finally, you can market the project as an example of your capability.
Sometimes a builder runs into a recession of a downturn and has a project on the horizon. The builder to maintain staff and expertise will make the decision to buy a project. That is to tender a project where you can’t lose and do it for cost or worse. The strategy is that you will win a project down the track that will subsidize your lost profit. on your current bid.
Now you are skating on pretty thin ice and then play the waiting game for things to get better. Now if you get stuck in a cycle of doing the same thing again and again, this cycle continues until you either leaf frog into a solid project with good margin or you go bankrupt. Whilst this leapfrogging is taken place, overheads are still piling up, holding costs are hurting and only take one thing to fall out of place to send a company into insolvency.
One client payment delay, one disputed, one mistake anywhere in a thousand variables that could sting you. ACIS takes a pretty grim view to companies trading whilst insolvent… Leaf frogging is usually followed by another phrase – “When the shit hits the fan…”
If you ever get a sniff of this happening – good time to jump ship quickly.
This is a BOQ thing of leaving messages to your future self. (You are leaving a road map of your odd actions during tender).
Signposting is basically leaving notes. Let’s say you have priced a group of items in a standard BOQ format and then the client wishes to break out a specific item. Now you have a choice to corrupt your BOQ or you can transfer an amount of corresponding money into a new location on the client pricing schedule as a one-liner. So you have now created a signpost to explain to your future self what you did at tender.
Another example of this would be when you have a price in one of the service trades that include all design costs. So in the consultant section, you leave a signpost (message to yourself that the design fees are included in the trade cost.
All I can suggest – be specific and signpost in both directions – In and out. One day you will thank me.
I have won tenders a year after the first submission and when you are asked a question, you want to be able to find the answers question quickly.
Building Information Modeling – has been marked as the next big thing. It is not just coming it is here…
It is a way of managing information in a team environment. The fundamental concept starts with the design in a 3D model where the components of a building have a unique industry code and are drawn, estimated and procured.
In theory – a drawing can quickly extrapolate these components in an automatic BOQ and then priced and managed the same way through the design and building process. The system relies on a draftsperson constructing the drawings in a set manner with every component inputted the same way every time. The codes would follow a similar cost plan format (elemental manner).
I spent many years on various forms of CAD systems both as a drafty and QA training staff and it is hard enough getting two drafts people to draw the same way. Most drawing software uses a system based on line weight and line type via a system called layers. The quality assurance and level of discipline to draw correctly using these layers are really difficult from one user to another and take a lot of time and money to manage. As a design manager and builder – you want the documents to be coordinated and fully documented (quality of that process can be a problem as well).
To get this to actually take place between Alpha type egos – I see basic issues of people simply playing nice. I see an inevitable scenario where the architects will have to be employed by the builder. An architect is paid to punch out a document that we can build from to guarantee that these same documents are drawn 100% correct in a BIM format – I would imagine it will cost a bomb.
There are only so many hours in the day and I believe if you place any more stress on architects and consultants from doing their jobs – I think the decline of standards will follow.
In the short term – when you are producing basic boxes, of track housing and the designs are the same all the time. However, where you have a custom design building – I see inherent problems with the system just to get the design consultants to play nice. It is like most things – the actual cost of a BIM system and the organization paying for this system will have the last say.
If these human issues can be addressed I think the industry will be more accepting. But as a true D&C tender where design and estimating evolve through the process – I think there is even further gap. But technology has a good way of solving most issues.
Elemental or element is the term used to describe the format in which a Cost Plan or BOQ is formatted. An element of a building is simply as it seems – floor, walls roof, etc. An elemental cost plan – this is where you are pricing a building using a checklist of simple building elements (elemental).
Now a natural evolution of an elemental cost plan is a BOQ. The BOQ will also follow an elemental manner where its trades are grouped in building elements.
Elemental billing is a very easy way to track where inside a BOQ a particular trade in formatted within a pricing schedule.
An example of why this is helpful: if your Cost Plans and BOQs are set out in an elemental format every time the same way – well it is harder to misplace costs or double up on pricing. Some times you will have to price a really obscure item on a custom build and there is no clear place to assign the cost – if you place this new cost item in its elemental group – again you will be able to find it relatively easy at a later date.
Cost plans, BOQ and BIMs should always follow this format unless you like hunting around wasting valuable time.
If you wish to read more about Cost Plan & BOQ Formats – Click Here
Just a little OCD Clarification – Alternatives (or Options) should be used to describe single items that are being changed.
The word “ALTERNATIVE” is the keyword here – in the building industry we use alternatives in tendering and contracts when we are simply are pricing the possibility of swapping one element for another. (When we get into a contract situation these options become Variations). This language often gents used when a client or architect wants to know the difference in price for product A for B. A good example would be changing the carpet selection from broadloom to Carpet tiles. The building methodology doesn’t really change significantly and it is more a selection and specification change.
I herd the words alternative method, alternatives product, and selection, specification, etc. Pretty much means the same thing and from an estimator’s point of view, in isolation where you change and BOQ item note from A for B – not a great problem managing the risk of the change. (Subbies don’t shoot me – I get it, a spec change is a pain).
But if someone starts using the words “Alternative system or solution” – for an estimator that is an entirely different story.
Just a little OCD Clarification – Alternatives (or Options) are singular and affect maybe one or a few trades. However, an Alternative System is a number of combined items that affect methodology and a number of trades. (I am sure there is an exception however you get the picture).
As I mention above In terms of the building industry language – Alternatives relate to singular trades where Alternative system – the keyword being “SYSTEM” which means a number of items combined for a combined purpose.
From a QS & Estimating perspective, managing risk and capturing a system in parallel to the core tender is a bit more complicated and relatively easy to manage if you get the request at the start of the tender and again not at the eleventh hour.
Alternative Systems get a little more complicated. A good example would be changing the frames and trusses in a house from timber to Lightweight steel. This seems pretty straight forward however from a BOQ perspective and also managing the risk –
- Remove the structural steel & all carpentry, frame, and labor.
- We have to coordinate the services trades, lining & fix out subcontractors, etc
- Add the lightweight steel price & labour,
- Coordinate any preliminary costs associated with material handling and program duration.
Now, this is just a small system change. But to a sleep-deprived estimator that normally gets these options at the eleventh hour and dealing with the stress of meeting a deadline. Yeh, not much fun.
The next OCD moment – Alternative Systems and Alternative solution get used loosely for obvious reasons however from an estimating and BCA perspective. In terms to use the correct language in the building industry – there is a term in the Building code of Australia (BCA or NCC) that references engineered solutions outside the minimum requirement of the BCA called Deemed to Satisfy (DTS). The term is an Alternative Fire solution or engineered solution. See below for definitions.
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