Some mistakes are big; most of them small. Hopefully our mistakes are caught before the bid, but sometimes they aren’t. These post-bid mistakes often cause a cold sweat to come over an estimator, followed by a bit of panic, then nausea and more panic. After that, a few choice words are eloquently uttered and sometimes papers are thrown around the office.
So, what should you do when you realize you’ve made a mistake? I have a few suggestions, and they start with the golden rule: always tell the truth, especially to your boss.
Tell your boss
Informing your superior may be the last thing you want to do, but you need to do it immediately. The longer you wait, the worse you make the situation for your boss, the company and you.
The sooner a decision-maker knows about the mistake, the sooner he or she can begin researching the problem and planning a solution.
Now if you have the ability and time, you should prepare as much information and facts about the mistake as possible. If delivered at the same time as the bad news, this information can help soften the blow.
Figure out the mistake’s value
This shouldn’t be too hard, as you are probably very aware of exactly what the mistake entails. But all of your panic and frantic scrambling may have produced more fear than necessary.
At first glance, you may not be aware of the actual true cost and impact of the mistake. Remember, materials can be bought cheaper than they are priced in the bid, and the labor amount you carried can sometimes be made less on the job site.
Remember, the hard-cost is the actual loss. Profit doesn’t actually cost the company anything up front—it is just something the company won’t make in the future. Of course, your boss may have a different take on this.
Decide what you are going to do
Once you know the actual value of the loss, you (or, most likely, your boss) will need to make a difficult decision: Do we stay in the bid or pull our price?
This is not such a tough decision to make when the mistake is small, say less than 3 percent of the bid. Even 3 to 5 percent is still not too much to worry about, if the rest of the estimate is strong. When the mistake gets into the 10 percent or more range, the impact is much deeper and dangerous.
Of course, everything is relevant to the size of the contract. Losing 10 percent on $20,000 is only $2,000. Losing 10 percent on a $1 million is $100,000. It is funny how the bigger numbers seem to change the math, isn’t it?
You never know until you ask
There are other issues beyond cost that also need to be considered and factored into the decision. What will our client think if we pull our bid? How will it impact our relationship? What will it do to our client’s bid? Will they force us to keep the contract?
Another possible solution would be to admit the mistake to your client and ask for a chance to reclaim the oversight. For most bids, this simply is not an option.
However, bids come in many different forms and there are many types of clients. Talk with your client. Ask them if there is any chance to submit a price for the missing piece of your estimate puzzle. You might get lucky.
Minimize the impact
If you keep the contract, inform the project manager and field foremen of the mistake so they can help lessen the impact. By telling them what is not in the estimate, they will be more prepared to focus on the missing costs. They can track the mistake’s costs and make sure they use every possible material and labor-saving option they can.
You can be too careful
One of my mentors and longtime friends always told me, “If you’re not making mistakes, you’re not working hard enough.”
He was simply saying mistakes are just another part of your day and we don’t have time to be perfect. One of the best tricks he taught me was how to handle the mistakes and turn them into gold or, at least, silver.
Making a mistake can win the job—catching one can lose the job. It is a crazy business. Perhaps this is why I’ve heard so many estimators blurt out this nervous, but light-hearted quip after they’ve won a project: “We must have made a mistake!” 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.