Overview

Most companies spend a great deal of time and money trying to capture as much of the ever-shrinking profit margins a lot of our projects face these days. As construction professionals, our primary focus for any new project is to put together an accurate, complete, winning bid. For developers, not diminishing our development fees by cost over-runs, poor cost management and missed pre-construction opportunities. However, this does not always ensure profitability.

QUESTIONS:

1) Would you like to reduce overhead, minimize cost of estimating functions, or reduce/eliminate the need and burden of in-house estimating staff?

2) Increase profits with saving time and HOO (Home Office Overhead) by better pre-construction practices?

3) Have you lost previous bids?

4) Has profit on a past project diminished due to a poorly put together bid?

5) Has profit been depleted due to unrealized change work and deficient change order requests?

If the answer to these questions is no, fantastic. However, if your answer was yes to any one, then we have solutions for you.

For us in the construction industry, it goes without saying that profitability does not come from winning a bid alone. Company profitability quickly gets eroded when your company has lost bids, won bids that ended up costing you money, or has current work where profit gets depleted from trying to make up for lost revenue on previous projects. This is definitely true for unbalanced bids. If these practices go unchecked, there may no longer be a company. It happens far to often.

Solutions We Offer

General Requirements/Gen. Conditions—Always a point of concern, and sometimes contention. There should be concern when given a stipulated percentage (%) for this division of work by client/owner, or historically you have just assigned a percentage to cover the cost of these items as opposed to actually defining them. How do you know this assigned percentage is accurate to cover cost for each specific job or to not diminish profit margin? What changes have occurred since the last time defining this division of work? When a specific percentage is mandated or stipulated by a client, owner, or government agency it’s originator may not fully understand this category of cost or its development. When this is the case we can help find an accurate place to assign the balance of cost associated with this category. This will ensure your submitted bid not be disregarded or passed-over due to an inappropriately heavy line item. If your company is not already accurately identifying these costs you may be loosing profit, impacting revenue, etc.

Data Mining and Cost Models—Their have been great advancements and improvements to the tools we use to collect, filter, and analyze incredible amounts of data and meta-data. There is such a growing demand for the analysis and ability to interpret big data across the AEC industry. We have found it to be very intuitive, however, the right data must be provided to encapsulate correct and accurate results. A great deal of data is lost and under-utilized in the AEC industry. Here at MyRealCost we set out to change this for our clients for the following reasons: A) this data can answer questions and solve mysteries of how to increase productivity and profitability B) better and smarter decisions can be made for current and future work C) improvement in asset management through project life-cycle. Data drives decisions. What keeps MyRealCost at the forefront is having a capable team that possesses the necessary skillset: creativity, organization, and the ability to interpret complex information in a straightforward useable manner. Benefits include productivity trend analysis, multi-source combination for greater insight, in-direct cost management, etc.

Change Order Requests (COR) / Change Work—In today’s construction environment, changes are an inevitable reality. Poorly prepared COR’s can produce frustration, lack of respect, and possible distrust for the presenter/preparer. Many COR’s fail due to the lack of adequate documentation. Using only one type of pricing for bids or estimates and yet another for change order work that is considerably higher without justification fails. Passing through another contractor’s COR without reviewing and confirming the data would be a mistake—your company’s credibility can be diminished or lost. All cost associated with preparing the COR itself must also be quantified and included, especially General Requirements and Home Office Overhead (in-direct costs). Reminder: a COR is not an opportunity to try and gain increased profit or to make-up for poor estimating practices during the initial bidding of the project. Equally, it is wrong for an owner/AOR/PDC to expect a contractor to deliver a finished project that was never sufficiently planned, detailed, and designed without proper compensation.

Multi-Department Integration / Analysis—We have extensive experience working with accounting depts. to adapt accounting principals into estimating and cost accounting functions. This is accomplished by creating custom field reports, creating productivity analysis for accurate estimating, and recording methods for both self-perform work and sub-contractor activity. We can develop a system and cost model for data mining of historical costs for future bidding practices. Capture and analysis of cost for bid vs. actual and historical data is key to understanding errors in estimating practices, bid amounts, and how to remain profitable.

Green Building / Sustainable Design—This is an area where prime/general contractors often over estimate cost. Soft costs are often misunderstood or overlooked: commissioning agents, submittal and document management, energy modeling, etc. From a perspective of cost management, the following are significant areas of concern: A) cost increases for LEED document management and submittals B) additional engineering for calculations pertaining to energy efficiency and savings C) greater HVAC and electrical costs for LEED certification D) increased cost for additional controls and monitoring of the building E) Green Building knowledgebase for contractor bid evaluation and qualification. We have the experience and expertise to help you evaluate, analyze, and quantify the impact of such work.

Do You Have:

  • Company with estimating department and established policy & procedures

  • Company providing minimal in-house cost estimating

  • Company without a dedicated estimating staff

No matter what size your company is we can provide you with real, cost effective solutions. For the small, mid-size, and large companies who desire to keep the pulse of operations in-house we can offer solutions for greater efficiency and profitability. We can help identify waste, duplication, and deficiency with you current estimating practices, estimating department, and corresponding Policy & Procedures. We can evaluate and isolate problematic estimating practices that cost your company and profit loss. We can help develop or establish customized means and methods for greater efficiency and to help recapture lost revenue from poor estimating practices.