Too many contractors dismiss the potential impact that construction bidding might have on project success. We're here to talk about how contractors can benefit from a more concentrated focus on preconstruction activities, including bidding.
Bidding is the key to getting new work, obviously. Going beyond that, contractors should realize that a good bid sets the stage for a realistic budget, healthy cash flow throughout a construction project, and ultimately, a successful and profitable outcome.
However, bidding can be tricky. Industry wide, contractors can expect to win about one in five construction bids - out of every five bids, one will lead to a project contract. It's hard to justify a lot of time and effort to put in a bid that may not lead to work.
Further, contractors may not be all that familiar with project nuances when they bid. They may only have a few weeks with a bid package along with a pre-bid conference to get all the details they need to construct a bid. In the end, it's not a lot to go on. Still, the benefits of putting in the work to bid accurately can pay off down the line.
Preconstruction is the time to dig in and get the details. That legwork can save time, trouble, and cost down the line and lead to more successful projects overall.
Preconstruction takes the plans the owner and designer created and determines how the project will come together. What begins as construction bidding ultimately becomes a construction budget; it becomes a bottom line contractors agree to. That's why it's critical to have accurate construction estimates during preconstruction: They lower risks, lead to more accurate budgets, and improve relationships between owners and contractors.
Understanding Construction Estimation
Here's the skinny on estimating: Contractors get an idea of how much a construction project will cost to build based on the project specs and designs they're given at a pre-bid meeting. They walk the site, get the lay of the land, call their friends in materials distribution, and put a number on the project.
That's all well and good, but any contractor with a project or two under their belt knows many surprises can come up during a construction project. Maybe the soil on site isn't what was expected or materials prices have gone through the roof in the past six months.
Some surprise costs could actually have been discovered if the contractor could spend enough time and effort during preconstruction. For instance, a project that's located in another county or state may involve higher labor or permitting costs.
Pinning down the details is what actually leads to a winning and profitable construction estimate. And knowing those details comes from working closely with everyone on the project team.
Crossed Wires Lead to Inaccurate Estimates: Collaboration Is Key
Think about how construction projects work. A crazy number of experts, teams, and managers go into building any new asset. Those teams can work pretty independently from one another and get the job done. However, the more they talk to one another, the smoother it goes.
Traditionally, construction delivery models were limited to mostly design-bid-build (DBB), where an owner and designer finalized drawings and then let the contractors estimate a price. Preconstruction was a separate, siloed operation left to the owner and design team. The problem is that many owners and designers don't know what it takes to put a building up, so their design might actually be unbuildable.
When the contractors joined the party, they had limited time to familiarize themselves with the design before putting a price on the project — and that price eventually became an ironclad budget. Once the project started and the contractor got a good handle on the details, they may have had to change parts of the project that didn't work or make sense, leading to delays, change orders, and overall frustration.
Luckily, the tides are changing for construction delivery models, creating a more collaborative approach to preconstruction. The design-build (DB) construction model is now the most commonly used construction project delivery method in the U.S. DB brings the contractor in early in the process, working with the owner and the design team to develop a construction plan that works and ultimately build more accurate construction estimates. Technology helps groups work together more effectively, sharing information and ideas instantly for closer collaboration.
How Technology Improves Construction Estimates
It's easy to forget what communication and collaboration looked like before technology, but let's just say they were slower. Paper plans had to make their way hand to hand. People took notes with pens and lost to-do lists between the truck seats. It was really a less reliable way for teams to work together.
Information collection was also more difficult in an offline world. Site staff would have to fill out worker information, safety checklists, and materials delivery information on paper forms. The information was stuck in one place - no other team member could access it until it was collected, copied, and disseminated by office staff.
Finally, once a project was over, all of the valuable information and insights were locked away with the files in boxes and filing cabinets. It was difficult and time-consuming to find past project details that could improve a business's operations on current and future projects. Cloud-based digital platforms help solve many of these challenges to help contractors get better at what they do.
Here are some ways technology enables construction stakeholders to work together more effectively.
Better Cost Predictions by Analyzing Past Work
Estimation gets easier with experience. Construction teams that have been there and tried that have a better idea of how long tasks will take and how much they'll cost. Seasoned estimators pride themselves on keeping all that experience locked away in their brains, but research tends to bear out how unreliable memories can be.
Construction management platforms allow construction teams to set up systems for tracking metrics throughout construction builds. Input actual facts, photos, and costs into the system at every step, and Future You can build estimates based on facts rather than vague memories and misconceptions.
Checking past project data gives estimators a better sense of how much material waste to include in cost calculations. It also provides useful workforce productivity data, for instance, and an allowance for overhead costs.
Greater Accuracy With Digital Takeoffs
Takeoffs involve creating a complete list of the materials needed for a construction project and a detailed cost estimate for each. Estimators used to look at plans and literally count doors, windows, and square feet of flooring needed for a new building, along with all the thousands of little parts that go into making a building. The process was long, slow, and easy to mess up.
Digital takeoff software changes all that. Computer algorithms help estimators calculate the materials needed, while precise measuring tools get accurate information from digital plans. This allows estimators to complete faster and more accurate takeoffs for better construction estimates.
Realistic Labor Costs
The cost of getting workers on site represents a huge portion of overall building costs — some estimates put the number as high as half of total building costs. It's critical to get that number as correct as possible during estimation, but the calculation isn't always straightforward. Not all workers get paid the same amount, after all. Certain parts of the job may require specific skill sets, overtime pay often comes into play, and the location may impact minimum wage requirements, tax burdens, and insurance needs.
Workforce management technology can account for all these factors to quickly and accurately calculate costs. When it comes time for project planning, workforce planning software helps place workers with specific skill sets and credentials where they're needed most, optimizing the workers on site.
Enhanced Communication and Collaboration
Accurate and clear estimations are more likely to come from people who actually know how to build. Involving contractors and specialty trades in the estimation process leads to a better sense of true costs. Collaboration from all stakeholders can also help avoid errors in estimation that could lose the project.
This is where technology shines: We know we can't all be in the same room at once, but we can share documents through digital platforms so we know we're all looking at the right data. Working together means the preconstruction estimate benefits from the knowledge and expertise of everyone on the team, which could prevent costly delays and frustration during the project.
Enable Stronger Construction Bidding With Better Estimates
Smart construction teams don't dismiss the importance of preconstruction efforts. The legwork contracting teams put in early on can avoid problems later and lead to more efficient and profitable projects. Digital tools can help develop more accurate project estimates in no time! With faster and more accurate takeoffs, better materials estimation, and opinions from all the project experts, these tools can help teams submit more competitive bids, land more work, and, ideally, make more money.
