Volume 35, Number 2, February 2000

 

theFarnadyFiles

The Fine Art of Guesstimating

determining costs and developing contracts often turns into a guessing game

by Dez Farnady

Construction estimating, sometimes facetiously called “guesstimating,” is the most extensively practiced “inexact science” I know. In the construction business we live and die by the contract documents that are composed of specifications and architectural drawings. Sometimes it gets to be a little awkward when the specs require one thing and the drawings show something different. The estimator’s problems are both the drawings and the specs, since his job is the translation from the original concept as it appears on these papers, to how much it is going to cost. He is not necessarily concerned with what it will look like or what it will become once it has been built.

The estimator has to price material, labor, all related costs, overhead and profit before coming up with a dollar amount he is prepared to “bid” and to which he will commit. The commitment requirement is also difficult and may even become unreasonable since the building frequently does not get started on time. I don’t know how often the glazing contractor gets to pass on material and labor costs that increase while he is waiting for the project to be ready for his crew.

Generally, the largest portion of a glazing contractor’s bid is the labor. Fortunately for glass fabricators, temperers, glass insulators, or other suppliers, this is not a problem. And I for one am grateful. Knowing a little about storefront glazing, I can tell you that it is not easy to determine the labor cost of what has to be put together because it always depends on who is actually doing it in the field. A glass supplier has a much easier time. We concern ourselves with material cost based on glass cost, cutting loss (net glass yield from manufacturer’s standard sizes), cutting labor, process cost (tempering, insulating, laminating, etc.), overhead and profit. Compared to field labor, this is a piece of cake.

For the glass portion of the process, the glazing estimator submits a price request to the glass suppliers in the form of a list of all the glass types required by size and quantity. Essentially he has listed each individual piece of glass that will be required for the building. The glass types are then priced with a per-square-foot price for each product. The extent to which even the material take-off may be an “inexact science” is evidenced by the frequency with which we receive quote requests from several contractors for the same job. In these cases, the glass lists are not the same or similar and, on occasion, not even close.

As a supplier doing business with many glazing contractors, it is in our best interest to remain fair and unbiased in our pricing. Beyond legal implications, I certainly never want to be the supplier who provides two different prices to two of my good customers thus influencing or contributing to one winning a bid over the other. There are more than enough intangibles and plenty of other places for them to “see” the job differently. So long as the products are the same and the quantities are substantially similar, then the price is the same. When there is a substantial difference in the quantities or there appears to be some other large discrepancy between two quote requests that are obviously for the same job, I feel obligated to contact everyone to notify each of them that someone else is doing it differently.

But what about this scenario? There are two inquiries for the same job—one for a limousine and one for a pick-up truck. They both have wheels and are for transportation for the same neighborhood and, coincidentally, they both require something extra special, like say gold bumpers. This tells me that someone is willing to pay a premium and it also contributes to proving that it is the same job. Both of the customers know what they are asking for and it is pretty clear they both have the same client. The dilemma may be this, do you tell the limo guy that someone is figuring a pick-up or tell the pick-up guy that someone is figuring a limo. Both are good customers and you want to be fair and protect everyone’s interest. So, what do you do now? Think about it. n

wpe15.jpg (3343 bytes)   Dez Farnady is manager of architectural products for ACI Distribution in Santa Clara, CA. His column appears monthly.


USG

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