David Gerstel, Journal of Light Construction contributor and author of Nail Your Numbers: A Path to Skilled Construction Estimating and Bidding, says builders could benefit from taking an “exam” that questions them to think through the way they handle the major issues that come up during estimating and bidding. In other words, an “exam” could act as a tune-up guide, prompting a close look under the hood to see what was working and what needed adjustment. Check out some of the questions below.
Explain the difference between estimating and bidding. I was fortunate to learn about bidding and estimating from a professional estimator named Paul Cook, who was also a superb writer. Mr. Cook understood the difference between bidding and estimating so clearly that he wrote about the subjects in two separate books, Estimating for the General Contractor and Bidding for the General Contractor.
When I felt ready to write my own book and began interviewing other builders as part of my research, I found that all but the most savvy were puzzled when I asked them for their thoughts on the differences. One builder, though he’d been in business for 30 years, said, “It never occurred to me that there was a difference.” Joseph Hough, by the way, came up with an interesting way of summarizing the difference. “Bidding,” he wrote, “pertains to making money. Estimating pertains to spending it.” How do you see the differences?
Explain why it is necessary to separate bidding from estimating. Can you pinpoint the hazards of allowing the mindset necessary for bidding to take over when you are estimating?
What do you consider the most important factors to consider when you are deciding whether to go after a project? What tools have you created to ensure that you are considering all the factors? Are your tools effective? Or do you find yourself too often investing precious time in estimating and bidding a project, but then not being selected to build it?
Do you ask prospective clients about their budget for a project? Do you have a well-thought-out approach to asking the “B” question? For a project I learned about recently, the clients refused to divulge their budget even to the architect. They were afraid that if they did candidly state their budget, the architect and builder would gobble up every penny of it. Have you ever gotten a similar response when you asked about budget? If so, how did you handle it? If not, how would you proceed if you did get such a response?
What are the primary functions of estimating spreadsheets? If you are using a spreadsheet produced by a software vendor, have you considered that you might be able to get more functionality for far less long-term cost by creating your own spreadsheet using Excel? What do you see as the pros and cons of using Excel vs. using a program created by others?Read More