The start of each new year can be quiet, which gives estimators a great opportunity to take stock of the previous year and plan for the year ahead. Brian Seymour explains.

During January and most of February, tendering in the estimating department (whether it is one person or a team) is typically fairly quiet. Builders, developers, architects, industrial plants and the general consumers have put all their efforts into projects that had to be completed by Christmas and every waking moment was occupied in trying to achieve that outcome.

Now the new year is here, everyone is dusting themselves off and turning their attention to proposing, designing, drawing and writing up new projects and upgrades for the coming 12 months. This is also the period when estimators are able to take the time to analyse the company’s previous year’s performance.

“How did we go?”

If you have kept accurate statistics on all the tenders submitted for the year, it’s not rocket science to list the categories of projects, the win/loss tally, the profitable versus the disasters, etc.

First, list the categories you have tendered:
•    Industrial
•    Commercial
•    Residential
•    Light and power
•    High voltage
•    Data communications
•    Solar
•    Mechanical services
•    Maintenance
•    Projects over $1m
The list could go on and on, but only list those projects relevant to your company.

Once you analyse the statistics, you need to ascertain of your tenders submitted, what percentage did you win in each category and what were the profit outcomes? The pattern will emerge that there are some types of projects that you do very well and some not so well – maybe you are more familiar with one type of work than another, or your site staff are more efficient or better trained in certain classes of work? Was it the values of the projects that made the difference, are you more efficient on long term projects rather than short term where you are sparing with the costs of moving from job to job and re-establishment costs?

Why was one project far more successful than another? How did it compare with the tender? It is far easier to research those projects that have been completed where all the costs and installation techniques have been recorded rather than those projects in which you were unsuccessful and have little or no feedback on the results.

It all begins with the estimate; was the documentation clear and understandable, was the location suitable, were the materials readily available, did you have an experienced workforce, did you have the workforce capacity and did you have the tools and equipment? All these factors have a significant impact on profitability and must be considered in future tendering viability.

What are you good at? You all believe you can do anything and are indestructible – sporting the big red ‘S’ on your T-shirt and wear the undies on the outside and a big red cape – but these statistics will show where your weak links are and you need to take into consideration what jobs you have a chance of winning and those which will be a waste of estimating resources.

Do you have a business plan for your estimating department? A good, well defined business plan will include a strategy to be employed when applying for tender documents to ensure the best probability of a successful tender. This plan may include a list of guidelines for increasing your market share, such as:
•    Continuous education for estimating staff, keeping up-to-date with new installation techniques, materials and equipment.
•    Clearly defined acceptable markets (industrial, commercial, residential).
•    Clearly defined customer base.
•    Clearly defined skill levels of staff.
•    Restriction on location.
•    All new customers to be vetted prior to estimate.
•    Clearly defined suppliers.
•    Clearly defined time frames.
•    Check list for the final pricing sheet.
From your analysis you have determined those categories of jobs in which you have no record of winning with your present criteria and you have established those which are successful and profitable. Therefore you concentrate your efforts on obtaining as many tenders as you can in your successful market and gain a greater market share. If you specialise in this market you will become more efficient and profitable.

Assuming there may not be enough of your successful market to keep you 100% employed, you will need to assess what changes you need to make to your estimating, skill sets, labour expertise, purchasing and site efficiency to turn your secondary not-so-profitable category into a better outcome. Maybe it means staff training or change of suppliers but the analysis will give us a starting point?

Is your estimating system up to date? No matter whether you are using a manual paper-based system or the most sophisticated computer program it is the duty of the estimator to ensure that the system is up to date and is working for us and not us for the system. If a technique, product or plan isn’t working, stop using it – don’t invest more time and energy trying to make the unworkable work.

Having reviewed last year’s estimates, you know what went well and what fell off the perch and if you are using a paper-based system is it doing all you expect? By reviewing these sheets you need to ascertain if they are user friendly, have you made any changes in the past couple of years do you need to up-date in order to be more efficient? The paper system should act like a check sheet, as a reminder of issues to be addressed and inclusions which need to be accounted for. This system should streamline the take-off process.

In the case of a computer-based system, you need to ensure that the program is delivering all that you require and, considering change is inevitable in any business, so should be the systems that support it. You need to ask yourselves what features you need most – menu driven database searching, fast input, multiple take-off screens, easy database manipulation, scheduling features, or interfacing with a pricing program, etc? If your current system does not accommodate your requirements to help streamline the estimating function you need to up-date the existing system or replace for something which is user friendly to us.

If you decide to install a new system, will you have the time to edit and build your database? This needs to be addressed before jumping into a new system.

Streamline 2013 estimates with the analysis complete and a plan to put in place on the viability of projects to tender and those to reject, the estimating department will become more efficient and provide more opportunities to win profitable jobs.