Estimating Trends

Questions You Should Be Asking as an Estimator

In practically every kind of business you can think of, a big contributor is the success (or lack thereof) that business comes down to trends, or specifically:

• what is currently trending
• the ability of that business to anticipate future trends.

Estimators play a critical role in both the current and future state of their business. An estimator can discover what works and what doesn't simply by observing estimating trends. There are two benefits of this:

• your estimating skills are sharpened
• you contribute to the future success ratio of your company

So let's go ahead and get into the estimating trends you may see your company experiencing. Are these trends good? Are they bad? Perhaps both? What makes a trend "good" or "bad"? Think about what kinds of jobs you've won and what jobs you've lost recently. Are there similarities between them, or are they fairly diverse? Whether they are similar or diverse, consider why and what trends contribute to the outcome.

Consider the possibility that you are winning or losing some jobs based on your estimating techniques, including how you estimate, when, and how often? Could it have something to do with estimating knowledge, or perhaps lack of knowledge? All of these factors could be related to the types of contracts your company wins and goes on to build.

Another element to consider is your company's software. Is the software you're using affecting trends? Here's a few ways software could affect your wins or losses:

• The assemblies database may not be efficient enough.
• The materials may not be up to date, which could mean cutting too much or not enough.
• You may not have correctly adjusted labor unity to accurately reflect your electricians true installation times according to the national pricing service or program you're using.

Upon talking with multiple contractors about estimating software and databases, we've discovered that many haven't actually spent time working on their databases by adjusting them along the way as time goes on and work is done.

We ultimately have to consider the trends of profitable projects versus the losers. When analyzing a project won versus a project lost, look and see if there are any similarities. 

Your vendor or subcontractor quotations may play a major factor in your wins and losses. Here's a few contributing factors you may want to think about:

• Consider whether you have one specific vendor you use frequently, or do you use multiple vendors?
• Are you known to always go with the lowest quote?
• Are there any trends that you can spot in your quotations?
• Are your quotes consistently low, consistently high, or do they have no clear pattern?

When analyzing this data, know that it is very important to know if your quotes play a factor in your wins or losses.

You also need to consider the "GC Factor". Take a deeper look into which general contractors you are winning and which ones you are losing. Notice any trends? Perhaps it would be best to stop bidding to one GC where you discover a loss trend. If another pattern reveals that you are always winning with another GC, consider the possibility that your prices are too low.

As time-consuming as it might seem, you should take it upon yourself to ask the same questions about your competition. Let's say your bids are constantly getting beaten by the same companies; it might be a good idea to avoid bidding on the same projects they are bidding. There's a strong possibility that these losses are connected to the same trends you found among your vendors.

In order to discover exactly how each element of your estimating stacks up against the others, you have to look at everything. An example would be your database, as mentioned earlier. If you are unsure how your database affects your wins and losses, any conclusions you come to after analyzing your estimating techniques will not be accurate.

Something we often hear contractors say the reason they are bidding a project is because they were asked to by their GC client. While this mindset is relatable since we're taught we have to serve the client, when it is paired with statements like "I don't really want to bid a job like this" or "This isn't the type of project we normally like to build", this in itself is a trend that can produce negative results. The importance of only bidding on projects laid out by your company's business plan - including projects you are good at building and estimating - can mean the difference between your company thriving or struggling. While it's good to estimate new types of work and expand your experience and education, the desire to experiment shouldn't come at the expense of your company's well-being.

While you may think you are following your company's business plan, this is a good time to re-visit the plan and find out how you're REALLY doing. While it may seem like a daunting task, this isn't something should take too much time. Starting off will likely take the most time, as it will require creating spreadsheets, charts, etc. Once you develop a system and keep up with it as you work, you will reap the fruits of your labor since you will be in a position to review your reporting any time you need to. These reports can then be used as a compass to guide your company into more successful trends.

Charter Estimating is a professional electrical and pre-construction estimating company that offers long term and short-term estimating solutions for contractors around the nation. Whether you are looking for part-time, full-time, or more than one estimator, we are always here to help you further your company’s goals. Get in touch with us today!