An estimating strategy guide for subcontractors
You've been using your membership for a while now. You're not getting the results you like. We know, it's frustrating! It can bring you to the point of cancelling your membership, and that's the last thing we want for you.
I used to sit on the other side of the fence. I was an Estimator for a Tier 2 builder for a few years. Some Subbies managed to jump to the front of the queue by following what appeared to be a simple process. Let me share their secrets and help you achieve the same results.
Let's begin - the basics
Before discussing tactics, you must understand the Estimator's typical tender cycle. Ideally, we'd all quote a job and know within 24 hours where we stand, but the industry doesn't work like that. Let's take a look at the average tender lifecycle for a $20m apartment project.
The tender timeline:
1. Tender period - 4 weeks
These four weeks are the open bidding period where the Estimator seeks quotes on the noticeboard. This is where the bulk of your quote requests will come from.
2. Tender close - 2 weeks
The builder submits their bid to the Client side PM/Architect. The Client spends two weeks comparing the bids and trying to find a common medium between them.
3. Value management & clarification - 4 weeks
The Client comes back to all builders with new design options and a list of clarifications. At this point, you will often hear from the Estimator requesting cost options and further clarifications. Sometimes it's as complicated as putting a whole new quote together because the Client decided to change some major items.
4. Contract negotiation - 2 weeks
The Client will pick their preferred builder and issue a letter of intent. This states they are successful pending contract review and negotiations.
5. Project handover & construction management plan - 4 weeks
The Estimator will hand the project off to the delivery team who will review all pricing against the latest designs from the Architect. At this point, the Estimator is no longer involved in the project and is neck deep in another 2 or 3 tenders. Early trades such as piling and retention, concrete structure, and hydraulic services are usually let now.
6. Site mobilisation - onwards
The delivery team starts on site and begins looking at the balance of trades over the next few months.
What does this mean for me?
In summary, the time between tender and a team actually starting on-site is between 4-6 months, on average. With this in mind, let's look at how to increase your odds at the open tender stage, and also how to go about winning work from the awarded tenders tab.
Pricing public tenders is a necessary evil; it feels like you're pricing and pricing and pricing and never hearing anything back. It sucks. But as you can see above there's usually 4-6 months between your pricing and the job starting.
From my time estimating, there are certain things you can do to get to the forefront of the subcontractor list.
Get to know the Estimator
This is critical. Even though technology like EstimateOne makes quoting work easier, you must be willing to get to know the Estimator during the tender period. This applies in particular if there's no existing relationship there. Don't be afraid to pick up the phone, ask them questions, find out a bit more about them and the company, and make yourself known to them.
It's much better to be "that idiot Tony from ABC Stonemasons who calls all the time" compared to "that random guy who emailed a quote through."
Be an educator
An Estimator is a jack of all trades but a master of none. They have a general understanding of the 50+ trades often required but having an in-depth knowledge of each is impossible. You must be open to giving them an education where required, and happy to explain things to them. If you have a better idea on how to do something or to improve on the design, give the Estimator a call and discuss. They may say "sure, go ahead" because it's a D&C contract, or "don't bother" because it's a lump sum contract. But ask and plan your attack together before charging into it.
Going to use an anecdote here. As an Estimator, I knew all projects needed switchboards. I could see on the drawing that 3 were required, but I had no idea what they were for, or what they did. All the quotes came in with no clarifications.
When we won the project, the delivery team went to let the contract, and every single Sparky had changed the design to a single switchboard without telling me. It may have been a better option, but we hadn't clarified that on our tender.
The Architect and Client refused this clarification post-contract because it would have required them to redesign the electrical package. We ended up wearing the cost of doing it as designed.
Don't do this to your Estimators.
Your first task should be to go through the project and identify areas of improvement on the design, then call the Estimator to discuss any questions or queries you have before you begin your pricing. When you're done and ready to submit your quote, ensure you write all your clarifications and changes in the quote, so the Estimator knows what you've priced.
Changed the switchboard design to a single layout? Clarify it.
Changed the stormwater pump from a dual to the single ring main? Clarify it.
Changed the aluminium suite to a different product? Clarify it.
Using an alternative carpet supplier then specified? Clarify it.
You've submitted your quote to the builder. Now put a reminder on your calendar to call them in exactly four weeks. As per the tender timeline above, four weeks post-tender will be right in the middle of value management and clarification period.
You could write yourself a script to use with your Estimators. Something like;
1. How did you go with the tender? Any info from the Client?
2. How did my quote stack up? How do I compare to the other Subbies?
3. Can I help with anything? Has the design changed? Do you want me to see if I can do some value management?
There you have it
The Subbies that followed the above process were my favourite. They were the ones who provided the most value to me and the people I would go in to bat for with the delivery team.
Become one of these Subbies, and you are well on your way to getting more work.
One of the main benefits of having a full membership is the ability to view awarded tenders. That means no more waiting 6 months to find out how your quote went.
The moral dilemma
It's important to understand that some Builders/Subbies are careful on the ethics of accepting a quote post-tender.
When I started as an estimator, I wasn't a fan of receiving quotes after the tender closed. I wanted to support the Subbies who priced at tender stage. After a few months of using EstimateOne, I relaxed my stance as some quality subcontractors started coming my way. It would have been foolish to reject them.
For example; Subbies who quoted for my competitors but not me introduced themselves, and they began working for me too. They may not have been awarded that initial project, but they would quote moving forward.
Now that morals and ethics are out of the way, let's review how to make the most of the awarded tenders information.
As mentioned in the timeline above, once a bid is awarded it's no longer in the hands of the estimator. They've sent it off to a delivery team and washed their hands of it.
So who do you speak to?
Part of the tender handover involves organising the project team and setting their initial schedule, which includes the timeframe for letting trades. The one responsible for letting trades is the Contracts Administrator (or CA for short). This is the gatekeeper to your success.
If you've before priced the job and now see it's awarded, call the estimator and congratulate them on winning the project. Again, ask how your quote stacks up, and then ask for the CA's details.
If you haven't priced the job before, call the estimator and introduce yourself. Let them know that you're interested in pricing the project and would like the details of the CA to follow up with.
At this point, it really isn't too useful to query the estimator about it. They are far removed from this project and working on countless others.
Once you've got the CA's details, put a script into action to get consistent information. Questions can include;
1. (If quoted) How does my quote stack up? Did I leave anything out? How does my price stand up to other Subbies?
2. What is the trade budget? Is the package being broken up? Do you have a scope of works for me?
3. When do you plan on letting the trade?
Once the delivery team have the project, the actual budget is assigned to them to maximise the builder's contingency and profit. If you haven't priced a project already, and the CA tells you what their budget is, you can do a quick check to see if you can match or better the price. Complete your quote and send it through to them.
And as a reminder, call them again when they plan on letting the trade. Often the CA’s are under the pump and pick one or two Subbies based on the estimator's recommendations. If you're in the estimator's good books, that should be you. But if you're still new, keep on the CA until they either bring you in for a meeting or say they're not interested. The squeaky wheel will get the grease.
Strategy is key
You might be the best plumber or Sparky in the world, but winning work in this industry is as much about your actual strategy and networking than your capability of doing the job itself.
Try out the advice above over the next few weeks and let me know how you go. I'd be keen to hear your results and discuss any issues you may still have.