Estimating in construction once meant receiving a set of plans and sending back a dollar figure. However, today’s owners want to know, in detail, exactly what’s behind that number. Thus, construction estimator skills have evolved as more demands have been placed upon them.
If an estimate isn’t based on accurate assumptions, then costly change orders and delays are inevitable. Getting the assumptions right requires deeper collaboration not just with owners, but with all key players of a project – including estimators.
“Client expectations are driving estimators to wear new hats,” says Craig Mulliniks, director of virtual construction for The Korte Company, an integrated design-build construction company.
“Our clients look not only to our architects, but also estimators for solutions that help them remain fiscally responsible within their capital budget while maximizing their services.”
Of course, owners have always relied on accurate estimates. So what has changed that makes them expect more? And how are estimators and GCs responding to these new expectations?
With more data available to them than ever before, owners are better equipped for effective decision-making and investments. For example, if an owner is considering building a new apartment or retail complex, plenty of data is available to help the owner choose the best location, the units that would likely attract renters in that market, and the amount of rent the target market is willing to pay.
But market data is only half of what an owner needs to determine if a project will succeed. GCs and estimators are expected to provide the other half of the picture, with equally detailed information about their proposed project, comparable costs in the same market, and how to get the most design bang for the buck.
Providing owners with the assurance that their occupancy targets and profits are realistic before even breaking ground on a project – thereby reducing their risk and increasing their margins – gives GCs and estimators a competitive advantage.
With the Pew Research Center reporting that 77% of the U.S. population owns a smartphone, instant, unlimited access to information has become the norm. People have become accustomed to getting answers immediately, and expect them to be accurate, current, and detailed.
“Time is money,” says Aaron Haas, executive vice president of design and construction management for The Howard Hughes Corporation, which owns, manages, and develops commercial, residential, and mixed-use real estate throughout the country. “Owners are looking for contractors to be involved earlier. Instead of getting an estimate at the end of each design phase, we want them to be doing more real-time estimating every step of the way.”
Meeting such expectations requires estimators, GCs, architects, and engineers to work more collaboratively. And technology vendors are responding to these trends, creating integrated software solutions that enable users to become jacks of multiple trades.
The Generational Shift
Estimators (and contractors) are increasingly younger and more technology-oriented. Many Millennial workers have never known life without smartphones or computers, and they quickly and eagerly adopt any technology available to them.
Unlike today’s generation, the previous generation of estimators often reached their positions at mid-career after many years of hands-on experience in the field. As such, seasoned estimators can be wary of the younger generation’s dependence on technology. While their concerns are valid, they also point out the urgent need for GCs to tap into the older generation’s career knowledge, capture that intellectual capital, and share it across the enterprise. The entire company will suffer if the knowledge of these seasoned estimators walks out the door with them when they step down.
The Changing Role of Estimating
In the past, estimating was often based on outdated information, and significant variations between the estimate and actual cost were the norm. Now, as owners’ expectations have changed, construction estimator skills have evolved to keep pace.
Estimators must possess good communication skills to not only connect data to design at the preconstruction phase, but also articulate it to the owner. They need to make accurate assumptions about a project and be able to explain exactly how they arrived at those assumptions. And, they need to be able to discuss everything from market conditions to project comparables.
“Clients expect department-level breakdown of costs very early in preconstruction phase, which is driving estimators to wear many hats,” says Korte’s Mulliniks. “Our estimators not only have to understand construction costs but also departmental needs. All of this allows for richer information to be provided to the key stakeholders, so that less rework happens later in the project.”
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Improved Technology & Collaboration
As GCs adopt advanced estimating and modeling software, estimators are taking on a hybrid role that bridges the gaps between estimating, design, database management, business development, and technical sales.
Because estimate accuracy depends on getting assumptions right, the job requires a deeper understanding not just of costs and options, but also of how building space will ultimately be used. Today’s estimators must be ready to anticipate and instantly present and owner’s vision at the earliest project discussions.
Construction Estimator Skills Evolving to Keep Up with Technology
Advances in estimating technology and 5D BIM have aided in this process. By centralizing all historical cost data in a single database, which then feeds into various types of construction software, multiple people in the organization can now immediately answer owners’ questions about not only what a project costs, but also how long it will take to build and what materials should be used.
Because commodity and labor prices change, today’s estimators might arrive at a price by analyzing historical cost data from the last five projects in the same market. But instead of coming up with a single dollar figure, they can use technology to pinpoint a range of prices that take different scenarios into account.
This facilitates conversations with owners in which, for example, the cost difference between a structural steel framing system vs. a concrete superstructure can be estimated arbitrarily, driving early collaboration and decision-making that leads to a more accurate estimate and less risk that the project will get derailed.
Technology can also help facilitate collaboration among the owner, contractor, architect, engineer, and other key players much earlier in the preconstruction process, so that the initial estimate reflects the architect’s intentions, rather than the architect having to design to the estimate.
“Working together early in the design phase allows teams to understand the owner’s needs and make major multi-million value analysis decisions, rather than minimal value engineering savings later in the design process,” says The Howard Hughes Corp.’s Haas.
In fact, Denton Wilson, director of collaboration at The Beck Group, a commercial construction and architecture firm, believes that early and continuous collaboration should be incorporated into the Request for Proposal (RFP) process.
While leading a campus expansion project for Methodist Health System in Mansfield, TX, Wilson created a three-step vendor selection process. After a Request for Quotation (RFQ) was sent to a large number of qualified firms, a selection committee narrowed the list down for interviews. Then, the final group of candidates received a Request for Collaboration (RFC) structured around the RFP process, but demonstrated in a team environment to measure the team’s collaborative capabilities.[i]
“The RFC was a defined focus on project team selection based on abilities of the individuals,” Wilson explains. “Owners might be hiring qualified people, but if qualified people are not in an environment where they can support and understand each other’s needs, it will be a wasted effort.”
Bringing together and engaging all parties as early as possible gives these key players a say in the decisions that could impact a project’s status, schedule, and cost.
Such early collaboration increases estimate accuracy and prevents future problems. “BIM technology along with project management and estimating software allow for timely information-sharing, creating an environment of success and robust communication that helps all team members better understand the value they can bring to the table,” says Wilson. “If you’re able to achieve an environment that allows teams to share knowledge, they start supporting each other in a different way, and the silos go away. Shared knowledge brings value, reduces waste, and creates a better value and outcome for our owners.”
Technology-enabled knowledge-sharing can also help contractors win work. When a GC can answer detailed pricing, coordination, or scheduling questions using a 3D model at the very first client meeting, for example, it makes a lasting impression.
“Smart owners are getting contractors involved early in the design process to build a team that works together, not just during construction but during design, when major decisions are established to set up projects for success,” says Haas.
The construction industry may traditionally lag behind in adopting technology and moving toward collaboration, but owners’ expectations for accurate estimates and teamwork are higher than ever.
With advanced technology and new approaches to cross-functional collaboration, estimators and contractors can give owners the reliable information they need for successful projects, right when they need it.
About the Author
Stewart Carroll is COO of Beck Technology in Dallas, TX, where he runs all aspects of the corporation, corporate strategy, and vision. Stewart is an expert on A/E/C technology and its application in the marketplace. He is a lead A/E/C technologist and continually speaks on the integration of cost and scoping technologies to owners and developers.
This article was written by Stewart Carroll, chief operating officer of Beck Technology, and published in the July/August 2017 issue of CFMA Building Profits.
© 2017 by the Construction Financial Management Association (CFMA). ALL RIGHTS RESERVED.
This article first appeared in CFMA Building Profits (a member-only benefit) July/August 2017 and is reprinted with permission.