Every completed project is an opportunity to improve the next. The post-project review should be a data-driven process that identifies systemic variances in things like labour productivity, material volatility, and site coordination. This is crucial information that determines whether a contract is profitable or a loss.
Structured estimation reviews are your best hedge against market volatility. Material price escalations are currently growing between 4.0% and 6.0%, and most construction insolvencies occur late in the financial distress cycle. A quality review process provides the data you need to adjust risk margins and contingency allowances in future estimations, ensuring every project equates to profitable work.
How do you prepare for a dynamite review?
A great estimation review requires the creation of clear benchmarks and a process that allows for systematic data gathering. Many estimators suffer from a lack of centralised project data. E1 (EstimateOne) makes this a bit easier by letting you consolidate tender documentation, RFI logs, and builder communication in one place. This makes it much simpler to compare bulk information across multiple bids for a project.
We recommend deciding on some metrics that will define estimation success. Here are some KPIs that you may find beneficial:
- Labour Productivity Variance
Measure the difference between estimated and actual labour hours.
- Material Price Divergence
Track the change between quotes received during the tender phase and the final invoice prices at delivery.
- Variation Capture Rate
Calculate the percentage of out-of-scope work that can be converted into paid variations to understand scope creep.
- Site Readiness Delay Factor
How much time is lost due to the site not being ready for your trade?
Important note: Perspectives from the office and field are required here. Estimators need to chat with site supervisors to get a good idea about the project’s physical execution. Business owners and accounts managers can also offer helpful feedback and notes. Always approach these conversations through the lens of root cause analysis as opposed to a performance appraisal, and move chronologically through the project timeline to understand the variances between original expectations and actual experiences.
Why are multiple quotes beneficial for estimators?
When you gather and compare multiple quotes, you’ll gain benchmarks that will help you distinguish between competitive pricing and unsustainable undercutting. Comparing quotes for the same scope of work means patterns emerge that reveal the true market rate. You can identify outliers, understand regional variations, and see when a supplier or subcontractor is offering genuinely competitive rates as opposed to pricing below cost to win work.
Conversely, operating with insufficient quotes makes it harder to verify whether the pricing is fair, inflated, or dangerously low. E1 makes it easy for estimators to gather and compare multiple quotes, so an accurate market picture can be formed.
Material variances can be the result of spillage, inaccurate formwork, or estimators working from old drawings while site teams work from plans with additional scope items. E1’s Document Matrix solves this issue by making sure everyone is working from the latest revisions during the tender phase.
What other factors should be reviewed?
Site-specific conditions that influenced your estimate’s performance should be reviewed, noting that these are often external factors you have limited control over. Understanding these during the review process helps you attempt to price for them in the future.
Interferences and poor coordination between stakeholders often lead to productivity loss. This can look like trades arriving on-site to find the previous trade hasn’t finished, or a loading dock access is unavailable. Review these happenings by cross-referencing your site supervisor’s daily logs with the original project schedule. This should tell you teams were frequently waiting for other people and work.
Rework is another issue that can often be classed under one of these three buckets:
- Design errors in original documents not caught during tender phase
- Construction errors or deviations from plans
- Communication misunderstandings between head and subcontractors
One of the goals of your review should be a new checklist for estimating that flags these kinds of high-risk issues, for example, unusual floor plans or non-standard finishes. You always want to catch these problems during the qualify and manage phase of a bid.
What should I do with my review findings?
A review is only worthwhile if its findings improve your next estimate. Create a centralised register that includes information like:
- Trade-specific productivity constants
- Regional price loadings
- Site setup adjustments
- Relative safety and compliance information
As you add to your register over time, you’ll have a bank of knowledge that will make each new estimation simpler and more accurate.
Future-proofing through estimation
As you approach bigger projects, estimation guesswork will create larger and larger risks. In-depth reviews of past project estimations are a must-have survival process that can be the make-or-break of your business operations.
If you can close the gap between the office and the site, you’ll protect margins and create more accurate estimates. The goal should be to turn every lesson learned into an investment in future profitability.
If you are new to the role of estimating and wish to improve your skillset, some industry bodies offer training, like the CPCPCM4012: Estimate and cost work course. These can provide nationally recognised processes for calculating materials, labour, and overheads. These can be a great way to expand your skills in bottom-up estimation and software options that can reduce planning errors.
Simon
Herod
General Manager - Builder
