Whatever your trade, craft or even profession, there seems to be a professional intuition that is developed over time.
Knowing when & how to implement this intuition into your business & projects can be a game changer.
It can really help tie together all of the myriad of moving parts that occur on a daily basis in this construction industry that we all love.
Today, we’ll discuss how to implement this intuition into your estimating process.
How it breaks down
Estimating costs on a custom construction project is roughly 80% scientific, 100% mathematical, 40% historical and the other 20% is an art form.
On multiple levels, that statement doesn’t add up, right ?
Before we delve into the absurdity of that statement, first let’s define what a cost estimate is and what it contains.
Cost Estimate Defined
A cost estimate is the sum of all of the labor, material, equipment, subcontractors, taxes and builder’s overhead & profit that it will take to complete a custom construction or renovation project.
It will contain sub sections of foundation, framing, electrical, plumbing, HVAC, roofing, doors & windows, cabinets, flooring, along with all of the other items it takes to comprise a new building.
Since a custom project typically contains items that are very specific to each customer, a good estimate should also have solid descriptions of each task and be very clear about what is included and also what is not included.
This will help to reduce the number of surprises during a project that could negatively impact the budget and your bottom line.
Back to School
Back to the top and the funny mathematical total of percentages, you may be wondering what science, math, history and art have to do with determining how much it will cost to build a new house or remodel a kitchen.
They are all important and knowing how to implement each one into a cost estimate greatly improves the accuracy of that estimate.
The scientific approach behind a cost estimate is the determination of how much material your project will take and how long each task will take to perform.
Let’s use the example of a concrete footer.
How many yards of concrete will the footers of your new build need, how many pieces of rebar will those same footers need for reinforcement; how long will it take to dig those footers and tie the rebar together – these are all questions that science will help to answer and a good estimator can determine all of these things very accurately.
But wait, the material part of the concrete footer question seems easy since it is a simple math equation of length x width x depth divided by the proper number to determine the cubic yardage needed, but how would you know with any accuracy how long it will take to dig those footers and tie the steel together.
It has to be more than just a guess right?
Breaking apart the footer section, how would one know with any accuracy how long it will take to dig those footings.
Well, if it is your first time digging footers then there might be a little trial and error involved until you get a historical backlog in place. At some point along the way, you will gain more & more experience with this task and then you will have a historical log of how long it actually takes to dig footings for a pour.
Once you have a historical log, then you combine that with the math & science needed and come up with your cost estimate for this scope of work.
Back to the original thought
What about the Art that was mentioned?
And no, I’m not referring to a picture on a wall.
Let’s go back to the concrete footer example. Your science, math & history combination is telling you that the footers on the house will take 16 hours to dig and that you will need 18 cubic yards of concrete to fill them.
However, something just doesn’t seem right. Despite what your numbers are telling you, your gut is saying that is something is off. This is the art that I’m referring to – your GUT INSTINCT or CONSTRUCTION INTUITION.
On this particular estimate, your gut instinct is telling you that 18 yards of concrete just isn’t going to be enough.
Let’s assume that you have lots of experience with this scope of work and maybe you can’t quite put your finger on it but something just doesn’t sit right with you.
Your gut instinct is telling you to plug 20 yards of concrete into you cost estimate sheet. Now you may be asking, well if I can just round up like that to cover myself than why not just input 22 or 24 yards?
For one, over compensating is inaccurate and could actually cost you winning the bid on the project by bringing in your price as too high. What I’m referring to is not just rounding up to “cover yourself”.
It is using your construction knowledge and intuition to accurately depict the cost of a project so that you are not short changing yourself, not over compensating to the customer and that you are keeping yourself profitable.
This construction instinct can be applied to more that just a cost estimate. It can be used on many different levels throughout your business and throughout your day.
Hiring a new employee, ordering materials, scheduling deliveries, even computing a fair & honest final invoice to a customer are all a small sampling of areas where instinct plays a role.
The potential new employee that is sitting in front of you with the sparkling resume seems like a perfect fit for your company on paper. However, there is a nagging feeling inside of you that you can’t even really explain that is telling you that it will not be wise to bring this person on board.
The math totals one number on your final invoice to a long term & repeat customer, but you are keenly aware that one of your guys might have slacked off more than typical because of the seeming good relationship with this customer.
Within reason you decide to knock the invoice down a little bit to keep your integrity and give a fair & honest invoice to your customer.
You might disagree and think that you need to go with what the numbers are saying, but this has been implemented on occasion in our business and has been for the best.
Art overrides the Math but yet they work in collaboration with each other.
What about me
You might be asking how you can obtain this intuition and add it to your business & management toolbelt.
It will come with time, experience, and even some learning from your past mistakes (see previous post).
Knowing your numbers is very important but being able to implement your construction intuition will help to set you apart.
Punch List Tip of the Day
I mentioned trial & error during the footer excavation earlier.
While this method can and sometimes must be applied.
I would suggest reaching out to someone who has the experience and historical backlog of knowledge for advice.
Learning from your mistakes is great, but learning from the mistakes of others is even greater.