Web Exclusive: The Case for Estimating Software
by Austin Merritt
September 1, 2009
How adopting an estimating software system can help your bottom line.
Are you still estimating the old-fashioned way? Why is it that the majority of construction firms continue to use pen, paper and bare-bones spreadsheets for cost estimating?
There are a variety of excuses, ranging from “I’m the only one who really knows the material and labor costs in my region” to “It’s easier to do it by hand than to learn a new program.” But the bottom line is that contractors using today’s cost estimating software systems are generating bids faster and more accurately than those who are still kicking the tires.
The Benefits of Estimating Software
Examples of this type of package include Sage Timberline, Maxwell Quest Estimating or HCSS (a system for contractors in the infrastructure and heavy construction industries). Switching to a packaged estimating system is bound to yield a number of benefits that cannot be achieved with manual processes.
• Process standardization. While sometimes a double-edged sword, the structure inherent in a packaged application enforces takeoff and estimating best practices, which increase efficiency and reduce user errors.
• Multiple user support. Most packaged applications enable collaboration by supporting multiple users over a local area network. This eliminates the problems that contractors experience when e-mailing spreadsheets around the office.
• Application integration. Since most estimating applications are built on a standards-based database, it is easier to integrate data into other applications such as accounting and job costing systems.
• Data analysis. Modern databases are better suited to support analysis of their data. Therefore, packaged applications typically offer some “out-of-the-box” reports that are guaranteed to be more accurate than a quick analysis on a napkin.
• Pre-built assemblies. Packaged applications are often designed with specific trades in mind, supplying formulas for cut-and-fill quantities, electrical requirements and everything in between.
Each of these capabilities presents attractive reasons for construction firms to stop delaying the inevitable and to start estimating more effectively.
Four Trends That Are Impacting Adoption
The good news is that advances in modern estimating and takeoff technology are helping the late adopters get up to speed. Just as innovations such as Microsoft Windows drove increased adoption in past decades, new technology trends are once again speeding up the adoption of estimating and takeoff software.
• Up-to-date materials pricing and catalogs are integrating with cost estimating systems to generate fast, accurate bids. (No more materials prices from 1998.)
• Digitizers and onscreen takeoff systems are improving in accuracy, becoming easier to use and increasing in flexibility to cover a wide range of jobs.
• Preconstruction management analytics allow firms to review the accuracy of their estimates, as well as their win rates and business processes.
• Improved ease of use has allowed contractors to shorten the learning curve and start getting results sooner.
Let’s take a closer look at the way each of these trends can potentially improve a contractor’s bottom line.
Integration of Up-to-Date Materials Pricing
In one form or another, materials pricing databases have existed for decades. Pricing for a variety of materials—lumber, concrete, wire, bricks, mortar—used to be a monumental task. Not today. Buying a packaged cost estimating system gives users access to the most up-to-date pricing list possible. Databases such as RS Means and RemodelMAX are updated regularly to provide users with pricing that reflects the going rates in their specific industries.
Database-driven estimating systems can also generate estimates for the amount and cost of labor involved. The software takes into account the intensity and difficulty of each job, the number of people on the crew and the external factors such as overtime and holiday pay. With this system, users can get accurate estimates of labor’s contribution to the total project cost.
Digitizers and Onscreen Takeoff
Depending on the size and complexity of a project, contractors can spend anywhere from a few hours to a few days generating a takeoff by hand. And how accurate are such measurements? Well, that depends on the estimator.
Fortunately, digitizer pens and onscreen takeoff applications have become easier to use over the last decade. Whether a firm uses paper or digital plans, accurate quantity takeoffs can be generated far more quickly. With paper plans, the estimator traces around the perimeter of buildings or lots to measure lengths and areas. A digitizer tablet underneath the plans records these measurements and sends the data to a computer for analysis.
It gets even better with digital plans. On-screen takeoff programs dramatically improve speed and accuracy with CAD files or electronic versions of plans. On-screen takeoff is used by a wide variety of firms—from large commercial general contractors to excavators to electricians—to save time, improve efficiency and generate more accurate quantity takeoffs.
Pre-Construction Management Analytics
How well do you currently do with your manual bids? What is your final job cost relative to the original bid? What aspects of the job were over or under bid? Questions such as these can be difficult for contractors estimating with pen and paper. Users of packaged applications, however, can typically answer these questions quickly.
The costs of upgrading to a packaged application are justified when you consider the value of this knowledge. Using estimating software, contractors have the ability to know that they consistently underbid the amount of labor for one aspect of a project, or that they lose most bids because their competitors’ proposals are more accurate and professional.
Ease of Use
Are you worried about investing in a system that will require an engineering degree to learn the software? Fortunately, software has been getting easier to use as the Web influences user interface designers. Moreover, the current generation entering the industry is more computer-savvy than past generations. As this generation ascends the corporate ladder, they will expect more automation and will have the basic knowledge required to take advantage of it.
Strategic Recommendations
Based on these trends and the inherent value gained from using a packaged estimating system, construction firms are advised to take the following actions.
• Figure out your needs before going shopping. Long before you start talking to software vendors, put in the time and effort to determine exactly what features are important to you. This will save time as you shop.
• Don’t buy from your local computer store. A program for $50 from a big-box retailer is likely to be a $50 lesson that you need a more robust system. You may not need to spend tens of thousands, but systems less than $100 typically don’t get contractors very far.
• Integrate with accounting or project management software. You can achieve tremendous efficiencies by integrating your estimates with project cost information.
• Stay up to date. Once you have made progress in adopting new technologies for estimating and takeoff systems, stay up to date on trends in the industry. Continue to monitor new releases from your software vendors and their competitors.
Despite the relatively low adoption rates for estimating and takeoff systems, there is substantial value to be derived from these technologies. Those construction companies that adapt accordingly will undoubtedly prosper.
A Happy Medium: Excel-Based Applications
If these benefits sound appealing, but you still love the familiarity and flexibility of Excel spreadsheets, there is a happy medium. Excel-based estimating software such as Tally Systems’ QuickMeasure or GeneralCOST Estimator by CPR Software allows users to realize many of the above-mentioned benefits, while still using Excel as their estimating tool. These systems are built entirely in Microsoft Excel, but provide on-screen takeoff, digitizer integration and the core components of a cost estimating system, such as a straightforward cost item database. These extra capabilities evolve Excel from a generic desktop application to a purpose-built construction estimating tool.
Austin Merritt
Austin Merritt is vice president of Construction Software Advice (www.softwareadvice.com), a Web site dedicated to helping contractors find the right construction estimating software for their businesses.
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