An estimator recently asked how to tighten up his estimates without getting too far out of his comfort zone. His zone was 20-plus years experience and knowledge that told him exactly what jobs require; this was not helping him compete in our insanely aggressive and below-cost bidding environment.
We talked a bit about cutting raw material costs. But assuming he counted and rolled accurately, his material quantities should be fine and really shouldn’t be adjusted. This left only the costs of materials to play with, and the best he could do was discount them to just above cost or get a firm quote.
Then we discussed about trimming his labor database.
Know your database
There is excess labor gathering in your assemblies. Most estimators today use some sort of estimating software and (hopefully) assembly-based databases. This is a great thing, but it comes with the high potential for accumulating too much labor as assemblies are counted in bulk, especially if the “per foot” or “per unit” assembly labor is too heavy.
Study the database assemblies that comprise the bulk of your takeoffs. Typically, pipe and wire, branch devices and lighting fixture assemblies carry multiple database items, which collectively can extend out to a lot of labor.
Instead of focusing on the labor of each individual item within the assembly, study the labor for the entire combined per foot or per unit assembly. On their own, they may look OK. But do they account for bulk quantities and repetitive installations? Is there potential for these assemblies to be prefabricated? Does the labor reflect a prefab or in-the-field installation? What does your company’s historical data show for the actual installation time of these assemblies?
Example: A single ¾-inch EMT conduit is labored at 4 hours per 100 feet. This should include any bending or elbows (not LBs). Add straps, anchors and supports. The per foot assembly labor is now at 4.5 hours per 100 feet.
But this is a single conduit run, independently routed and strapped. It should carry with it all of the layout time, anchoring and supports, etc. It is not efficient. “Grouped” trapeze rack-mounted conduits should be faster, as they share the layout time, supports, etc. They are more efficient.
As you perform the roll off, segregate and use different assemblies for the solo and combined runs (typically homeruns on a trapeze rack). This will give you the ability to adjust down the combined runs by applying a labor factor. Here are a few ways you can do this:
• You can simply total up their entire footage and calculate the total labor they extend to. Then create and enter a single labor-only item called “bulk conduit labor discount.” Make sure this is entered in as a negative value as you are cutting, not adding.
• In your combined assembly, create and use a different ¾-inch EMT database item that has a lower labor unit—say 3 hours/C versus the solo assembly item’s 4 hours/C.
• Some estimating software programs have special labor factor settings that can be applied to a specific takeoff as you enter it. This is a great feature. Just be sure you understand how the factors apply and how you will see it in your final extensions.
More than one way to cut a wire
Wire items typically are labored based on a single wire. For example: No. 12 solid at 5 hours/M.
When do you ever pull a single wire through conduit? If you do not adjust the labor down for this single wire item, you dramatically increase the labor for your wire. Three No. 12s now combine to 15 hours per 1,000 feet!
I recommend taking a hard look at the labor for your wire items. Study them while considering they will be run in a minimum grouping of three. You may even want to see if you gain more labor for combinations of four, five or more. Maybe there is a labor factor item you can add to your assemblies to accommodate this?
This logic/method can be applied to virtually any type of bulk assemblies entered throughout the takeoff. Just remember: when you start to cut labor units down based on groupings, you need to ensure you account for materials handling and setup time. Also, remember these cuts as you review your extension. You do not want to make more cuts to something that already is factored down.
Thinking and cutting deeper
In order to estimate tightly, you must be fully aware of every assembly and item you put into your estimate as you are entering it. Don’t wait until later to think about it, such as when you are reviewing the extension. You may not be able to focus on exactly where the excess labor is. This may cause you to make an over-all labor adjustment, which may or may not be accurate.
In today’s hyper-competitive bidding environment, staying in your comfort zone will not win bids. In fact, you won’t even get close. In order to win, you need to get creative, aggressive and downright risky with how you count, roll and use your database.
SHOOK is the president and chief estimator for his estimating company, TakeOff 16 Inc. He has worked in the electrical construction industry for more than 18 years. Reach him at 707.776.0800 and sfs@TakeOff16.com.