Your client has heard your pitch or read your proposal. You're confident in your estimate, and the players involved. The client hasn't green-lit your proposal, and the scheduled start date is looming.
Every client or design team question is a red-hot priority to get answered. Whatever else you've got to do will have to wait.
As days creep by there's still no contract award. What do you do?
Estimators suffer a tendency to think like...estimators. Specifically they tend to focus on measuring and pricing items rather than considering what's been presented to the client. Adding to this problem, Estimators might be accustomed to competing against their peers in the market. This implies that a general level of knowledge and skill is present among competing estimators. No such criteria exists among clients. Clients may not understand industry practices, terminology, and jargon.
Well I'm the low bidder, surely that's enough for them!
Consider the case of a one-time builder like a standalone retail building. The client may have little to no personal experience with the construction industry. However they have doubtlessly read about State or Federal projects that became boondoggles through mismanagement and greed. It's a grave concern to an individual that cost over-runs could put them under before they can even start. The tighter their budget, the less likely they are to have contingency funds to pay for change orders. This is a serious commitment, similar to hiring a surgeon. Clients need the project to be successful on their terms. That means defining and addressing whatever they're most concerned about.
The key to closing is knowing which door is open.
Some clients will be especially sensitive to deadline delays. Retail establishments that aren't open in time for major shopping seasons can face financial ruin as a result. Office remodels might entail renting a temporary space, effectively doubling or tripling their rent during construction. Clients like this would be looking for a firm schedule commitment in the bids they receive.
Competence with Complexity
Other Clients are primarily concerned with the functional outcome of complex systems. Factories, or manufacturing facilities might require extensive coordination between; Architects, Engineers, specialty contractors, equipment purveyors, and the build team. Clients in this case might need a General Contractor who can take the many demands of all these disciplines and direct the resources towards a successful outcome. "By the book" bidding practices won't carry far with these clients. Problem solving, conflict resolution, and strong leadership need to be promoted to attract these clients attention.
Certain clients want perfection in terms of craftsmanship, and materials. These clients are willing to hire strong design teams with well-defined construction documents. Top-tier subcontractors deliver the sort of performance these clients are looking for. These clients want to know you've vetted every tradesman you'll have working on their project. The best indicator of future success is past performance.
Proving your abilities with a portfolio of similar work is a good approach. Appearing "cheap" may work against a bidder.
Bid Packet Perfection
Municipal, public, and institutional clients often have regulations and policies they must adhere to. These regulations may give preference to specific groups like Women Owned Business, or Minority Owned Businesses. Depending on the policies, these clients might have a percentage of participation for these groups in terms of contract value. Proving the percentages with the correct paperwork, on complex jobs often leads to minor discrepancies. Winning and losing these bids can be as simple as getting the paper work correct. I've encountered urban city projects that were re-bid because there wasn't a single GC who had submitted an error-free proposal the first time! These clients can't accept an incomplete/imperfect proposal so it's very important to prioritize accordingly.
Corral the Committee
Sometimes the client is a committee tasked with reviewing the proposals and awarding the contract. In the best of cases, this is a smooth democratic process. More often, it's an exercise in scope creep. Questions regarding the project quickly move to the hypothetical. Before long, you're attempting to give accurate schedule, budget, and permitting feedback on something imagined within the conversation! Committees lacking firm leadership are long on good intentions and short on decision-making. It's critical to understand that these clients won't make decisions any faster once the project is underway.
Projects rarely get schedule extensions so unanswered questions can pose significant risk. Kindly rise to the situation and fill that leadership gap. Diplomatic but firm direction keeps the committee on task and gets everyone where they need to be. Done well, they'll be satisfied that your firm took their direction properly.
Clients with Design-Build projects have an entirely different perspective than others. Lacking an Architect's representation, these clients are looking for a turn-key proposal which effectively delivers them their vision of the project within the schedule and budget submitted. These clients generally perceive change orders to be impossible since "you designed it". Whatever schematic design documents were provided will be expected in your proposal regardless of how vague, misleading, or apparently irrelevant. A history of previous successes might be significant with these clients as well.
Finally, there's the budget-conscious client. These clients occur at every tier and there's just nothing for it but to be low bidder. Clients with high expectations and low funds often arrive at bid day to find they've blown their budget. Estimators are often too discreet to ask the client how far the budget is off. Lacking this information, they're unable to determine how much needs to be cut. This leads to playing guessing games with breakouts, alternates, and value engineering. Estimating is NOT GUESSING. Throwing out whatever might save money is a foolhardy practice that consumes resources, generates risk, and lowers profitability. It's a terrible practice that desperately needs to stop. Every number you provide can be used against you later. Many GC's have unit-priced their way into an unprofitable project by "helping" an underfunded client. Charitable donations should at least be tax-deductible!
It may help to be reminded that the Architect typically knows the clients budget at the earliest design stages. They also know the clients priorities for the project. Some features are naturally more critical to the client than others. When it comes to big budget gaps, the Architect should be involved. Working together with the Architect reduces the odds that they'll reject your suggestions later.
"Your number was competitive, I'm still deciding which way to go."
It's absolutely imperative that estimators recognize the connection between time for consideration and pressure to act. The deadlines for bidding are a source of pressure for all bidders. Get it done by this day, no excuses, no exceptions. Clients who marinate on the proposals for longer than you had to bid aren't playing fair. It can be extremely difficult to get the clients attention after the bid. Stay after it because more time translates to less pressure. Dithering clients might be approached by a competitor who captures an opportunity to revise their proposal to meet some previously undisclosed demand. Now that competitor is "working with" the client. Potentially generating inertia away from the actual outcome of the bid via trust-building rapport.
Next week read part 2!
Thanks Anton for your valuable insight into construction estimating
© Anton Takken 2015 all rights reserved
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Copyright 2016 - The attached articles cannot be reproduced for commercial purposes without the consent of the author.
The opinions expressed in the attached articles are those of the writer. It should be noted that projects are varied and different laws and restrictions apply which depend on the location of the contractor and the project. It's important that the reader uses the supplied information taking cognisance of their particular circumstances. The writer assumes no responsibility or liability for any loss of any kind arising from the reader using the information or advice contained herein.
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