What is one of the biggest differences between high-performing, fast-growing construction companies and companies that could be standing still, or even shrinking? Accuracy, efficiency, and solid management and estimating.
According to McKinsey & Co., infrastructure investment is expected to double by 2030. A lot of work will be available across all construction sectors, from residential to commercial—even infrastructure megaprojects. The value of all of these projects could total over $13 trillion by 2030.
Your competitiveness in this fast-growing construction environment starts at the base. The foundation for growth, improved management, more jobs and a wider profit margin are strong, accurate estimates that will win you bids. Once projects start, the smart, accurate estimates you've made will be a guide for you to finish on time and cost-effectively. Most of all, you'll have insights into where your profit margin comes from and where you can improve it in the future.
Our construction cost estimating guide covers the following ways you can efficiently and accurately estimate your jobs:
The construction industry sometimes gets criticism for being slower to adopt technology than some other sectors. That process is speeding up. According to Construction Week Online, 2019's top trends for construction included 3D printing, building information modeling (BIM), cloud data storage, automation, and self-healing concrete. Digital takeoffs and estimating software fall into two of the top construction tech trends. Other tech, like virtual reality and drones, also have a place in construction's future.
Do you have to adopt every new technology that comes along? Not necessarily, but it’d be wise to use the tech that benefits your company. Using construction estimating software and storing your data in the cloud is a smart choice that can help you grow your construction company. You can get a clearer picture of how your jobs work, how your people work, and how you can win more jobs and grow your profit margin with professional estimating backed by professional construction estimating software.
With pencil and paper or Excel spreadsheets, cost estimating can take hours. ProEst software saves time, reduces or even eliminates errors, and allows you to access your costs across your company and between different jobs. Efficiency and time-saving are “best practices” not only in cost estimating, but all aspects of your construction business.
What's wrong with spreadsheets? You don't just have Excel as an option any more. Google Sheets provides nearly all of the same capabilities as Excel. Google's product is also available on the web. You don't have to email the sheet to someone else to check it. You can just provide a link and everyone involved can update, change, or work on the sheet. Perfect, right? Google Sheets are even free!
But there are significant drawbacks that make spreadsheets a “less-than-best” practice for construction cost estimating. Spreadsheets have significant potential for errors. Over time, studies of business databases show that each cell has a 1% to 5% chance for errors. According to Forbes, nine out of 10 spreadsheets have some type of error. A small mistake can multiply itself in your final bids and project budgets. It can even repeat itself across jobs.
Some guides overlook this factor but any construction cost estimating guide should inform you about data security. Security is important. Your estimating spreadsheet for a job might not contain personally identifying information, but it will contain your cost basis and other important financial information. As one sample, “free” Google Sheets work well for school projects where there's no confidential information. Programs like Google Sheets and Excel don't have the security a business needs to keep prying eyes away from crucial information. If you want to keep people from seeing your confidential bid information on a Google Sheet or Excel spreadsheet, you’ll need to buy or install extra security software to be certain that no one can break in and see it.
Spreadsheets also fall short in providing you the information needed to get a picture going beyond just one job. Relationships between different categories, from materials costs to types of job matter when you're refining and strengthening your estimating process.
Why? It's nearly impossible to track different values or categories between different spreadsheets over time. If you wanted to know how much you were spending per square foot on different types of jobs two years ago compared to now, you'd need to find and open all the different spreadsheets — or create a new one and link them. Spreadsheets can sometimes be as reliable as using pencil and paper. Each spreadsheet is a "flat file" containing a grid of rows and columns. A data program can link across files and relate different aspects of the files, creating reports and a more powerful way to view your information.
The ability to store and relate information between different jobs and over time is one of the most powerful "best practices" you can introduce into your cost estimating process. This is the way that ProEst works. ProEst users say that the software adapts to their company, not the other way around. All of your estimating information is stored in the cloud, eliminating lost records and files. The RSMeans database is fully-integrated, so you don't need to buy the books, either.
Another “best practice” is creating a database of estimates and job categories that are unique to your company. ProEst supports you in this process. Yes, it’s work to build up the cost and project management categories that are right for your company. But think about the work of creating a tracking spreadsheet to show you the relationships between different labor costs between jobs over the years. Is it the same amount of work, or even more work? It’s more work.
Can you get the visibility across different types of jobs and different time periods to standardize your cost basis for your materials, labor, rentals, and equipment? ProEst supports your increased visibility. Once you get a real picture of how your best jobs go and how ones you’d rather leave behind experience problems, you will save money and increase your profit margin.
Finally, the construction industry is collaborating more and more with the help of technology. Having accurate estimating data at your fingertips makes collaboration much easier. Storing data in the cloud will allow you to share information with trusted partners — and keep information secure when security is necessary.
2. Digital Takeoffs: Fast, Easy, Accurate
Any reliable construction cost estimating guide should advise you to consider digital takeoffs. Your takeoffs to complete a project should include all the materials that are required to get the job done. Takeoffs include raw materials like wood, sand, or concrete. They should also include manufactured materials like bricks, flooring, and paneling. Experienced contractors can do takeoffs for smaller jobs in their heads. Some contractors can also be tempted to do their takeoffs based on previous jobs. Even though a job may seem similar, chances are very high for error given this method.
You know you need to keep track of count, area, length, and volume when doing takeoffs. When you're taking your time, you can do accurate takeoffs with manual methods. But can you afford to spend the time you need to do an accurate manual takeoff from printed plans? Manual takeoffs for even a modest construction project can take an entire morning or longer.
There's also the issue of cost. We don't often consider how much it costs overall to print and use paper, but paper isn't cheap and it's getting more expensive every year. Printed blueprints aren't free, either. Big office supply stores advertise they'll print blueprints "starting at" about $2 each. The starting price is usually for small prints that fit few projects. Common-sized prints (24"x36" and 36"x48") start at $3.50 and go up to $7 or $8 each.
We hear a lot about environmental sustainability, but let’s just talk money. Consider your cost if your company prints 400 large blueprints a year. At $7 each, that's $2,800 a year.
About 37 million blueprints were printed as of 2017, according to Software Advice. Software Advice even estimated that — given the average size of a blueprint (24" x 36") — about 42,000 trees would need to be made into paper to print them all. At an average price of $3.50, those blueprints also cost a total of $129.5 million. This is good news for blueprint companies and office supply stores: not so much for your construction company.
Even if preserving trees isn’t your top priority, using wood efficiently probably makes sense to most people. The Home Preservation Manual estimates it will take about 22 to 24 mature fir trees to make enough board-feet of lumber to build a 2,600 square-foot home. If the trees used for blueprints were used in residential construction, they'd build about 2,100 homes.
Digital blueprints are a smart cost and time-saving technology, and the same is true for digital takeoffs. If you can save yourself hours and potentially thousands of dollars by investing in digital takeoff technology, why wouldn't you?
ProEst will give you amazingly fast digital takeoffs from your drawings. You can not only measure unit counts, square footage and pitches and angles, you can calculate all of your takeoffs automatically. With ProEst, you can:
Digital takeoffs are one of ProEst’s biggest advantages and strengths. You can find other digital takeoff programs out there, but ProEst offers a combination of flexibility, ease of use, and sophisticated reporting. Along with ProEst’s commitment to training and service, the program offers more than just digital takeoffs that you can use to speed your estimating process. You can save time with digital takeoffs to devote to growing your construction business, improving profitability, and learning which jobs are right for you and which ones you can safely pass by.
3. Data Integration
Spreadsheets are useful – we don’t mean to sound like we’re down on every form of spreadsheet use. They just aren’t designed to integrate data and use it to create reports you can use to manage your company, bid more efficiently and effectively, and select jobs you want to bid on – or pass by.
Integrating data into your construction business will change the way you manage your business and make decisions. It can give you insights that paper and pencil methods or spreadsheet-only management can’t.
ProEst not only integrates data from different parts of your business and different jobs and bids, it also integrates with commonly-used software, from accounting software to ProCore construction management software.
ProEst allows you to perform the following data integrations:
• Accounting integration
ProEst integrates smoothly with major accounting programs used in the construction industry. One of ProEst’s customers, Heads Up Landscaping in New Mexico, used ProEst to create estimates that were fully-integrated with the company's ComputerEase accounting system. The company eliminated redundancy and reduced errors through integration. Overall, the efficiency let them create new estimates quickly, resulting in a 43% revenue growth in just one year. Heads Up does 2,000 estimates a year, and when the job bid is accepted, the process smoothly integrates into their accounting program for billing and financial reporting.
• Customizable templates
You can customize your estimate and bid templates for different job types quickly and easily with ProEst. Crawford Construction used ProEst to access their bid history quickly, leading to more accurate estimates. They sped up their estimating process by 50% using ProEst's capability to create templates. They also used its Digitizer capability. In business since 1931 with over 150 employees, Crawford Construction has used ProEst reliably to create templates for all phases of the estimating and bidding process.
• Audit trail
There are a lot of reasons you'll need a construction audit. If your audit trail consists of paper receipts in a box, you know you're in for a lengthy delay. If you're working with subcontractors, you'll also want to check they're working within their contract. Progress billings are simple if you've got a verifiable and documented trail of expenses and time records. Without this? You're bound to waste time at best and at worst, will experience higher insurance costs and many other problems. You can use ProEst to provide a complete audit trail built-in to the estimating process that you can carry through receiving the bid award and entering pre-construction. With ProEst’s integrations, you will eliminate repeated work and can pull reports for audit purposes in moments.
• Subcontractor management
As noted with the requirement for a solid audit trail, managing your subs requires careful documentation. There's no substitute for going to the job site, but technology can make job site visits much smoother. It's better to manage intelligently before problems occur than troubleshoot afterward. Cincinnati-based general contractor HGC Construction used ProEst to integrate Viewpoint and ProEst, instituting a rapid, seamless integration of job setup and project management.
• What-If Analysis
You can easily run reports changing timelines, bid categories, and cost variables. It's difficult, if not impossible, to do many different "what-if?" analyses accounting for variables in timelines, job planning, or "worst-case" and "best-case" scenarios.
Change the way you plan and manage your jobs by integrating data from different programs, including your accounting software and construction management software. When you can move smoothly from estimating and bidding to receiving a contract and entering the construction process, many of the cumbersome and time-consuming steps of the pencil-and-paper method aren’t just eliminated; you’ll have time to do the more important work of actually managing the project and stopping problems and bottlenecks before they start. Imagine how great it will be for you to be able to spend time building quality relationships with your clients and employees and talking about how the job is going ahead of schedule instead of dealing with work slowdowns or full stops.
Data integration can save you and your employees 50% of the time spent in the past on repetitive manual tasks, duplicating data entry (common for financial reports and billings), and coping with miscommunication or delayed change orders. We get it: this is construction, but you can invest your time and energy on the essential on-the-job challenges. You can eliminate unnecessary delays, challenges, and lack of visibility that result from using three or four separate computer programs that don’t integrate.
Or let’s put it another way: have you ever had to wait for payment because you had to wait for a progress billing document to be prepared before you could submit it? Solution? Data integration.
4. Professional Reporting
Many articles you'll see these days advise construction companies to develop their own branding and carry it through all of their materials, from bid sheet documents to progress reports and billings. Branding includes your visual image, from your logos to the type style you use on documents. It also includes the way you work with others, the types of projects you do (or would like to do), and your reputation. ProEst enables you to create reports, proposals, and bid documents that can carry your branding across all of your documents.
You also want to have genuine visibility in your company. Visibility means you have a good idea of which jobs have been the most profitable for you in the past, and which ones are less profitable. You also need a better picture of your labor productivity and the ability to determine the profit margin you currently have. Getting excellent visibility means you can realistically set goals for your company's growth.
There are a lot of things in the construction industry you don't have complete control over, like financing rates and terms, but there are many that you do have control over.
Older methods of accounting and planning, from pencil and paper to spreadsheets, can direct you into micromanaging. Traditional methods make it difficult, if not impossible, to see the "big picture." Using flexible, professional-grade reports will allow you to see the bigger picture using data from past jobs, tracking current jobs, and planning future bids and jobs. With integration into construction management software, cloud-based data storage, and integration with accounting software, your reports will give you all the information you need to manage your jobs, your calendar, and your future planning.
ProEst allows you to define your reports and brand them. They can be ready in seconds and will give you the information you and your stakeholders need in seconds.
5. Customer Relationship Management (CRM)
Many construction advice articles discuss the importance of managing your relationships with your customers. The term "CRM" has launched a massive industry of cloud-based customer relationship software. You probably know exactly who your best customers are, but do you know all the information you need to know about your potential customers and contacts? How do you keep in touch with them?
According to Construction Executive, the construction industry could be ten to fifteen years behind other industries in customer relationship management (CRM). One reason for this is the way the construction business works: mostly word of mouth. If you want to grow your business, you'll need to advance beyond a one-page list of customers and stack of business cards in your desk drawer.
Have you ever sent a progress billing to the wrong address or contact? Did you ever have to call to find out where your payment was and hear, “We didn’t receive the bill?”
How about a wrong contact name or number for a supplier or vendor? Customer relationship extends to all of the people and businesses you rely upon, not just your biggest dollar-value developer client.
Using software that integrates your vendors, suppliers, subcontractors, clients, and service providers is the key to building stronger relationships all around.
Practical benefits of integrated customer relationship management software include:
Customer relationship management doesn't just include necessary information like name, account number, address, cell phone, and email. It also records important dates, bid preferences and job preferences, and information that can help you build relationships, like birthdays, family names, and anniversaries.
Your CRM database as a contracting business won't be as extensive as a major cell phone company or a large bank. You don’t need to maintain vast amounts of data on every person you've ever spoken with. Your goal with customer relationship management (CRM) is to have good relationships. You need tools and information to maintain good relations and the ability to strengthen them over time.
6. Training and Support
ProEst offers two ways for you and your staff to get trained on using the software to your company's best advantage. First, you can get web-based ProEst training on your time and turf:
You can also access in-person training at ProEst's San Diego office. We are also glad to join you at your office for in-person training.
ProEst's experienced staff will give you the training you need to use the software effectively. They'll also help you to create your customized version of the software that meets your specific general contracting or subcontracting business needs. You can create your customized training process to make sure your business is using ProEst for its maximum effect and benefit.
You'll also receive customer service and technical support that goes a step beyond "out of the box" software products. You'll have an Account Executive who'll be familiar with your company's projects, goals, and needs from the software. Your Account Executive will be available to answer any questions you have. ProEst offers unlimited phone, email, and online technical support.
ProEst is committed to providing customers with worry-free technical support. We can also help you to integrate your existing software, including accounting software and construction management software (ProEst integrates seamlessly with ProCore). We can help you to design the reports you need for management, bidding, billing, and more. With our pre-built general contractor database, including over 15,000 items and unlimited sort types, ProEst is very flexible. We can help you set it up for your company's optimal use and make sure your staff is able to use it efficiently and effectively. We work with all levels of technical experience and knowledge.