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Breaking Through Estimation Limitations

June 2017
 

 

6 major liabilities that estimators can overcome with specialized software

 

Patrick Reitz, B2W Software

 

When pencils, paper and calculators were the go-to tools for construction estimating, spreadsheets represented a major breakthrough. Now, contractors relying on Excel find themselves at a big disadvantage when they compete against companies equipped with purpose-built estimating software. Even processes built around advanced, customized spreadsheets are no match for the speed, accuracy, integration and collaboration capabilities provided by specialized software. These are six major liabilities that estimators can overcome when the leave spreadsheets behind when they make the switch:

 

Costly Formula Errors

Spreadsheets rely on formulas. The problem is, formulas can be changed, and changes are hard to detect. Checking and double checking every cell to prevent errors from making their way into the final bid is tedious and time consuming. Estimators are often forced to skip this step when a deadline is looming and they have to focus on cost components and strategies. Spreadsheets also lack the safety net of automated error checking, a feature built in to specialized estimating software. Like a spell check, this feature scans the estimate and flags common mistakes or discrepancies like a zero or negative cost, undistributed values or dozens of other variables.

 

Too Slow

With spreadsheets, estimators essentially have two choices. They can start from scratch, creating a structure or framework and then populating it with cost components that they have to go and find from multiple external sources. The second option is to start with a similar, previous bid and make adjustments. Obvious dangers here are that the cost data could be outdated, or they have to verify or change the formulas in the cells. In either case, they lose time and accuracy and increase risk.

 

Inaccurate Data

When cost information for materials, labor and other components of a bid is maintained in spreadsheets, contractors struggle to keep track of changes and keep the data current. Estimators typically end up searching through multiple sources and previous bids for cost data that may or may not be accurate. Different estimators may use different sources. That wastes time and leads to mistakes. A single, centralized cost database is the cornerstone of specialized estimating software and provides a single source of truth.

 

Collaboration Challenges

Having several estimators contributing to estimate is common and can be essential. That’s especially true when contractors bid for large, complex projects, perform a broad scope of work or operate in multiple locations. With spreadsheets, limitations on collaboration are a big disadvantage. Estimators generally have to input information one at a time in succession rather than concurrently, and they can’t see what their colleagues are doing in real time. That can slow the process, create overlapping or conflicting entries, and leave companies trying juggle and reconcile multiple versions.

 

Process Not Standardized

Spreadsheets make it difficult to standardize the estimating and bidding process within a company. Each estimators might do things a little differently. Methods and cost data – and how they are applied within the bids – can also evolve over time. This threatens efficiency, speed and the ability to compare one bid to another. More importantly, companies with an inconsistent or non-standardized process struggle with conveying the bid information to the field and with comparing actual costs of a job to the estimated costs.

 

Isolation

Estimating impacts multiple workflows, but spreadsheets isolate the process. Communicating data to accounting, project management and field operations systems can be inefficient and time consuming, often requiring manual re-keying of data that invariably leads to errors. The lack of a seamless connection between estimating and field management can be particularly damaging. Teams in the field struggle to plan and execute according to the expectations of the bid, and estimators miss opportunities to use actual field performance to improve future bids. Incorporating quotes from vendors and subcontractors presents similar integration challenges for estimators relying on spreadsheets. Specialized estimating software also allows contractors performing DOT work to take full advantage of electronic bidding systems (EBS) - downloading forms, building bids from pre-populated databases and exporting to a bid file at speeds that would be unimaginable with spreadsheets.

 

Every dollar a construction company earns – or loses – begins with the estimate, so there is a lot riding on the accuracy and speed of the process. These spreadsheet liabilities can force estimators to choose between speed and accuracy and to compromise in both areas. The result is an increased risk of losing potentially profitable jobs or winning jobs they will lose money on. That’s why construction companies continue to make the move to specialized software.

 

Patrick Reitz, is a product manager at B2W Software. He has had a leadership role in the continuous development of B2W Estimate, the company’s comprehensive application for heavy civil construction estimating and bidding that is used by more than 1,500 companies in all 50 states and each Canadian province. He can be reached at preitz@b2wsoftware.com

 

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