What to do when you lose faith in the number that won the contract
by David Swider
September 23, 2019

If you’ve never had the opportunity to be in the “war room” on bid day, you owe it to yourself to observe the action in person.

Picture a large conference room with about eight to 10 separate phone stations and monitors, all tracking different disciplines of a project. These stations are manned with what look to be the latest home-shopping channel operators (bid coordinators and/or estimators) frantically plugging in last-minute numbers.

Then, like a great telethon or lottery, the final numbers are displayed on a huge video monitor in the front of the room. The bid captain or lead estimator gathers the final numbers and adjusts the bid to be submitted to the owner before the designated bid time—not unlike the chaotic scene on the trading floor of Wall Street when the latest initial public offering (IPO) hits and the buying frenzy begins. 

Once the submission time is closed, the bids are opened and announced in public. War room associates wait for the call to hear the results. The call comes in from the bid runner downtown and the message comes back, “We won! We were the low bidder!” The announcement prompts high fives and cheers from the whole team except for two people—the estimator and the owner of the company. 

How Low Can You Go?

Why aren’t the estimator and owner reveling in the excitement of winning another project? After all, the team may have been working on the project for weeks or even months. It’s because they’re looking for the answer to one critical question: How low were we? 

The answer to this question puts knots in their stomachs because if the win is based on their company’s low bid and it’s significantly lower than the bids of their peers, they may have left margin and profits on the table. Worse yet, they may have missed a critical component that could add out-of-pocket expenses.

As a contractor, while your bidding scenario may change, ultimately, you will be faced with the underlying questions, “Where did we get that number?” and, “How confident are we in our number?” The simple truth is that if companies do not have the necessary tools and access to critical cost and productivity data, they are at great risk of missing the schedule and coming in over budget.

So, how can you instill confidence in those numbers? When customers have actionable data earlier on, it drives better decisions. And the deeper an organization is able to drive the digitalization of that actionable data throughout its projects, the more impactful and transformative the outcomes will be. 

Real Data, Better Outcomes

An underlying challenge is figuring out how to digitize the data that helps contractors better deliver on owner projects and, in turn, have owners better manage their risk. Further, is how to realize far greater levels of project certainty for both. One way is to start with models or digital, two-dimensional plans.

There are tools that enable the transfer of quantities and materials from the plans directly to a schedule of values or an estimate. More robust tools go the extra mile and aim to standardize the data or make the transfer automatic, without the need for an import/export process in between.

With the resulting standardized quantities, companies can deploy digital planning and estimating tools. These tools help you track standardized quantities over time and produce a project history that allows you to leverage accurate production rates.

Consider how much more certain project outcomes would be if you could leverage actual past performance numbers to inform the planning and estimating of your next project. Having access to digitalized performance and quantity data provides critical visibility to help ensure your project stays on track and on budget. 

If you are waiting for numbers to come from your accounting system at month-end, you are looking in your rearview mirror, and changes now have diminished impact. However, when you’re armed with near real-time numbers, you can start calculating your earned value and track true contractor quantities. 

Consider the process of quality and compliance as well. Commissioning and turnover occur when construction turns to operations and facility management. Without a digital trail to help manage critical commissioning activities, such as mechanical completions, punch lists and walkdowns, the entire process occurs again and, often, with missing pieces. 

Analytics tools, like connected reporting systems, provide numbers originating from multiple sources, such as the solutions described above, as well as your accounting system, to ensure you leverage all critical information. 

Having dashboard access provides an entire organization visibility into the health and performance of your projects, enabling anyone who has responsibility for the project’s outcome to leverage their experience to keep the project and portfolio in check.

Control Your Project Destiny

The capital project life cycle is diverse, but with appropriate digitalization, you can feel more confident when answering: “Where’d we get that number?”

Why? Because your answer will include, “From our experience and involvement of key knowledge resources that are driving visibility and ensuring our predictability for successful, profitable project outcomes.”