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