Ignorance ain’t an excuse
Brian Seymour explores the notion of decisions and actions being made based on opinions rather than facts.
“It ain’t what you don’t know that gets you into trouble. It’s what you know for sure that just ain’t so. “– Mark Twain.
Mark Twain’s quote is suggesting a penchant to believe that what we think is fact when, in many cases it is just opinion, and as an opinion it may not be correct. How many people in this industry have a belief that something is fact which is only based on an opinion? Often these opinions have been handed down from boss to apprentice as authentic, and this belief becomes a financial disaster.
As a result, there have been innumerable jobs in which there have been substantial losses and companies liquidated. In many instances this
has come about through lack of diligence when reading the plans and specifications. In the legal world, Due Diligence means “A complete and appropriate review of documentation and facts by a party, before engaging in business with another party”.
For the novice estimator, the most overlooked part of the specification is usually the beginning. These are the General Conditions, written in legal jargon. This is where the sh*t interfaces with the fan. It becomes apparent very quickly how important it is to understand this jargon, as a few words could represent a major cost. Before starting any take-off, one of the first details to check is the construction timeline. If you are not capable of meeting these timelines, do not even consider producing an estimate. Failed timelines can invoke liquidated damages, which can be enormous, and many contractors have bankrupted just on this clause alone.
It is important to read the “Scope” first to ensure you are fully aware of what your estimate must cover. Systems and equipment provided by others could be involved and may not be shown on the electrical plans. For these other items, you need to know exactly what you are installing, providing, or just connecting. Is your responsibility just to run the feeder to the indicated location or do you have to provide some termination isolator, or connect this equipment?
Take care with any existing installation wiring and electrical equipment that it complies with the applicable standards and adequately
controls risks to health and safety. Is any of this noted on the drawings?
Every project is unique, therefore how you interpret the information is critical. You need to understand everything on the plans to complete the project within the estimate and ahead of schedule. These plans are required to estimate your costs for materials and labour, obtain your permits, establish a construction schedule, and complete the project in a timely manner.
With the continued advancement of technology throughout the construction industry, digital plans are becoming increasingly popular due to ease of making edits and sharing plans among on-site team members. Be careful with notes on the drawings, they can often be conflicting. Such as “any work shown in one location on the plans will be considered to be shown in all locations.”
After reading all the documents, the estimator needs to consider the following questions:
- Do we want this job?
- Who is the contract with?
- Is the location within our travel award?
- Can we complete within the time schedule?
- Do we have the human resources?
- Do we have the expertise for this job?
- Can we finance it?
- Is the payment schedule to our satisfaction?
- Are the Liquidation Damages clauses acceptable?
- Is there a Schedule of Rates?
- Do we need to qualify our tender?
- Tendering to government.
Just to pick up the documents and start the take-off without assessing these questions, may incur many unproductive hours. If you say NO to
any of these questions, it will be a good indication to not submit a tender.
Do we want this job? How often, when work is short, do we believe we want every job. However, if the answer to any of these questions is in the negative, how much is the risk? Is it worth the gamble or will there be less distress in declining to tender?
Who is the contract with? Are we prepared to work with this organisation? Do we know their payment record? Have we checked their
Is the location within our travel award? Will we be competing with companies which do not have the same travel expense to access the site? Will there be airfares and accommodation involved for all, or only a few tenderers? If it is a remote site do our competitors already have an established site set-up?
Can we complete within the time schedule? A construction project’s schedule outlines each step that should be completed by a specific date. A successful schedule ensures that project steps are completed in a timely manner and without delays or penalties will be imposed.
Do we have the human resources? By studying the time schedule and considering the size of the project, do we have the team to cope? Can we increase our team numbers? What is the employment market situation? Do we have other projects being completed in time to relocate labour?
Do we have the expertise for the job? If this work is outside our normal working skills and licensing? Do we have expertise within our own team to accomplish? Can we hire people with the expertise, or would that put us out of the running?
Can we finance it? Depending on the schedule of progress payments, is there a major expense setting up the site? Can we apply for a site set-up payment?
Is the Payment Schedule to our satisfaction? Does the frequency of progress payments suit our financial program? Are they regular monthly payments or paid by stages?
Are the Liquidated Damages clauses acceptable? Liquidated damages are the mechanism through which one party can claim monetary compensation for loss or damage that occurs because of the other party’s failure to deliver the works, goods, or services under the
contract on time. This clause has sent many sub-contractors into bankruptcy.
Is there a Schedule of Rates? You should be careful of the request for these rates. Many ask for a price for an outlet, without any reference to route length or installation details. No better than throwing a dart at the board.
Do we need to qualify our tender? If any of the above questions produce a NO, and you still wish to submit a proposal then you must include qualifications. You can protect yourself from poor and incomplete engineering by writing a thorough proposal. Exclude work that is not shown on the electrical plans and exclude dangerous phrases in the specifications.
Tendering to the government
The Commonwealth, States and Territories and local governments each have their own legislation and guidelines governing procurement. It is important to understand the procurement rules and the options available if there is a need to challenge procurement decisions.