Our local ABC chapter was kind enough to let me put on a short seminar on estimating. The presentation went well. We obviously hit a nerve as verified by the feedback and the request for a more detailed workshop.
Estimating is a great topic as it forces several related topics to be discussed such as:
- Overhead allocation
- Job costing
- Tracking labor productivity
If you don’t have a firm grip and complete mastery of those systems, your estimating is not going to be accurate. Sloppy or lazy estimating technique leads to blown bids and the landing of undesirable work. If you are not 100% sure you’ve got these things under control give us a call. We are experts at putting them in place.
So started my interview with Bill Miller, founder of Building Erection Services of Olathe, KS. The interview will be available to members of our upcoming Private Club (we can actually see the finish line).
Bill shared a ton of great advice. Thought you might enjoying reading the catchiest piece. Bill’s manner of stating an owner’s need for timely reports was classic and perfect:
“I don’t like to read an autopsy. You want to know want happened right when it happened, not six months after it happened. You’re not looking for what killed it. You’re looking to keep it alive and keep it healthy.”
As I discovered during our interview, Bill has a passion for job costing and has used job costing to keep Building Erection’s field efficiency high and its field costs down. Their cost competitiveness has been their secret to keeping 120 union crane operators busy day in and day out (prior to the current economic implosion).
Take a look at the reports you receive daily and weekly. Do they cover the performance of each and every factor that controls your business’ health? Things such as:
- Field productivity
- Billable hours
- Sales leads and/or bidding opportunities
- Cash spent and cash received
- Overhead expenses
- Aged receivables and payables
If you are going to avoid reading an autopsy (either as a year end financial statement or project-end cost report), you best have a system of report generation that lets you track and monitor everything that matters.
We’ll be back soon.
Until then, wishing you much success.
Your friends and champions,
Ron & Guy
You can learn a lot about a contractor’s job costing system by looking at the company’s time cards. Those little things are an oft overlooked hurdle blocking effective cost tracking.
The first thing to look for is whether the time card has a place to write down a cost code. Stunningly, most don’t. How in the world is an estimator going to have the cold hard data he needs to build a realistic estimate when the time cards don’t break out the work activities?
The next common mistake I see is having no place to record the amount of material that was installed. A less important item to track, but valuable none the less, is the length of time equipment was run on the job.
The time card is the ideal place to capture all of this data.
Now for the really tricky part. You need to keep it as simple as possible or your crews will record garbage. The total hours will be right, if not overly generous, but the rest of the data will be useless.
Since projects vary in length and scope, the one size fits all time card is hard to find. consider using multiple time card designs. Two or three versions is usually plenty.
It boils down to this: if you don’t collect good information in the field, your estimating, scheduling, project management, and budgeting will all be baseless. Your time card is your one and only tool for getting the right information. Is yours doing the job?