Benefits of a Database-Driven Cost Estimating System

by

Chief Operating Officer,

Still estimating the old-fashioned way? Pen, paper, and bare-bones spreadsheets still comprise the cost estimating “systems” of the majority of construction firms. Why is this so, when just about everyone uses accounting and project management software applications? We hear lots 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”.

The bottom line is, contractors using today’s cost estimating systems are generating bids faster and more accurately than those who are still kicking the tires.

The Case for Estimating Software
Switching to packaged estimating systems such as Sage Timberline, Maxwell Quest Estimating or Accubid (a system for electrical and mechanical work) 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 increases efficiency and reduces 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 emailing 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 supporting 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.

From our experience, 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 are increasing in flexibility to cover a wide range of jobs.
  • Preconstruction management analytics allow firms to review their estimate accuracy, 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 look at the way each of these trends has the potential to improve contractors’ bottom lines.

Integration of Up-to-Date Materials Pricing
Materials pricing databases in one form or another 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. Taking into account the intensity and difficulty of each job, number of men on the crew, and external factors such as overtime and holiday pay, 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? 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. Onscreen takeoff programs dramatically improve speed and accuracy with CAD files or electronic versions of plans. Onscreen takeoff is used by a wide variety of firms – from large commercial GCs 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? Users of packaged applications can typically answer these questions quickly, but questions such as these can be difficult for contractors estimating with pen and paper.

When one considers the value of being able 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, the costs of upgrading to a packaged application are justified.

Ease-of-Use and User-Friendliness
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 World Wide 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.

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 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 onscreen 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.

Find the right cost estimating & takeoff software tools for your organization.

 
  • http://www.remodelormove.com Remodel cost

    Wow great software tools. Thanks Austin for the information. The software help me alot in improving cost estimation & increasing performance with no or little bit of errors.

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