The following article appeared in the March 2006 edition of Constructech:
Integrating the Estimate
March 2006
Constructech Staff
Lowest bid doesn’t necessarily win the job. With owners factoring in strength of schedule and profit potential when evaluating bids, contractors are focused on integrating their estimating systems with scheduling and accounting.
Cliff Dawley, estimating administrator, Yeager Skanska, www.usacivil.skanska.com, Riverside, Calif., considers this type of integration critical in adding confidence to his estimates. Integrating the estimating system from Hard Dollar, harddollar.gate6dev.com, Tempe, Ariz., with SureTrak scheduling from Primavera, www.primavera.com, Bala Cynwyd, Pa., allows Dawley and his team to proactively forecast resources and assets needed on a job and better align final estimates in relation to bids.
“Contractors are very paranoid and if they think there are a lot of unknowns they start bumping the margins up in order to cover themselves,” says Dawley. “When you are able to use technology to create a more accurate and confident estimate, you can more accurately approach the job and know you are well covered on the job. The technology may not make you cheaper but it will make you more confident. And when you are more confident sometimes you can squeeze that margin down just a bit and be confident you will have (profit) left in the end.”
Dawley also credits the application with allowing his team to factor in long-term costs of material and labor, among other factors. This has proven particularly valuable in recent months.
“When you look at spiral in petroleum prices, two years ago we were paying .90/gallon for diesel fuel and now we are paying roughly $2.50/gallon,” says Dawley. “Being able to factor that into a bid, knowing the job will last a few years, gets back to that confidence factor. Having the capability to know the cost will escalate around 4% or 5% a year gives us some room (for escalations in project costs).”
Many estimating packages have the ability to integrate well with existing scheduling and project management applications, further enhancing the overall investment. ICE 2000 from MC2, www.mc2-ice.com, Memphis, Tenn., for example integrates with Primavera P3 and Expedition, as well as Prolog Manager from Meridian Systems, www.meridiansystems.com, Folsom, Calif.
Matching up estimating to job costing is key for success at the end of any job. Fred Ode, chairman and DEO of accounting software provider Foundation Software, www.foundationsoft.com, Cleveland, definitely believes this to be true despite the fact not every contractor actively carries this process out.
“From a practical perspective, integration (between estimating and accounting) is not always done,” says Ode. “This can be because many companies don’t necessarily estimate the way they job cost. As a result, there is some manipulation that may be needed (within the data).”
A built-in Import Deesigner contained within FOUNDATION for Windows allows job costing data from third-party estimating packages to be imported into the system. This ability offers seamless integration with virtually any estimating package on the market, allowing users to select best of breed in terms of their software tools.
The import process allows users to select required fields – job number, cost code, hours, costs, etc. Next, they open the import designer within Foundation and use its “capsule technology” to select and drag in the information for import.
“Successful companies match up estimates to costing, they just may need to condense tasks or activities in estimating to simplify the process,” adds Ode.
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