No "RISK"  =  No "REWARD"

David Moyer
04-25-2022 6:05 PM Comment(s)

No "RISK"  =  No "REWARD"

What if there was a new tool that could increase the productivity of your estimating department by 25-30%? I know, you’re skeptical, but so were framing crews, before they retired their hammers and replaced them with nail guns.

Maybe a more closely related example are estimators that replaced their ruler and felt tip markers with the ability to electronically digitize a set of plans. A framer will never go back to slinging a hammer, and an estimator will never return to the ruler and markers. Nor should they, not after experiencing firsthand the productivity gains with these improved tools.

The pitfalls of using generic spreadsheet software to produce construction estimates and make critical decisions about the right subcontractor bids to “carry”, has been well documented. These hurdles include last minute merges of trade specific spreadsheets, lack of standards enforcement, undetected formula errors, and a lack of a collaborative team environment. So, traditional estimating workflows are ripe for improved productivity and accuracy.

Fortunately, estimating tools exist today that allow estimators to tackle all these obstacles. Certain “dedicated” estimating tools remove the need for last minute file merges and allow estimators to work more efficiently as a team. Maybe most importantly, the madness normally associated with managing subcontractor bids can be more organized and less chaotic.

How does improved productivity in the estimating department improve ROI? When it comes to producing detailed accurate estimates, improved productivity means improved profitability. For example, let’s say a department of four estimators produced four estimates each month, or 48 estimates in any given year. A 25% increase would result in bidding 60 jobs per year. If your bid to award ratio stayed the same, let’s say 6/1, then your company would be awarded two additional jobs each year, all without adding additional resources to the department. What would be the increase to the organization’s profitability by adding two additional jobs each year?  I’ll let you do that math. In fact, the improved productivity, should provide additional time to explore alternatives, which would most likely have a positive impact on the company’s bid to award ratio.

When it comes to “negotiated” work, a tool that allows you to compare the range of subcontractor bids more easily, provides you with an improved ability for negotiating with your subcontractors. An improved negotiating tool could help you increase your margin on these projects. What would a 1% increase in margin mean to the bottom line?

So, before you dismiss arming a $10,000 - $12,000 a month estimator with a $200 a month productivity tool, you may want to reconsider and rethink your ROI.

Bridgetown Software, Inc. are the producers of BidMatrix, a comprehensive bidding solution for all your “negotiated” and “hard bid” construction estimates.