"Working smarter" has been a catch-phrase for businesses in just about every industry for at least the past decade.
It means different things to different people, but the core idea is one of taking a critical look at how your own business processes could be streamlined and putting your business in a position to take advantage of any efficiency gains.
The construction industry is not immune to this trend. In an effort to get in front of fiercer competition and the fluctuating economic conditions of the past few years, many contractors have turned to digitized takeoff and construction cost estimating software as a way to increase productivity without taking on the added overhead of a bigger staff.
Most contractors are familiar with the idea of digitized takeoff and estimating software, even if they've never used it themselves. Instead of calculating measurements and quantities with a scale, calculator and legal pad, digitized takeoff and estimating software lets the estimator trace over a set of blueprints with a stylus pen. The software calculates the measurements and quantities and then applies cost items (with the appropriate cost information) to these quantities. The benefits-more accurate estimates in less time, with far less hassle-are significant.
There are several major providers of estimating software, with scores more who offer limited products at a budget price. With all these choices, many contractors feel overwhelmed by the options in front of them when they start researching the industry. This kind of uncertainty may cause you frustration and lead you to delay the purchase, even though you know a new estimating system can help your company's profitability-or worse yet, you might find yourself stuck with a system that does not fit the needs of your business. But by knowing what to consider and look for before you talk to a sales representative, you can sort through all the options and end with a product that works for you.
Buy Construction Cost Estimating Software for the Present, but Look to the Future
Obviously, if you're in the market for construction cost estimating software, you've got estimating needs that are going unmet. Naturally, meeting these immediate needs will be in the forefront of your mind when you're sorting through the different options. But don't stop once you've asked yourself, "What do I need from estimating software right now?" There is a potentially more important question that should immediately follow-one that too many contractors neglect: "What will I need out of this system next year? And the year after that?" Even if you're satisfied with your pre-construction processes right now, bear in mind that the construction business changes rapidly-and a little careful consideration can help you be one step ahead of those changes. Be sure that any estimating system you buy meets your present needs and is flexible enough to adapt to future demands.
Now, that's all well and good, but the tricky thing about changes in the construction industry is that they're often next to impossible to anticipate. But you don't have to see the future to plan for the future. For example, maybe you currently employ only one estimator. You should still look for software that is network-ready. This will allow you to easily expand your estimating system when you're ready to hire more estimators-whenever that may be.
Productivity, Productivity, Productivity
Construction estimating software isn't something you buy because it's cool or trendy. It's an investment, and you're making it for some very specific business reasons. These reasons vary from contractor to contractor, but they generally involve some combination of improving the speed, accuracy and information quality of the pre-construction process. We're talking about generating more estimates, faster and with fewer mistakes-in short, boosting productivity.
The right estimating system can give you the power to double-or even triple-the number of jobs you bid each month. What that means is with the right system, you'll have a better chance of winning two or three times as many jobs. These economies of scale drive down labor costs involved in creating each bid-labor costs that can easily top $3,000 per bid. And the higher level of accuracy has a secondary benefit as well-it reduces the time spent fixing mistakes and virtually eliminates unpleasant surprises on the jobsite.
Contractors sometimes have a tendency to "wing it" when project information is difficult to come by. If you've ever done it yourself (and really, who hasn't?), you know that winging it rarely ends well. Often you'll have to go back and re-do parts of the job that you would have done right the first time-if only you'd had adequate project information. In theory, estimating software should help you with this. In practice, however, different estimating systems deliver vastly different information quality. You should make sure any estimating software you consider provides accurate and detailed project information-but more than that, you should make sure it's the right kind of project information for your business.
For example, most contractors could strengthen their bottom lines simply by allocating profit and overhead intelligently. In order to do that, correct quantities are a necessity. An accurate takeoff may show you, for example, that the engineering quantities you received underestimate the amount of aggregate base needed for the job. In that case, you would know to allocate more profit to the aggregate base and less to other areas of the job. The bid will more or less balance out, but you'll see a much better profit.
This is exactly how an automated estimating system can pay huge dividends. It will give you information about the project that your competitors might not have-and you can use this information to win the bid in the first place and to maximize your profit over the course of the job. But whatever system you choose must also give you the ability to utilize the information, or it's worthless.
Avoid Using Complicated Construction Cost Estimating Software
Speaking of worthless-no matter what a system claims to do, if you can't make it work, it won't do you a bit of good. Estimating software that's too complicated or frustrating to use may offset any gains in speed or accuracy and could actually decrease your productivity-and that certainly won't help streamline your estimating processes.
This becomes a more pressing concern for contractors who buy an estimating software package for some of the more intricate and advanced features it offers. For example, maybe you're most interested in a particular system's database configuration capabilities, or its ability to run a certain report. Maybe these features have the potential to turn your business around-but only if you can get them to work for you.
To that end, you should make sure that any estimating software you consider offers the right combination of power and ease of use. Ask for a hands-on demonstration before you buy. If it's not intuitive, ask yourself if it's the right system for you. And if the sales rep won't agree to a hands-on demonstration, you should ask yourself why.
Of course, we're talking about estimating software here, and estimating often involves some pretty complex processes-so it may take a little effort at first to really get rolling. Your vendor should help you with this; reputable software manufacturers will usually offer some kind of training program for new customers, and many offer training for advanced users as well. Ask your sales rep about the availability of training for his products. If you don't like the answer, move to the next system on your list.
Seek Out Expertise
One thing the software and construction industries have in common is that they're both very complex, technical fields. Because of that, there are very few people who fully understand both fields, which is why there are so many poorly-designed, underpowered software products marketed to contractors. Ask sales reps about the backgrounds of the people behind the scenes-do the people who make the software have a background in construction? No matter what the answer is, it probably shouldn't be the deciding factor in your purchasing decision-but it might tip the scales in the event that you can't decide between two or three competing systems.
Don't Get Spooked by Price
If you're like most businesspeople, one of your first questions about any estimating software package will be, "What's this gonna cost me?" Nothing wrong with that-questions of cost figure into just about every business decision, and there is a wide range of price tags in the world of estimating software. But it's also a world where the phrase "you get what you pay for" really rings true. You can get an estimating program for $99, but it's not going to do nearly as much as a system that'll run you a few thousand dollars.
Can the more expensive system actually be a better deal? Certainly, because a more powerful system will enable you to realize significant cost savings on every job-provided, of course, that you're making maximum use of the software.
"Cost savings are directly related to the extent to which an estimator is using his estimating system," says Matthew Anderson, director of marketing with Quest Solutions, a Florida-based manufacturer of estimating software. "Our software is designed in such a way that estimators can use as little of it as they want-so if they're only interested in the digitized takeoff, they can get the benefits of using that feature without being forced to use some of the other more advanced estimating options. Others dive right in and take full advantage of all those powerful advanced features. Either approach is fine, of course, but it's the contractors in that second group who will see bigger cost savings from implementing Quest."
Or you could look at it this way: Assume for a moment that the average life span of an estimating system is about three years. If price is the one thing holding you back, consider what your return on investment over the next three years could be. Spend a few thousand dollars today in return for doubled or tripled profits over the next few years-now that's a deal no businessman in his right mind would turn down.
It Can Be Easy to Find the Contractor Estimating Software that's Right for You
Buying contractor estimating software doesn't have to be intimidating if you keep in mind a few simple guidelines. Your estimating software should be flexible and easy to use, or it won't do you much good. The company you buy from should ideally understand both the software and construction businesses and absolutely should offer training and support after the sale. And remember that price shouldn't be the determining factor. Considering these things before you purchase will go a long way toward ensuring that you end up with estimating software that's right for your business.
Construction Business Owner, August 2006
