Real Life Secrets Estimators Refuse to Tell Their Bosses
Being on a winning team requires good communication. Delivering bad news in the right way is just as important as delivering good news. There must be transparency if you want everyone to move forward together towards the same goal … a true team.
A 2019 Harvard Business Review article shared “An ineffective knowledge sharing culture … can cost large U.S. firms up to $47 million in lost productivity annually.” Which led us to wonder what estimators are not telling their managers and colleagues. We asked and they answered. Below are four stories from actual preconstruction professionals.
Looking Out for Trades and Subs
Early in my estimating career, the industry was recovering from the Great Recession. I had spent a few years in the field on self-perform crews, so I had a soft spot for the guys in boots when estimating. Even though our contracts were mostly negotiated, my boss was very sensitive to keeping the price low when presenting to clients out of fear of losing work. At the same time, ownership was pushing for profitability, so my boss would trim estimated costs to pad estimated contribution during review. In my mind, he was robbing the field.
On one project, I developed a relationship with the owner who became increasingly transparent in conversation about what they could actually afford for the project. Our finished scope and estimate were well below that mark. So, I waited until I knew my boss had little time or interest and scheduled the review. I intentionally spread a lot of 'extra' money across the trades we estimated and sub work while leaving a 'nugget' in an obvious spot for the boss to find and move to margin. It worked. We got the signed deal (lump sum, so open book was loosely interpreted) and before I moved the costs to accounting, I pulled all my fluff into a couple of spots to support labor and material waste. I told the PM what I did and where the money was.
It was the most profitable project by percent of contract that year and the field guys loved working the job because they could staff it appropriately and do the work how they believed to be best. To my knowledge, the boss never figured it out because he later mentioned his moving money to margin from cost as proof that he knew what he was doing.
A very particular, highly sophisticated client we are about to go to GMP with just found out that their building is not up to code and will need Arc upgrades added at all the electrical. This is a 500+ unit hotel! My estimate is now $1.5 million over what we had at schematic design because the engineer did not have this in their narrative. We would be 100% justified in adding it but this is a design-build project. I’m bracing for the "Why did you miss that?" conversation we are going to have soon.
Why Behind the Cost
A big thing a lot of estimators run into when starting is why things cost what they do. Like the difference in masonry between running bond, stacked bond, soldier course, or Ashler. The same material can have multiple price points based on how it is laid out but that isn't something everyone knows right off the bat. Learning how job site conditions, weather, locations, access, etc. impact the labor cost is something a lot of younger estimators don't know and are scared to ask about.
A lot of the value engineering (VE) options are offered because the sub suggested it and we took their word for it. We don't know if it is a good or bad idea, just that it may save money. When people throw out VE ideas, a lot of times it is a last-second thing, and we don't vet it out properly. It takes experience and expertise to vet out the VE options before committing the project to it.
How to Avoid These Issues
Sharing these real-life stories is meant to shed light on the difficulties precon pros can find themselves in. Construction estimating roles are notorious for being in the middle of “a rock and a hard place." They are expected to keep the company profitable, the customer happy, and be efficient with their time. The unexpected doesn’t factor into the equation but the unexpected has always been part of the construction industry.
Building a work environment and team where people feel secure in bringing up concerns and mishaps without fear of repercussions is ideal. Also, a lot of the stories above were from people’s first couple of years in preconstruction.
One response received stated, “I wouldn't work for a boss who I was afraid to tell something, especially when it concerns a bid. People can lose their livelihood and my pride isn't worth anywhere near that. The earlier you admit to a mistake in precon/estimating the easier it is to fix. Everyone is going to make mistakes, it's impossible to be perfect when it comes to estimating.” This is a perfect example of a work environment where employees feel comfortable and are encouraged to speak up.
How can you avoid the above situations? Supply junior team members with opportunities for mentoring from more seasoned professionals. This gives them a person who can teach them about honest and transparent communication.