Before Bid Day: Does Operations Understand The Estimate?

On any given day at a growing construction company, the estimator is likely cranking out the numbers just in time for a bid deadline, while the field operations lead is pushing to the finish line on a current project. Say the bid is well prepared, gets submitted on time, and is ultimately awarded. Excitement is in the air about the next build, and there’s a handoff. Then the confusion begins. Assumptions are not aligned. Numbers don’t add up. Conflicts heat up. Sound familiar? How can you put an end to this vicious cycle? Try getting the real conversations going before bid day. 

One Shared Understanding of Every Build

Jerry Aliberti, principal of Pro-Accel, sums up the “two languages, one project” conundrum often faced by talented professionals in construction this way: “Estimators and field operations can look at the same project AND see two completely different things.” Stopping the vicious cycle requires getting estimators and operations onto a shared path well ahead of bid day—and its required commitment to price, schedule and key assumptions. As Aliberti underscores, it’s vital to have constructive disagreements about a project “while there’s still an opportunity to do something about them.” Toward that end, he warns against making the handoff the first real conversation, and advises:

• Before bid day: Have Operations challenge the production assumptions carrying the greatest risk, particularly crew sizes, equipment, access restrictions and construction sequencing.
• During the handoff: Explain why those assumptions were made and identify what the field needs to verify immediately.
• After mobilization: Compare estimated and actual production early enough to make adjustments before small losses become expensive problems.

In thriving construction companies, sustainable success grows from a culture in which consistent, open and honest conversation across functions ensures assumptions and challenges are addressed in real time. Among the best practices Aliberti points to are these:

• Have estimators visit active projects monthly to understand how the work they’re pricing is actually performed.
• Involve PMs in weekly, short preconstruction discussions so Operations can question assumptions before pricing is finalized.
• Identify the top riskiest production assumptions during each handoff and assign someone to verify them.
• Compare estimated versus actual production after major operations and use those lessons when building future bids.

Growth Brings More Changes to Make–or Lose–Money

At Buildertrend, Meghan Townley reminds us that a company can have “a full pipeline and still finish the year with less profit than expected.” As you steer your company forward, keep in mind that growth creates more places for money to slip away–and margin erosion is especially dangerous in the current market environment. In addition to ensuring that estimating and field operations are in sync, active and well coordinated marketing and sales functions are imperative. Be methodical about attracting and winning the right new projects for your company, following these pointers from Chad Prinkey at Well Build Construction Consulting:

• Quickly evaluate and separate the wheat from the chaff. You probably don’t have unlimited sales and estimating resources to effectively chase every project so focus on the ones that fit your business and have a high potential of converting to a sale.
• Create interactive conversations with your buyers. In most cases, humans are making buying decisions, and without talking to them you’re just another number.
• Gather essential information about the project, buyers and competitors. A little key information goes a long way to help your team highlight key differentiators beyond price in your proposal.
• …Close the deal. You need an opportunity to present your unique approach to the project and your team’s ability to deliver optimal results. You should also plan to field questions from the customer to put their mind at ease. Without this opportunity, your bid is all the information available to your buyer to make a decision.

Small, Medium, Large? What’s On Your List?

Every construction business has its own path to growth. That’s why Colonial Surety Company offers bonding programs to fit a range of needs.

For bonds up to $500K: The Hometown Bonding Program is a credit-based option for contractors who are newer to bonds or who need them occasionally. Qualified contractors can get bid and performance bonds as needed for upcoming projects, without a traditional surety line of credit.

For larger bonds: Get single and aggregate bonding limits in writing, and even issue your own instant bid bonds, through The Partnership Account® for Contractors. Once qualified, you can get a surety line of credit of up to $20 million single and $40 million aggregate. You’ll also receive free financial scores just for completing our easy pre-qual.

Put your business on a strategic growth path, starting right here:
Bonding Programs at Colonial Surety Company

In business since 1930, Colonial Surety Company is a leading direct seller and writer of surety bonds and insurance products across the USA. Colonial Surety Company is rated “A Excellent” by A.M. Best Company and U.S. Treasury listed.