My final thoughts for 2005 are for all the owners, chief and senior estimators out there—the team leaders who bear the responsibility of determining which direction their estimating department will take their company. You are the ones who decide which jobs will be bid, passed on, taken too cheap and bid too high. You determine what jobs the electricians will build and how much material the company will buy on credit.
You are the ones in charge of accepting, soliciting and thereafter assigning all that will be counted, rolled off, guessed at, input, questioned, cursed, forgotten, missed and finished one hour before the bid. You carry a big part of your company on your shoulders and you control the stress machine. And ultimately, you decide how many late nights and weekends you and your estimating team will work.
Many questions to ask
As 2005 comes to a close, I recommend you take the time to analyze your company’s year of estimating. This exercise requires many questions: What type of jobs did we estimate this year? How many? What sizes were they? How many wins? How many losses? How did your software work? Did it save you time? Are you ready for next year? What will you do differently next year?
The answers might be lost in the fog of a busy year, a blur of time that may be better forgotten. But even if you can only answer a few, the data will provide priceless information you can use to make your company more profitable in the year to come.
Applying your successes to bids
The easiest research can be taken on the projects you won. How did these projects go? If still in production, how are these projects going? How do they compare to the estimates? Is your purchasing agent benefiting from the detailed reports your estimating software produced? Have you given your foremen any of these reports? How is your bottom line? Answers to these questions should be reviewed and discussed with both the estimating and project management teams. Lessons learned and applied to future bids will produce better estimates and more profitable contracts.
What does your business plan say?
I am often amazed at how many contractors I talk to who are not working from a well-defined business plan. Does your business plan include a strategy for your estimating department? Does it outline the specific types of projects your company should bid? Which projects fit well with the skill levels of your electricians, your inventory of tools and trucks? Does it outline the margins you need to bid with in order to achieve true profit? If it doesn’t, perhaps this would be a good time to revisit your business plan and write in such a strategy.
Stick to your plan
This is a crazy industry full of “I need your price now” requests. More often than not, contractors are reactive and not proactive when it comes to servicing their clients. Some contractors simply bid a project because either their client has asked them to or they think they need the work.
For the most part, this is probably true; your company does need the work and passing up opportunities can be detrimental. But what about bidding the wrong job? Isn’t this as destructive if not more than passing on it? Saying no is hard enough. Learning when to say no is harder; though it is much easier to say no when your business plan dictates it. So, it is vital that you stick to your plan.
Knowing what to expect
Another valuable tool that can help your estimating department succeed is a solid list of goals and a realistic time frame for achieving them. What do you want your estimators to achieve in 2006? Become more proficient with estimating software? Increase their NEC knowledge? If any of your desired goals require education and time, you need to develop a schedule that allows for training in conjunction with your estimating load.
Knowing how much your estimator or estimating team can produce is very important. Asked to estimate too many jobs and they might get overworked, stressed out and sloppy. This will result in bad estimates that will either lose bids or win bids with the wrong numbers.
Either way, the company will lose money. Not challenged enough and they will most likely get lazy and complacent. Then, when a big rush comes along, they might hit a mental wall; unprepared and unpracticed at working under a tight, stressful deadline. Again, the result will be a loss of money, time and quite possibly the estimator.
For estimators, I offer this last bit of advice: enjoy the holidays, take care of your health and most important: rest up. You will need to be in top estimating shape as 2006 is set to be a highly competitive, fast-paced, super-charged year of bidding—and your bosses will be making a plan and checking it twice.
Happy holidays, and good luck with your bids in 2006! EC
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 or sfs@TakeOff16.com