Understanding the Role of an Estimating Department

An estimating department is an essential part of any company that deals with construction, manufacturing, or service provision. The department is responsible for creating estimates, budgets, and quotes for potential projects, as well as keeping track of costs for ongoing projects. Estimating is a highly specialized field that requires the proper training, software, and knowledge of industry standards and regulations.

The estimating department has a crucial role to play in ensuring that projects are completed on time and within budget. They are responsible for analyzing the project scope, determining the materials and services required, and creating accurate cost estimates that reflect the true cost of the project. The department also works closely with other departments, such as engineering and project management, to ensure that budgets and estimates are up to date and reflect changes in the project scope.

One important aspect of an estimating department is to ensure that the company’s proposals are competitive in the market. This involves estimating the costs and fees of the project accurately while keeping the prices reasonable. If the prices are too high, the company will lose out to competitors, while if the prices are too low, the company may not make a profit. Thus, the estimating department is pivotal in determining the optimal financial balance for each project.

The department must also keep track of changes that occur in the industry, such as new regulations, standards, and market trends. Estimators must attend industry conferences and stay up to date on new technologies to ensure that the company’s estimates reflect the latest industry standards and improve the company’s competitive advantage in the market.

The estimating department is also responsible for managing any risks that may arise during the project’s execution. Estimators must identify potential risks, such as changes in material costs, design changes, or delays, and create estimates that account for these risks. This helps the company to avoid unplanned overruns or losses during the project and manage potential risks effectively.

In summary, an estimating department plays a vital role in any company that operates in the construction, manufacturing, or service provision industry by creating accurate cost estimates that reflect the true cost of the project. They work closely with other departments to ensure that budgets and estimates stay up to date and reflect changes in the project scope. Estimators must also stay up to date on industry standards and regulations while keeping the company’s prices reasonable and avoiding any unplanned costs. Proper training, software, and knowledge of the industry are essential for an estimating department to function effectively.

Hiring and Training Estimators for Your Team

Having a strong team of estimators is critical for the success of any construction company. Estimators are responsible for forecasting costs and developing accurate proposals for potential clients. Therefore, it is essential to hire and train the right individuals for this role to ensure your company’s profitability and reputation. This section will discuss some key factors to consider when hiring and training estimators for your team.

Hiring Estimators

When hiring an estimator, it is crucial to look for someone who has a keen attention to detail and excellent analytical skills. Estimators should be able to interpret data and specifications effectively and understand the local market trends that impact construction costs. They should also have strong communication skills to negotiate pricing with vendors and subcontractors.

One effective way to screen candidates is by testing their estimation skills. Providing them with a mock project and asking them to prepare an estimate can help you assess their competence in forecasting costs. It is also crucial to check their qualifications, references, and work experience. Estimators with experience in the type of projects your company specializes in would be more fit for the role.

Another critical factor to consider is cultural fit. Company culture is essential in every organization, and the estimator should align with your values and goals to work effectively with the team. Behavioral-based interview questions can help you gauge whether the candidate fits into your culture and works well with others.

Training Estimators

Once you have hired an estimator, it is essential to provide them with the right training to ensure they are up to date with industry standards and best practices. The training program should cover technical skills, software applications, company procedures, and the bidding process.

The estimator should have a basic understanding of the construction process and the different materials and methods used to execute a project. Including cost control and management techniques as part of the training program will help estimators identify and manage costs more effectively.

Estimators should also be trained on the relevant software applications used in the company. This includes estimating software such as PlanSwift, On-Screen Takeoff, or HeavyBid. These tools can help estimators input project data quickly and accurately to generate reports, scope changes, and adjust pricing.

To make sure that the estimator’s work aligns with the company’s goals, it is essential to develop and communicate the company’s policies and procedures that govern the bidding process. These policies should cover items such as budget formats, subcontractor qualifications, bid packages, proposal delivery, and bid ethics. Once the estimator is familiar with these policies, they can incorporate them into their estimates and proposals.

Continuous improvement is important in any field, and estimators are no exception. Providing ongoing education for estimators, keeping pace with changes in the industry and new software, helps to keep your estimation department competitive and your team members up to date on the latest advancements and techniques. Consistently training and educating estimators ensure the continued success of the team and of the company as a whole.

Conclusion

Building a strong estimation department can give your construction company a competitive edge in the industry. Selecting the right estimator and providing the training necessary to be accurate will not only benefit you, but they will also benefit your clients by allowing you to deliver quality projects on time and within budget. Hiring an estimator can be a daunting task, but following the guidelines listed above should help you find the right estimator. Continuously training your estimation team ensures that they have the most up-to-date knowledge about construction techniques and software in your industry.

Implementing Standard Operating Procedures for Estimating

One of the key components of building an estimating department is the development and implementation of standard operating procedures (SOPs) for estimating. SOPs provide guidelines and structure for the estimating process, ensuring that consistent and accurate estimates are produced each time. Here are some steps to follow to develop and implement SOPs for estimating:

• Document Current Practices: Before developing SOPs, it is important to understand the current practices and processes used in the estimating department. This can be done by interviewing estimators, reviewing past estimates, and observing current practices. Documenting current practices will provide a baseline for developing SOPs and help to identify areas that need improvement.
• Define Roles and Responsibilities: Clearly defining roles and responsibilities is essential to the success of any department. This is particularly true in the estimating department, where there may be multiple estimators and support staff involved in the process. The roles and responsibilities of each estimator should be clearly defined, as well as any support staff involved in the process.
• Establish Estimating Procedures: Based on the documented current practices and defined roles and responsibilities, establish procedures for the estimating process. These procedures should include a step-by-step guide for each stage of estimating, including pre-bid activities, bid preparation, and post-bid activities. The procedures should be detailed enough to ensure consistency but flexible enough to allow for variations in project requirements.
• Create Estimating Forms and Templates: Developing standard forms and templates for estimating can help to ensure consistency and accuracy. Examples of forms and templates include bid tracking spreadsheets, bid summary sheets, and estimate sheets. These forms and templates should be designed to capture all relevant information required for each estimate.
• Train Estimators and Support Staff: Once the SOPs, roles and responsibilities, and forms and templates are established, train all estimators and support staff on the new procedures and forms. This training should include not only how to use the forms but also how to follow the established procedures.
• Monitor and Update SOPs: SOPs should be monitored regularly to ensure they are being followed and are effective. This can be done through regular reviews and feedback from estimators and support staff. If changes or updates are required, they should be documented and communicated to all relevant parties.

Implementing SOPs for estimating can seem daunting, but the benefits are numerous. With consistent processes and procedures in place, the estimating department can produce accurate and reliable estimates, improve efficiency and productivity, and reduce errors and rework. It is worth taking the time and effort to develop and implement SOPs for estimating to ensure the success of your estimating department.

Choosing the Right Software and Tools for Estimators

Choosing the right software and tools for estimators is crucial since it can ultimately affect the accuracy and efficiency of the entire estimating department. There are numerous software and tools out there, so it is important to consider the following factors to narrow down the options and choose the best one for your organization.

1. Industry-specific features

First, look for software and tools that offer industry-specific features. Construction estimating, for instance, requires specialized tools that can handle complicated construction projects and navigate complex regulations. Look for software that can automatically generate material take-off lists, create and maintain detailed project cost estimates, and integrate with other project management and accounting software. It is critical to ensure that the software or tool can cater to all of your team’s needs and requirements.

2. User-Friendly Interface

Next, it is important to choose a software or tool that has a user-friendly interface since it will likely enhance the productivity of your team. Ensure that the estimation team members can easily work with the interface, the program is easy to navigate, and minimize typing errors will result in time conservation in producing quality estimates. Look to invest in software programs that offer drag and drop features, importing and opening projects in various file formats. In addition to that, the program should be able to manipulate site designs, create contours, quantity surveys and comprehend with CAD (Computer-Aided Design) drawings.

3. Cost

Cost is one of the utmost vital aspects that should be considered while choosing estimating software or tools. The cost of many estimating software tools can vary greatly, with some being very expensive, especially because they require the purchase of add-ons. In contrast, there are alternatives that are modestly priced or free of charge, such as Excel spreadsheets. When considering the costs, carefully evaluate all available options, don’t upgrade until you think that it’s going to improve productivity and the reliability of the estimate.

4. Customer Support

Excellent customer support is another vital factor that should be considered when choosing estimating software or tools. The software or tool company should have great customer support service to give the users a sense of security knowing that they can count on the software company to provide assistance when something goes wrong. High-quality customer support might consist of a quick response time, extensive knowledge of the industry and their products, routine software updates to fix errors and bugs, and timely resolutions.

5. Security and Backup

Finally, you should not overlook the importance of security and backup while selecting estimating software or tools. Organizations need to be assured that their company’s data and projects are secure and backed up in case of hardware failure or other catastrophic events. Make sure the tool or software program has data encryption, prevents untrusted third-party access, and has reliable backup options to protect the organization’s information.

In summary, choosing the right software or tools for estimators is extremely important. By considering industry-specific features, user-friendly interfaces, pricing, customer support, and security and backup options, you can narrow down the options and choose the best one for your organization. Invest in the best possible software or tools, so that estimators can do their jobs effectively, efficiently, and with great accuracy.

Evaluating the Success and ROI of Your Estimating Department

One of the most important considerations in building an estimating department is evaluating its success and return on investment (ROI). After all, the purpose of the department is to accurately estimate costs and maximize profitability for your company. In this section, we’ll explore the key metrics you should track to assess the success of your estimating department and calculate its ROI.

Accuracy of Estimates: The primary function of your estimating department is to produce accurate estimates. As such, it’s essential to track the accuracy of their estimates against actual project costs. This will help you identify any areas for improvement, determine which estimators are most reliable, and adjust your pricing strategy as needed. One way to track accuracy is to calculate the variance between estimated and actual project costs as a percentage. A variance of less than 10% is generally considered acceptable, while a variance of 20% or more indicates that adjustments need to be made.

Win Rate: Another important metric to track is your win rate- the percentage of jobs for which you submit a bid and ultimately win the project. A high win rate indicates that your estimating department is accurately assessing project costs and producing competitive bids. Factors that impact win rate include pricing strategy, accuracy of estimates, and the quality of proposals. Aim for a win rate of at least 50% to ensure your estimating department is producing enough revenue to justify their expenses.

Utilization Rate: Utilization rate measures the percentage of time your estimating department spends on billable work. A high utilization rate indicates that they are spending their time effectively and generating revenue for the business. To calculate utilization rate, divide the total billable hours worked by the total hours available in a given period (usually a month or year). The industry standard is around 70%, but aim for at least 80% to ensure your estimating department is operating as efficiently as possible.

ROI: Calculating the ROI of your estimating department is essential to determine whether the department is generating enough profitability to justify its expenses. To calculate ROI, subtract the total expenses of your estimating department (e.g. salaries, technology investments, etc.) from the total revenue generated by their work. Then divide that number by the total expenses to get a percentage. Aim for an ROI of at least 20%, which indicates that for every dollar you invest in your estimating department, you’re generating at least $1.20 in revenue.

Customer Satisfaction: Ultimately, the success of your estimating department depends on their ability to produce accurate estimates that lead to successful projects. It’s important to monitor customer satisfaction with the accuracy of estimates, communication from estimators, and the overall quality of the estimating process. Solicit feedback from customers and use that feedback to refine your estimating approach and improve customer satisfaction.

By tracking these key metrics, you can assess the success of your estimating department and ensure that it’s generating a healthy ROI for your business. Remember, the goal of your estimating department is to help your company maximize profitability and grow by accurately assessing project costs and producing competitive bids.