Guest post in "Contractor Talk" 02/18/22 - Business Forum
I get whacked with at least a half dozen different Estimating Services that are all over the country with the exception of being right here in Georgia where I should be applying materials and labor via my own take off and break down estimate. They tend to start off with "affiliated for 40 years with architects and general contractors for commercial and residential" whereas in reality in the sample take-offs are just the same as any one of a number of "Construction Estimating" software packages that are available in standalone or part of a Full Office mechanization which always appeared to be either waaay too much software for most construction offices or simply exporting the data from the same estimating programs into an Excel spreadsheet with their names, Po Box, mobile phone number and the credit cards that they accept.
I don't see these clowns as ever getting repeat business because the art of "Estimating is Part Science and Part Art." The science part being the ability to take off each lineal foot of wall plate for a residential structure and the assembly that makes it a wall. The art part is as in any science such as actuarial work wherein a $number at any one given time is affixed via all the numbers, factors and variables that shift constantly between net labor costs PLUS net materials cost...which is why your proposal to the Smythe family for a new home is only good for 30 days....and with that, hopefully 30 good days. You really have to pick up on the vibe of what's happening with the industry that you're ordering materials from that day....such as Ready Mix and how the effect of Portland production runs that price around your proposed price. And that is an art in and of itself.I joined the ICEAA (International Cost Estimating and Analysis Association) maybe 25 years ago as computer take offs were just in the works and wanted to keep up with all the new programs, digitizers, etc. I kept up, but the products were outrageously expensive for my work and cost prohibitive...but talking along with other members of the local chapter that were not just construction valuations, I caught on how quick these guys and gals were to correct anybody as to a price on any item because things do change via not only the problems with the marketing, manufacturing and delivery....but the demand and competition for the same purchasers. But also, they were content NOT to spend thousands of then dollars for software that Excel could do for $100 plus time spent in configuration of the spreadsheet. They all appeared very much hands-on in order to beat out someone that shouts out a cost to other members...only to get hammered for being 24 hours out of tune to actual costs. Accuracy to these pros is a big deal....as Materials Take Off (hereinafter MTO) and valuations of unit cost in weight to the typical measure of each unit (square footage; yardage; acreage; cubic area; lineal measure, etc.).
It's NOT just getting that $number in the Estimate....it's keeping that estimate CURRENT to that $number as they are absolutely, positively guaranteed to fluctuate in the wrong direction. They'll fluctuate in the wrong direction every damn estimate that you'll use to go to your construction lender to commit yourself...to paying the money back plus interest and fees. Like a scene out of the movie Goodfellas..."Rained out and couldn't meet the deadline...that's too bad, PAY ME. Didn't borrow enough money to finish up that project....that's too bad, you're screwed...PAY ME!!"
I can only encourage all those that get the same cold-call emails....it's too easy to call oneself an estimator...a job that doesn't require a license. ICEAA offers an astounding number of educational opportunities and scholarships for various engineering schools that offer big league MTO and cost analysis; as well as certifications that are recognized by large firms in all forms of production, development and construction. I learned early on about taking care of this one majorly important task and that you can sleep well each night....if you provide a sufficiently sized $buffer for a sleep-aid.
If I had to work with anyone due to a client's family member that knows someone or volunteers to do the take-off...just like any professional as they should be...I'll need a copy of their general liability insurance coverage letter with my name on it. If I really want to chase someone out of my sight I'll ask for a cover letter of coverage for Professional Liability....Errors & Omissions. That usually stops that because lads and lasses...a) don't trust clients with your money, b) re-read a) c) it's your business to do a good job for the client and make a good return on that effort for your company as well as your own share of the profits.
If you DO choose to use a 3rd party prepared MTO and Cost Estimate as your proposal for work with a guarantee for up to XX days...that 3rd Party needs to be able to stand up in court to defend themselves, pay their lawyers (as well as mine) and find a way to pay out the damages as put down in the verdict and mandated by court directive. Without some skin in the game....cold call estimators are useless and highly suspect of what they can provide that actually assists you in the above c) of the preceding ¶.
Computers have done many favors for many in our biz...but it's also made software and "databases" available to anyone along with a take-off tool, digitizer or simply inputting the dimensions into your own system and clicking a button for a take off on horizontal, vertical and lineal area and/or measurements...which is imported into the calculator for the valuation factored by the reliability or lack thereof of the database. Some cheap bastids will buy the program and simply not spend the monthly fee for updating someone else's idea on costs and values which may...may not....be close enough for jazz for the date of that database. It takes only a few full blown take offs and valuations before their expenses on office equipment and software is returned with everything from that point being gravy no matter whether the $$numbers are good or wrong.
The database is only as good as it is current and only then if the database is legit or just for show as found with some cheaper programs. The MTO program is only as good as the user with enough knowledge to configure the MTO software to include little things like pounds of nails; nail sticks; construction adhesives; plate bolts; sill insulation; metal strap diagonal bracing....many of those things are subject to the drawings and specification for the construction itself. If the users knows about construction...they might include all the little things not detailed on each layout drawing due to general knowledge. If they're just bums off the street with software and a laptop that became estimators for less than $500 in software...what you see in the plan is what you get.
I ask for the same E&O and General Liability policy from Real Estate Provider Home Inspectors, too. It's always a red flag when they allow..."given our total liability for our worked is fixed at the fee for the inspection...we don't carry professional or general liability.
In both case...inspections or MTO/Valuations provide YOU one thing....a material inducement. You as a purchaser are using that Inspection as a material inducement to purchase that house. You as a General Contractor are using that MTO/Valuation as the basis for the proposal for you to build and complete a project on schedule and on the money with regards to quantities and price of both materials and their installation. You signed the contract and closed subject to the condition of an inspection. After the fact, it's your house and the only problem the inspector has is cutting you a check back for the $300 to $500 if his "inspection" fall apart. Somewhere in the contract agreement and/or work order or into the Inspection Report itself you will find the total limits and exposure to liability and a dozen or so caveats on top of that just to make your go away. So you submitted the proposal based on the opinion and work sheets to the MTO/Valuation team of your choice...if you fall short on materials or costs....the problems will be solely borne by YOU with your clients as plaintiff or your fiduciarial friend aka Mortgagee with their hand out.
Being blind sided when you are the responsible party for property; permitting; ordering and paying for labor and materials and having sufficient funds to run through the whole process is not a risk many older homebuilders are willing to take without some sort of lawful recovery of any losses. Not unlike pilots...there are Old Builders and there are Bold Builders but not as many Old/Bold Builders. Risking everything on someone else needs to be more of a "I need to find someone to do my MTO and valuations" which puts you in the search mode to pick and choose those that come recommended or by referral of their peers.
If you DO choose to use a 3rd party prepared MTO and Cost Estimate as your proposal for work with a guarantee for up to XX days...that 3rd Party needs to be able to stand up in court to defend themselves, pay their lawyers (as well as mine) and find a way to pay out the damages as put down in the verdict and mandated by court directive. Without some skin in the game....cold call estimators are useless and highly suspect of what they can provide that actually assists you in the above c) of the preceding ¶.
Computers have done many favors for many in our biz...but it's also made software and "databases" available to anyone along with a take-off tool, digitizer or simply inputting the dimensions into your own system and clicking a button for a take off on horizontal, vertical and lineal area and/or measurements...which is imported into the calculator for the valuation factored by the reliability or lack thereof of the database. Some cheap bastids will buy the program and simply not spend the monthly fee for updating someone else's idea on costs and values which may...may not....be close enough for jazz for the date of that database. It takes only a few full blown take offs and valuations before their expenses on office equipment and software is returned with everything from that point being gravy no matter whether the $$numbers are good or wrong.
The database is only as good as it is current and only then if the database is legit or just for show as found with some cheaper programs. The MTO program is only as good as the user with enough knowledge to configure the MTO software to include little things like pounds of nails; nail sticks; construction adhesives; plate bolts; sill insulation; metal strap diagonal bracing....many of those things are subject to the drawings and specification for the construction itself. If the users knows about construction...they might include all the little things not detailed on each layout drawing due to general knowledge. If they're just bums off the street with software and a laptop that became estimators for less than $500 in software...what you see in the plan is what you get.
I ask for the same E&O and General Liability policy from Real Estate Provider Home Inspectors, too. It's always a red flag when they allow..."given our total liability for our worked is fixed at the fee for the inspection...we don't carry professional or general liability.
In both case...inspections or MTO/Valuations provide YOU one thing....a material inducement. You as a purchaser are using that Inspection as a material inducement to purchase that house. You as a General Contractor are using that MTO/Valuation as the basis for the proposal for you to build and complete a project on schedule and on the money with regards to quantities and price of both materials and their installation. You signed the contract and closed subject to the condition of an inspection. After the fact, it's your house and the only problem the inspector has is cutting you a check back for the $300 to $500 if his "inspection" fall apart. Somewhere in the contract agreement and/or work order or into the Inspection Report itself you will find the total limits and exposure to liability and a dozen or so caveats on top of that just to make your go away. So you submitted the proposal based on the opinion and work sheets to the MTO/Valuation team of your choice...if you fall short on materials or costs....the problems will be solely borne by YOU with your clients as plaintiff or your fiduciarial friend aka Mortgagee with their hand out.
Being blind sided when you are the responsible party for property; permitting; ordering and paying for labor and materials and having sufficient funds to run through the whole process is not a risk many older homebuilders are willing to take without some sort of lawful recovery of any losses. Not unlike pilots...there are Old Builders and there are Bold Builders but not as many Old/Bold Builders. Risking everything on someone else needs to be more of a "I need to find someone to do my MTO and valuations" which puts you in the search mode to pick and choose those that come recommended or by referral of their peers.
DO NOT and DON'T EVER suppose that a responsible professional would send a cold call email is your best tip of the day to take care of a lingering chore for each job.
There is no magic rug in Construction. There are a lot of programs out there that will swear that you'll work less hours for a lot more money. In my time spent, that would probably be the 1000th time I've heard that in person or read it in an ad. If you have the volume to warrant a MTO/Valuation group...by all means; it's just another cost of doing business. But if you choose the wrong package...CYA with current insurance documents (current being a key word here) that will give you some wiggle room while your attorney works through finding a way to recover lost money or assets to sell in sufficient amounts to cover your losses....and attorney fees.
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