“Estimating.” In the construction world of logistics nightmares, impossible deadlines, and complex projects, the word has a benign ring to it. But as every good electrical contractor knows, getting that job done right is the critical first step to landing profitable work — and hardly one to be entrusted to just anyone. Ironically, that line of reasoning is used to both justify and argue against outsourcing project cost estimating to third parties.
Opponents of outsourcing say it's simply too nuanced and far too important a task to let someone outside the company fold handle. Proponents, however, maintain that farming the work out to trusted and capable professionals can yield better numbers and free up valuable resources. Plus, more estimators translates to more bids, and more bids means more work.
Meanwhile, continual improvements in information technology tools are muddying the decision of whether to hire outside estimators. More powerful and reliable estimating and bidding software is taking some of the tedium and cost out of the process, helping outsourcing critics make their case. But for many contractors, it's not an either-or proposition. Some larger contractors don't use any outside help. Some smaller ones, who are constrained by labor resources, mull turning all of it over to specialists. Most who outsource, however, probably do it selectively, using staffers for most of the work and hiring estimating contractors only at certain times of the year or for certain types of jobs.
Help in a pinch
Those in the latter camp, like Commonwealth Electric Company of the Midwest, Lincoln, Neb., essentially view outside estimators as “bench strength” to be tapped when circumstances dictate. A large contractor with dedicated staff estimators and others who can do takeoffs and related work, Commonwealth still gets in a bind on occasion, admits Matt Firestone, the company's chief estimator. That's when the call of “grab a bat” goes out to a professional estimating company.
When Commonwealth outsources estimates, several issues come into play. A heavy bidding/estimating schedule, overcommitted in-house staff, specialized projects that demand an intense focus or particular expertise, or a job out of left field the company feels compelled to bid on are common reasons, says Firestone. No matter what the reason is, the company tries to make sure the call for assistance is tied to a real need and provides a value.
“Anytime we outsource estimating work, it's good for us because it puts us in a position to bid on something we probably would have had to turn down,” he says.
Likewise, Triad Electrical Contractors, Inc., Mundelein, Ill., uses an estimating service only under certain circumstances, and only when the help is absolutely necessary.
“Mostly, it depends on my workload and also what type of job it is,” says Nick Mascari, president of the small company, which employs 14. “I'd prefer to do it in-house, but if I'm overloaded and it's a relatively simple job (like one for a public bid that I don't have a lot of questions about), then I'll send it out.”
For Mascari, the value of sending estimating work out comes primarily in the form of speed and accuracy. In the year he's used his primary estimating supplier, Accurate Electrical Estimating, Coral Springs, Fla., Mascari has come to appreciate its reliability and quick turnaround.
“On an average job, they can come up with an estimate twice as fast as I can,” he says.
Nevertheless, Mascari prefers to do his own takeoffs and estimating on jobs he needs to understand better through more focused and intimate study. Specialized work, such as medical facilities and projects that require him to take a design-build or value engineering approach, are also typically kept in-house.
Software lends a hand
For those situations, as well as even the more routine estimating tasks, specialized software continues to improve contractors' ability to do more of their own estimating. While estimating and bidding software still demands some facility with estimating, it is simplifying and streamlining the process. Contractors, in turn, can estimate more projects and pump not only more bids, but also safer bids, out the door.
For contractors like Tri-City Electric Co., Davenport, Iowa, estimating software that's been steadily improving has helped bolster its preference for keeping all estimating and bidding work in-house. Tom Lanum, chief estimator for the 400-person company, says the software it uses, from McCormick Systems, Chandler, Ariz., has made its staff of about a dozen dedicated estimators more productive and able to easily handle all the work the company wants to bid.
“Software has made estimating much easier, especially with some of the networked products that allow us to put multiple estimators on projects as needed,” Lanum says. “The speed and networkability of the software and hardware means several estimators can work on a project simultaneously and bring an estimate in a timely fashion.”
With its extensive materials databases and computing power, Lanum says most top-shelf estimating software is able to generate highly accurate and reliable takeoffs, as well as solid bid numbers that consistently reflect the company's bidding style. In addition, the network functionality meshes with Tri-City's approach of getting project managers more involved in the bidding and estimating process. That objective might be more difficult — not to mention more costly — if outside estimators that typically charge by the hour were spearheading the estimating work.
Commonwealth's Firestone also praises the improved collaborative capabilities built into estimating software. Also a McCormick user, Commonwealth has been able to increase the turnaround time on bids and quickly bring manpower to bear on estimating jobs. Across the company, about 55 employees (mostly estimators and project managers) can access the software and easily merge their work. That ability to quickly mobilize staff across multiple office locations is especially valuable as bidding periods have become more compressed.
“The time frame to put together estimates is being cut, because everyone wants things built faster,” Firestone says. “It used to be you had a month to bid a job; now it's two weeks, even on some of the larger ones. Some may even come in on a Monday with a Thursday deadline. A network-based software product is conducive to working in that kind of environment.”
Estimating software also has simply become quicker and more reliable. Steve Soloway, a project manager at Miller Electric Co., Jacksonville, Fla., says IntelliBid software from ConEst Software Systems, Manchester, N.H., permits “takeoff-on-the-fly” (counts go directly into the computer with no manual takeoff needed), access to real-time materials vendor databases, and the factoring in of manpower requirements and costs. The software's ease of use allows Miller to pay willing company retirees to lend a hand during estimating crunches, he says.
“If we get backed up, we can call on some of them to do takeoffs on certain parts of a job,” Soloway says. “The software makes it possible for us to essentially have another Miller employee, but my guess is if we ever got into a position where we were consistently overbooked on estimating work, we'd hire some more estimators.”
Farming it out
Nevertheless, advances in software can't convince all electrical contractors that information technology will make their estimating headaches disappear. Some, like two-year-old Control Line Electric, Inc., Santa Clara, Calif., have become enamored with the idea of letting someone else do the counting. Even though he uses estimating/bidding software from Accubid Systems Ltd., Concord, Ontario, Project Manager Anthony Voroshuck says the 13-employee company is steadily ramping up its use of an estimating service.
Focused on just getting established in the competitive Bay Area market, Control Line, Voroshuck says, was spending more and more time estimating and preparing bids. Often working late into the night on estimates, he'd consistently come in too high on many jobs. After finding two freelance estimating companies and putting both on the same test project, Voroshuck selected one that he's now funneling more work to all the time.
“We were wanting to go after both more jobs and bigger jobs, and we were pretty slow in the estimating process,” he says. “With 30 years of experience, the firm helps us come up with accurate numbers that we, of course, still have to fine-tune based on our knowledge of this market.”
Over a period of four months, Voroshuck says, the outside estimator, who uses Accubid and a mix of other estimating software products, has had a hand in more than a dozen projects. He credits him for helping land the company's biggest job to date: a $900,000 job at the Palace of Fine Arts Theatre in San Francisco. Voroshuck was so confident with the estimator's numbers that he tacked on another $30,000 and still won the bid. “We really wanted that job, but it involved some very intense estimating work,” he says. “He was able to do the estimating work for us, and we were able to get the job.”
Now, Voroshuck says, he's comfortable enough with the contracting arrangement that he's shelved plans to hire a full-time estimator. Even though he pays for estimating jobs he doesn't get, Voroshuck says using an outside estimator appears to make more financial sense.
“I think we'll use him even more,” he says. “I'd like to eventually have him doing all of our estimating work.”
At the other end of the spectrum, though, are contractors like Tri-City and E-J Electric Installation Co., Long Island City, N.Y., who don't see a place for estimating contractors in their operations.
Putting issues of software capabilities aside, Mark Jackson, vice president of estimating for E-J, says the company needs to be fully engaged in the estimating and bidding process. By immersing itself in that all-important function, the company continues building a vital knowledge base, stays current with continual changes in estimating and bidding protocol, and retains control.
“We think it's a lot easier to do in-house,” says Jackson. “We don't want to be in a position of getting a folder with the numbers two days before the bid is due. Project documents today are onerous, to say the least, and they're coming in less complete than ever — and often can involve two, three, four iterations. The work requires an estimator to understand our system and how things are supposed to work.”
Clearly, contractors are taking all of that and more into account when assessing the value of using contracted estimating help. While the answers may be different for each, there's little doubt contractors are giving more thought than ever to how to best accomplish a task that lies at the heart of any successful electrical job.
Zind is a freelance writer based in Lee's Summit, Mo.
Sidebar: Is Estimating Losing Its Allure?
Can someone whose work is essentially discarded 85% of the time be content in his job? That's more than an idle question for electrical contractors today. By some contractors' accounts, it's getting harder to find qualified project estimators these days. With the average contractor landing just one of every seven jobs bid, it's easy to see why it might be hard to interest people in taking part in a process where failure is routine. It may also help explain why some contractors are turning to more advanced software tools for estimating as well as outside estimating services.
That may be just part of the reason Matt Firestone, chief estimator with Commonwealth Electric Company of the Midwest, Lincoln, Neb., says young people entering the business are showing less interest in estimating. “University construction professional training is geared more toward how to be a project manager, and I think young people view being an estimator as something less than that,” he says. “The position doesn't seem to be glorified, and there may be the thought that if you're just estimating, then you're not making the money and running things. But it's obviously very important.”
Still, at Commonwealth, estimating is at least a weigh station on the path to positions of project manager or higher. All project managers, he says, start out learning at least the rudiments of estimating, a function Commonwealth views as fundamental to the business. “You must be able to understand how to price work,” he says.
Mark Jackson, vice president of estimating at E-J Electric Installation Co., Long Island City, N.Y., says the challenge of finding and keeping dedicated estimators has led his company to cross-train more of its 700-plus employees in estimating. “It is harder to find estimators these days partly because there's no glamour in the position,” he says. “Finding people who are competent is difficult, but we have a good team here now of four or five senior people who regularly estimate. We'll pull people in from the field when it's necessary.”