Bid it Like you Build it

Good afternoon and welcome to this webinar, How Quanta Scaled Its Estimating to Feed Growth. This event is brought to you by Engineering News Record and sponsored by Ineight. Hi. I’m Scott Seltz, publisher of ENR, and thank you for joining us. Bid too high, lose the job, bid too low, lose your margins. What’s a profit-minded, growth-oriented company to do? Today, we’ll hear firsthand how Quanta Services modernized its estimating work to balance their win rate with accuracy and scale their estimating function in a fast-paced environment.

We’re excited to welcome Rick Deans, Executive Vice President of Industry Engagement at Ineight, and Jody Greer, Director of Estimating and Project Controls at Quanta Energize Services. Since 1998, Rick Deans has worked with Ineight customers in more than 35 countries to help identify innovative solutions that address their biggest project management pain points. He leads Ineight’s efforts to engage with its most strategic customers throughout the industry advisory group. Rick is passionate about facilitating strong partnerships across the industry and helping build awareness of Ineight solutions.

Jody Greer has 25 years of experience in the estimating and project management field. He’s leveraged his experience to ensure project success in a competitive environment while mentoring others’ professional development. By focusing on bringing the field to the office, Jody has brought the estimating and project management process in tune with field operations, increasing accuracy of estimates and approving forecasts on project performance. I’ll be back at the end to field your questions to our presenters that come throughout the webinar, so don’t forget to submit them in the Q&A section of your webinar console. Now, I’m excited to turn it over to Rick Deans to kick off today’s discussion. Rick?

Rick Deans:

Well, thanks Scott. It’s always a pleasure to see you and participate in these events. For those of you who are not familiar with Ineight, we provide field tested project management software for owners, contractors, engineers, and designers who are building the world around us. Over 575,000 users and more than 850 customers around the globe rely on us for realtime insights that help manage risk and keep projects on schedule and under budget. I’m really thrilled to be here with one of our longtime colleagues, customers, Mr. Jody Greer, and we’re going to have a nice discussion about how Jody has used our tools, but we wanted to know a little bit about you first. So what I’d like to do is bring a polling question up on the screen, and this one is going to ask, which best describes your organization? So please take a minute to fill that out. That’ll give us a good understanding of what our audience looks like today.

As you’re filling that out, I wanted to share a fun fact with you. Neutron stars, the density of a neutron star is mind-boggling. These stars are composed entirely of neutrons packed together in a tiny radius. To give you some perspective, just a teaspoon of this material would weigh over a trillion kilograms more than the weight of the entire human population, which reaches a few hundred billion kilograms. To make something as dense as a neutron star, the whole of humanity would need to be crammed into a space the size of a sugar cube. So keep that in mind. If you’re in the elevator and a neutron star wants to get in, maybe you push that button to close the doors. It looks like contractors are well represented, followed shortly by engineer consulting firms. Let’s take a look at the poll results here. Appreciate you taking that time. So a lot of contractors, lot of contractors, so that’s great.

Let’s do the next poll polling question which asks, which best describes your role within the organization? So I have another fun fact for that and it’s going to maybe make some of us feel a wee bit old. On this date, in 1978, the first Halloween movie featuring Jamie Lee Curtis came out in theaters. What were you doing in 1978? Were you even around in 1978? I know Jody and Scott and myself were. Since then, there’s been a total of 12 of the movies within the franchise, and as a result, it’s been very, very successful, but it goes back to 1978.

So let’s take a look at our polling results and really take a look and see who we’ve got here with us today. So we got a lot of project managers, engineers, estimators. Great to see. We’ve got about a quarter of the people are in leadership, in management, and we’ll take a look in the chat and see what the other, please specify, what those roles look like. So that looks good. We’ve got a lot of leadership, project management, estimating folks representing the contracting industry with a good amount of consultants and owners as well.

So let’s do this. Let’s get onto the presentation now that we’ve got an understanding of who we’re going to be speaking with. Let’s let Jody talk a little bit about Quanta Services and his role within the organization and we’ll just take it from there.

Jody Greer:

Thank you, Rick. Quanta Services is a group of companies that specialize in infrastructure construction. We primarily are in electric power, and we do have an oil and gas division. I specifically worked with Quanta Energized Services, which supports operations in our operating units for high voltage transmission powered projects where we do not de-energize the line to work on it. Quanta currently has about 45,000 employees and we self-perform about 85% of our work. So we need to really stay in tune with exactly what the requirements of projects are is we are not mitigating our risk by subcontracting very much.

Rick Deans:

Excellent. I appreciate that. Can you tell us a little bit about life within Quanta Services, specifically Quanta Energized Services before you found out about our software? What did that look like? What was a day in the life of Jody Greer back then?

Jody Greer:

So being in the role that I’m in Quanta Energized Services, I interact with multiple operating units. At the time, practically all of them were using Excel spreadsheets for their estimating process. There were a few that had developed some access database applications themselves. Due to that, basically every operating unit had their own unique spreadsheet. So in working with those units, it would take a lot of time and effort to go through their takeoff format and understand exactly what data they were presenting and then validating the formulas and the logic behind them to make sure that we had a good understanding of exactly what was in the estimate and what was missing from the estimate.

This became a very time-consuming process for our group. So we took a look at having to move to a standardized database format estimating so that we could understand immediately what the logic of the estimate was and also have no formulas for anyone to inadvertently make a mistake with.

Rick Deans:

That horror stories abound about relying on Excel. I think it’s a great calculator. You can use it for a variety of things, but when you try to … My experience has been when you try to standardize business processes against it, it’s all the things you mentioned. You burn a lot of cycles, readjusting to that particular business unit’s format and layout. You can certainly, we’ve all done this, add a row and blow out a bunch of formulas, type over a formula, et cetera. Can you tell us a little bit about what you went through from a buying process and what ultimately led to a decision to partner with InEight?

Jody Greer:

Yeah, sure. We did look at several different packages. In a previous life, I had used Timberline a good bit and also some MC Squared, so went in heavy looking at those guys to start with and came across InEight and had a customer presentation done for us and just realized there were so many features that were available within InEight estimate that were not available with other software at the time that really fit our business process, especially the integration with scheduling either Microsoft Project or P6 was I saw immediately as being a very valuable tool.

Also coming from that spreadsheet background, having the integrated spreadsheet with an estimate gave us the ability to build the summary sheet that executives have been used to looking at for years rather than having to retrain them almost to the level of being users to understand what’s in the system. So that became just two immediate things that jumped off the page and made it stronger for us, but then also, especially compared to some of the other systems, the ability to be in control of the cost breakdown structure. You can determine yourself, the level of detail, the sequence that you want to do the takeoff in, and it’s just a very powerful tool from that kit. You’re not selecting preloaded items from a database, you’re scoping the project out, you quantify the project, and then you apply your resources to those items and it’s a very powerful tool.

Rick Deans:

We’ll talk a little bit about that later. I know we do have a lot of contractors on the line and a common pain point that I hear in the industry is that Client X wants us to submit a bid for this project and they’ve given us a list of 75 items. Each one of those items has a distinct quantity and a unit of measure, but the listing of the items does not in any shape or form represent a logical flow of how we would schedule or go about building the project. So we’ll talk a little bit about that later, Jody, in terms of how you can take that owner’s seemingly arbitrary list of items that they want really from a pricing perspective and really build a work plan that you can deliver to your folks in the field or submit to folks in accounting or, like you say, for executive management, and it follows a logical progression of how you might want to do things with making sure that all of the costs are funneled back to those items that the owner had ultimately wanted pricing for. So we’ll get into a little bit of detail on that as well. That’s excellent.

Can you talk a little bit … Okay. So you made the decision, “This is the tool we want,” you just ordered it and the next day you were absolutely successful using it or was there an intermediate step where maybe there was a bit of a rollout and implementation and then what did that look like? Did you experience any bumps and how did you overcome those?

Jody Greer:

Sure. So simultaneously, it just so happened that one of our operating units presidents was in the building the day that we had the demonstration of estimate, and he decided that he also wanted to be using the product. So we had a group of estimators that did transmission construction that were involved in the initial training. So I think we had about 20 people in our initial training, three-day training. Went very well. It was very professionally given and, really, the trainer made it a point to help us tailor to our needs to fit our process.

So we had a very good beginning with it and then just had to make the commitment at that point that this is what we are going to use, put the spreadsheet away and started working with it. I’ll tell you, within a week of using the product, became very proficient at it. It’s very intuitive once you understand the process within it.

At that point, we were also doing several international projects for Liveline projects, and so we mandated that this software would be used for it. It’s very powerful for international projects due to the multiple currencies involved and the ability to use, really, you could have a project that has 50 different currencies in it and you input it in the actual dollars, it converts it, and then you can display your totals in whatever currency is appropriate, either US dollars or in the currency of where you’re working. So that really helped us out immediately. That’s something that’s rather difficult to do and time-consuming to do in a spreadsheet basis.

Rick Deans:

Sure, and I know when folks were saying hello and announcing where they were from, it looked like we’ve got a good solid representation of North America. We had a lot of folks here in the states. We had a few folks up in Canada, some down in Mexico, and that’s one thing many of our customers have mentioned is the ability to … For any element that has a cost associated with it, whether it’s a material or whether it’s expat labor or local labor or something you’re buying from China and you’re shipping to Guam, all of those individual currencies can be maintained with a conversion rate. Then like you say, you can flip the entire estimate over and say, “What does this look like in US dollars? What does this look like in local currency?” Many of our customers really enjoy that. To your point, it’s difficult to maintain that within Excel.

So you had the demo. There was a president in one of your business units that said, “Okay. We’re going to sign up for this.” I see on the screen there that you’ve currently got 11 operating units now using the tool. So how did that go? How did that balloon from onesie, twosie to close to a dozen discrete business units using the tool? What drivers caused them to come on board?

Jody Greer:

Well, so primarily, it’s just word of mouth and exposure to it through our use of it. Our group interacts with all of the Quanta operating units that perform energized work. So once our group started using estimate, we’d go into operating units to help them with bids on major projects and they sit down in front of us and see the software in action and say, “Wow, we want that,” except for the international energized projects, we did not mandate it. So it has all been just people were exposed to it, liked what they saw and came on board. I actually spent a good bit of time over a two-year period initially going out and doing training for op units, bringing them into the system.

Rick Deans:

I remember that. So that tells a rosy story, but let’s peel that back a little further, that last bullet point. Let’s talk about some challenges. Let’s be frank here, and maybe it didn’t stick everywhere, and what were some common threads that you saw that really helped it stick and be successful and what were some other areas that maybe there wasn’t as much traction?

Jody Greer:

Really, probably one of the largest pieces of reasons why implementation failed is people failing to make the commitment to it. They get the training, it’s a three-day class, we get a template project set up for them, but they’re not proficient with the software yet. The estimator looks at his schedule and says, “I have four bids I need to turn in next week. I don’t have time to use the new system.” The next thing you know, that snowballs into not touching it for a month and now you don’t remember your training and it just goes away, which really to me also points to a lack of full executive support. If the executive is still accepting the Excel estimates and not mandating that they use the new system, then there’s going to be a much higher probability of it not working.

Rick Deans:

So we did the polling question. We did have at least a quarter of the audience was in leadership management positions within their firms. What recommendations would you give them if they were going to go down the road of implementing a new system? What things have you learned from your experience that you might be able to pass on to folks that are maybe just embarking on the journey that you embarked on several years ago?

Jody Greer:

Based on our experience, I think the number one thing is you have to make the commitment. You have to make the commitment that this is going to make our estimating process more dependable, and actually at the end of the day, it is much more efficient once you become proficient with the software. So you have to make that mandate, make that change, but at the same time, that gives you a responsibility as a manager because you have to make sure that you give your people the resources they need and schedule them properly so that they can have that time in that first week, two weeks, three weeks to be able to commit to the system and not fall back.

So if you’ve got an individual estimator that has four bids due next week, you’ve got to make the commitment to either help reschedule with some different estimators or possibly even step in yourself and help, but you just have to see that long-term the benefits are so far outweigh that initial pain that you have getting started.

Rick Deans:

I’m going to circle back to that in a moment because you brought up something really interesting. A lot of our customers think about return on investment and you nailed it with efficiency. Maybe we can bid more jobs quickly, but the one that really stuck out in my mind was when you said it creates a more dependable estimating process and it’s hard to quantify that, but it’s more of a qualitative than a quantitative feeling. I’m not staying awake at night worrying about busted formulas or did we get the last version of the spreadsheet off Joe’s laptop before he had to hop on a plane and go somewhere.

Jody Greer:

Exactly.

Rick Deans:

We’ll circle back to that in a moment, but I think those are really important business issues that might resonate with our audience. Speaking of quantifiable return on investment, what were some of the time savings that you guys identified when you were actually using the software in production?

Jody Greer:

So the number one thing, probably the number one feature with InEight estimate, I should say-

Rick Deans:

We go back away.

Jody Greer:

That’s right. I’m trying, Rick, I’m trying.

Rick Deans:

You’re doing great.

Jody Greer:

Transferring an estimate to a schedule time is just such a vastly improved procedure. Being able to have that two-way integration where once I finished my estimate that I have been in control of the cost breakdown structure on. So I build my cost breakdown structure to look like a schedule to start with. When I hit a button, it goes to Primavera, creates a new project and it pre-fills all of the activities, durations, resources, and cost loading. That way I don’t have really any data entry that I have to do to create a schedule.

Once I open the schedule up, all I have to do is enter my network logic diagram and my schedule is built, but then the really powerful tool along with that is that it’s a two-way integration. So once my schedule is built, a lot of times once that schedule comes out, you see just some glaring issues that came out from your estimate. You’ve got this activity is scheduled to take five days when in reality, I’m reviewing it with a field subject matter expert and they say, “You’re not going to get that done in five days. It’s going to take you eight days.”

Another activity, “You’ve got it in for three days, it’s going to take one day.” You make all of those adjustments in the schedule, you press a button and it goes back and updates the estimate so that my estimate is exactly in line with my schedule at all times at the touch of a button. It’s an incredibly powerful tool for reviewing bids certainly, and it has had significant impact and I think that’s really one of the features that keep people in the system more often when it is successfully implemented.

Rick Deans:

Well, and you talked earlier about working internationally and having multiple currencies. With that comes along I’m sure lots of logistics issues and long lead items need to be tracked and managed. Are you looking at your resource curves within the estimating tool? Now that we’ve brought those dates back from the schedule, you can look and see when you’re going to need those items on site, when they’re scheduled to be installed. Are you doing that analysis with the histograms within the tool, Jody?

Jody Greer:

Yes, absolutely, especially on the international projects because most of the international projects that we’ve been involved in have included procurement and construction in the contract, and there’s definitely long lead time items. A lot of times, it’s not even just materials we’re purchasing, specialized equipment that we have to move from the US to that country. So yes, that’s absolutely a very important tool in the international world. It’s an important tool even domestically speaking. You just are looking at a lot more risk and a lot more time involved in the international work. The other thing that’s nice with the schedule integration is once you’ve got the schedule integration in there, there’s a cashflow summary that can be quite quickly generated as another tool to do your pre-project planning.

Rick Deans:

So when you think about it, we understand, like you said, the scope of the work. We understand what we’re going to do and what it’s going to cost. Now, we can layer on when we think we’re going to perform that work. Then we’ve also got, obviously, it’s an estimating proposal bid development tool, so we understand how you’re getting paid for the work. So like you say, we can bring all those things together and look at our cost S-curves, our revenue S-curves across the project, and as many of our customers do, they look at that strategically. Are there ways we can shorten the gap between when we perform work and we get paid for this? I’ve had some customers that say that we’ve already negotiated fixed price with the client, but if we can model maybe invoicing them twice a month rather than once a month, we can become cashflow positive that much sooner, those sorts of things they can model within the software.

Jody Greer:

Another nice tool too is, in addition to what you would call activities, what I like to call your general conditions items, show up yard rental, temporary facilities, all of those sorts of things. I’ll take those to the schedule also and put them in as a level of effort activity, put the project start and the end of the project complete. With that two-way integration, it automatically tells me I have the exact time that we’ve estimated in each of those items at the touch of a button.

Rick Deans:

Then do you use the escalation feature where you can escalate certain costs over a date range? Have you ever had a situation where the client has maybe proposed a later start date and it pushes you on an escalation range?

Jody Greer:

Yes, that’s correct. Also in a lot of cases we have, we’re working with a union operating unit and the union contract is good for a year, but a lot of them actually change midyear.

Rick Deans:

In July 1st, the new industrial [inaudible 00:25:29]

Jody Greer:

Exactly. So you may have even just a rather short duration project, maybe it’s only two months long, but the union contract expires and you have new rates coming in that you have to account for. So yes, that is a good tool.

Rick Deans:

Could probably talk about that all day long. Talk a little bit about just a general flexibility. What have you noticed in terms of your ability to … I know I like to think about estimating as a science and an art. I like to think we provide the science bit of it, but you guys as estimators, you’re out there thinking, “Well, what if we did it this way? What if we did it that way? What if I self-performed this work versus hired a sub?” What flexibility have you seen with the application? Maybe some real world examples, Jody.

Jody Greer:

So one thing that I really like is the ability that I can suspend items in my cost breakdown structure so I can build multiple scenarios. For instance, say we’re going to have concrete foundations. Well, we can do a takeoff of exactly what we think it’s going to do and then we can have another line item in for subcontractor pricing separate from that, and I can have all of that prebuilt and ready to go and then we can just, “Okay. What difference does this make? Turn it on, turn it off,” and it’s right there. Again, it’s one of the things that is really powerful within the tool is just the ability to be in complete control of the CBS. You structure it exactly the way you want to. In fact, a lot of times I’ll even use the suspend feature for alternate pricing rather than using the alternate scenario tool just because it gives a great visibility, especially when you’re looking at an executive review, they can see exactly everything that you’ve included or removed as a result of that.

Rick Deans:

I’m sure you’re using the changes log tool that captures changes when you’re making them and how much the bid change by and all that good stuff.

Jody Greer:

The one thing you have to remember is turn it off when you’re building the estimate because you’re making a change every time you add a line item.

Rick Deans:

You bet.

Jody Greer:

So yes, we do use that, but I like to take it to the point of where I’m taking the project to management for approval before I start logging the changes because that’s really where you end up seeing the significant changes happen.

Rick Deans:

I think that’s what most of our customers do. They have that step where, “Okay. We’re ready to review this. Let’s turn that on.” For our audience members, really what that does, and it’s night and day different than Excel, we can all be working in an Excel sheet and I can leave the office a little early because I’ve got a ball game to go to, but Jody’s going to stay working at the office and I left the office and the estimate had a total cost of $2.5 million. I come back in the morning and now it’s at $3.1 million. It’s really hard to understand and trace those changes back in an Excel sheet. Whereas what our changes log allows you to do is you can activate that and any change that affects the price of the file, it’s going to log who made that change, what time they made it, what did they change, what was the old value, what was the new value, and then it’s got all kinds of reporting in terms of how did it affect my labor costs, equipment cost, material costs, how did it affect my margins, my indirects.

Many of our customers will use that in negotiations with their customers. So customer says, “Well, let’s remove this scope,” or, “Let’s add that scope,” like you say, you can just turn those elements on and off in the estimate, and it’s not just capturing your direct costs, but if you had derived indirect costs or margins on top of that, that all is part of that package now, and you can go to the client and say, “Well, that’s going to cost you X more dollars if we did it that way.” Many of our customers will say that is so much more powerful than, “Okay, well, let me crunch some numbers and get back to you maybe next Tuesday.” They can just do it in realtime and have, like you say, have confidence and be able to depend on that result.

Jody Greer:

One of the best pieces of that change log for me is that not only does it show you what the impact was, but it will tell you exactly which cost items were changed so that if you’re working in a team environment and someone else made a change, you can go back through that and determine what their logic was of why they were doing it, and it gives you the information you need to undo the change if you want to undo it. So it’s very powerful.

Rick Deans:

Good. Excellent. I’m glad you’re taking advantage of that. Let’s talk about … Now, we talked about some what I would call quantitative return on investment. It used to take me two days to put together a schedule and now it’s a matter of hours, but what about the overall quality of the estimate, Jody? Can you talk a little bit about it’s not saving me 10 minutes here and 15 minutes here and 30 minutes here, but the overall quality of the estimate?

Jody Greer:

I think what it comes down to, Rick, is really the title of this presentation is bid it like you would build it, and what I mean by that is you don’t just sit in a vacuum in the office and sit behind a computer and plug out unit prices. You do the takeoff, you get the job scoped out, you get it quantified, you assign the resources you think it’s going to take, you put it to the schedule. At this point, you bring in a field subject matter as expert to sit down with you and review the bid. It’s very powerful for the guys that are more field-oriented to be able to review with the schedule sometimes. They tend to maybe not see the forest for the trees when you’re just sitting in front of a CBS structure, but bringing those field subject matter experts into the process, having them engaged gives you the validation to know that your estimate is as accurate as it can be within the knowledge base of the entire organization.

So we’re not constantly just looking back at job cost reports for past performance. We’re looking forward as to what we think it’s actually going to take to do the job. It’s been validated by those field experts and it puts the field experts in a position of having their own personal buy-in to the bid. How often have you been in a situation where a project was going a little bit south? Well, the field guys are going to tell you that it was estimated wrong. The estimating guys are going to say they’re not doing it the way we planned for it to be done. Well, this gives you a much higher level of engagement and buy-in to the whole process and ultimately creates-

Rick Deans:

I think that’s a huge point, Jody, and I apologize for speaking over you there, but-

Jody Greer:

Oh, no, that’s fine. I’ll talk all day-

Rick Deans:

… because when you do get that buy-in and those folks in the field actually have some ownership of that, you’re absolutely right, the finger pointing goes away and it’s, “Hey, we’re all together as a team. We decided collectively this is how we’re going to do it, and if we run into some challenges, we just have to go through those,” as opposed to, “Rule one, identify the culprit.”

Jody Greer:

That’s right. By using this process, you’re basically creating the turnover package that you’re going to give the field crews to do the jobs. So they’re already bought in, they’re aware of the project, they know the parameters, they know the tools and equipment they’re going to need. It puts them in a lot better position to be productive from day one.

Rick Deans:

I used to have a boss that said if you ever had the opportunity to build a project the second time, you would do it much more quickly and much more efficiently than you would’ve the first time. He referenced the software, he says, “By building a virtual model of the project, how you’re going to execute it? That shakes out all of those issues or a good amount of them. What are the things that we may need to address as we actually get into the field?” So it was encouraging me hear you say that that the field is really participating in that and providing their buy-in as well.

So we talked a little bit about the multiple currencies. Can you talk about how the tool allows you to work in multiple regions clearly with different labor rates by region, maybe by union, by all these different attributes? Can you talk to us a little bit about how the tool helps you manage through some of that, Jody?

Jody Greer:

Yeah, absolutely. Several of our operating units are union, and so they each have different union contracts, which means they all have different base wages, they have different benefits, they have different taxes and insurances that are applied based on the operating unit or the state that they’re working in. There’s even times when we have projects that are crossing state lines, which often means I’m going to have two, maybe three different union jurisdictions involved in a single project.

So obviously, you can create new labor resources for each jurisdiction that you have, but we’ve determined that, really, the best process is I’ve used the Excel integration to create a spreadsheet within the system that is macro enabled so that I can switch to different labor union jurisdictions at the touch of a button and then I update the job from the spreadsheet. Now, all of my union labor rates or even non-union jobs in different companies, different states are able to be quickly updated, which is also a really powerful tool when you’re using a template project to create new projects. That is the process that we use. So that way all I’m changing is the dollars that are applied to that labor resource. That way, the crews that already have set up the assemblies that already have set up do not have to be changed also. So it’s very powerful.

Rick Deans:

So if you were addressing an astute listener that realized way back on slide three we talked about getting off of Excel and now we’re a little further into the presentation and we’re talking about using Excel, can you differentiate between using Excel integrated with our application versus using Excel standalone? What would be the difference there?

Jody Greer:

Absolutely, and I can’t see where that would get a little bit confusing, but within the tool, there is an integrated spreadsheet that is built into estimate. It is only accessible by estimate. Of course, you can print from it or you can save sheets out of it to get it out of the system to share with people if you need to, but its primary purpose within estimate is to be able to use it as a calculator. So you’re using Excel the way it’s meant to be used. You’re manipulating data or you’re building reports out of it, but it is not the backbone of the system. The way it’s built is basically just so that you can link data between that spreadsheet and your estimate so that you can use the calculator function to update your estimate or you can push information from your estimate to create customer reports.

Rick Deans:

No, that’s excellent. I think that’s important because once we do bring that data back in from the spreadsheet while we used the spreadsheet, like you say, the way it was intended to be used as a calculator, that data is now part of that estimate file. It’s part of that database. It’s reportable within your organization. It’s not out on someone’s hard drive as version final, final 001 of some spreadsheet that they’ve put together on the side.

Jody Greer:

That’s right.

Rick Deans:

From my perspective, and I talk to a lot of different organizations that represent owners, engineers, contractors, consultants, there’s a lot of discussion in the industry about doing a top down estimate versus a bottom up estimate, and by that I mean maybe I work for an owner type of an organization, we’re considering building a capital asset 18 months from now. I certainly don’t have any design or feed information on it. I’ve got a rough order of magnitude understanding of what I think that asset should be doing and I want to come up with a preliminary budget, but as I get closer to the actual execution date, my stakeholders within my organization, they want more detail. They don’t want to a high level ROM based on the last five projects that had similar attributes. They want to see a little bit more detailed bottom up estimate using cruise, productivity rates, things like that. Can you talk about your experience doing both of those types of estimates, and in your opinion, is the software better suited for one or do the other? Do you think it does both pretty well? What’s been your experience?

Jody Greer:

Yeah, absolutely, Rick. In fact, a lot of the estimates that I’ve worked on in the past have been conceptual estimates, just feasibility studies, can the work be done, and what’s an order of magnitude that it’s going to cost so that we can make a decision to either move forward with the project or how much budget money do we need to allocate? So you can start with something very basic, “I’m going to have this many structures. I’m going to have this much of widgets approximately.” So you can just do a basic line item summary of those things, assign a historical unit cost to it, and you can get to that order of magnitude estimate rather quickly.

What’s really nice about the tool though is that I don’t have to create a new estimate to go to the bottom up. I can use those same parameters that I had listed originally for the top down estimate to become my top level work breakdown structure, cost breakdown structure, and add some more items to those so that I can start building the details as they become available. You can go through several iterations of that to get to the final project.

Another thing that’s really powerful in the tool is that you’re able to split items. So okay, maybe I have 150 structures I’m building, but each of those 150 structures, maybe there’s 50 of them that are in town, there’s 50 of them next to a highway, there’s 50 of them in a cow field, and you’re going to have different production rates on all of those. So I can split those items as I’ve built them out. I’m keeping that same level of detail that I’ve built with those items, but now I can go in and adjust productivity rates for the actual conditions that they’re going to be built in across the duration of the project.

So I think, actually, estimate is an excellent tool in either direction, either bottom up or top down, and the ability to keep that progression going as the level of detail that you have available to you increases is very strong. There’s also a snapshot tool you can use as you’re going through this process so that you can have a quick direct comparison with how the projects changed as you went along increasing that level of detail.

Rick Deans:

So someone in your role, Director of Estimating and Project Controls, you’ve got presumably an inherent obligation to the firm to represent the firm’s best interests and get the right price, get the work at the right price. I’m old enough to remember the green sheets, remember the Dodge reports, and people would look at those and they were printed on green paper and the people would get average unit prices for items and they would use those averages in their own bids. What would you say strategically to someone that uses averages versus someone that does a true bottom up model of the project? Would you see any differences? Would you see any advantages of doing a detailed estimate for [inaudible 00:42:48]

Jody Greer:

Oh, absolutely, Rick. I think the reality is, what is an average? Well, there’s a very good chance that the number you’re using as an average was never actually your performance. You probably performed a little better on some, little worse on others, and you’re coming to that average. So what that would imply is if you’re just using historic average unit prices is that means you are going to be underbid on more challenging projects and you’re going to be overbid on the simpler projects. So what that means is you are going to win in an inordinate percentage of challenging projects that you have underbid and you are also going to miss out on the opportunity for very profitable projects because your price was too high.

So being able to go to this detailed level and say, like I say, bid it like you’re going to build it, look at all of these details, get the numbers right, and you’re going to find that your percentage increase of hit ratio is going to be better, but it’s going to be a lot better situation to be set up to be financially correct and profitable for your company.

Rick Deans:

Well, and you mentioned it at the outset, you guys have very specialized services that you perform. You’ve certainly invested in the training and the specialized equipment and the retention of those employees that have those skills. I would argue it would be ludicrous to use averages when you guys have really invested in creating a competitive advantage in those certain areas. Like you say, what is an average? That might not be applicable to us. We might really perform well in these cases and we might be able to be more successful if we model it from the ground up rather than using an average, right?

Jody Greer:

Yes, exactly. I will tell you that, basically, our estimating process, if you look at our cost breakdown structure, what you’re going to see is a work procedure. That’s exactly what drives all of our detailed when it comes to the work planning. What are we going to build? What labor resources, what equipment resources, what tooling are we going to need to do it, and how long is it going to take them to do it? That is exactly how we’re estimating.

Rick Deans:

Excellent. Excellent. Well, I know you’ve been with us for a while. You’ve seen us maintain what I would argue would be a pretty aggressive product release cycle over the years. Many of the capabilities you’ve talked about were suggestions that came to us through customers that we’ve implemented. Where do you see this going in the future? What enhancements would you like to see us make to the software and what other modules might you guys be considering as we go forward in the future?

Jody Greer:

I put the first bullet in there as a little bit of a haha, but you got the Canadian dollar, the Australian dollar, the US dollar. The symbol looks the same on the takeoff sheet, so that can be a little bit confusing at times, but really, I think as far as enhancements to the estimate package, it is a very mature package as it is right now. Being able to possibly have more bi-directional integration, especially if you start looking at some of the features that could be integrated with accounting systems, and I know you do have accounting integrations available, so that’s something I think that we would really like to move to, especially as we move into go into Ineight control where we’re actually doing our profit projections and that sort of thing within the system. I’m definitely looking forward to seeing what ends up happening with the completion of the integration with Ineight schedule. I think that could-

Rick Deans:

We’re very excited about that.

Jody Greer:

… actually be a very good tool for us also.

Rick Deans:

Well, excellent. Well, I know we’re coming up on time. Scott, I’d like to turn it back over to you and if there are any questions from the group, we could certainly stay online to answer anything that may come up.

Scott Seltz:

Excellent. Thank you, Rick and Jody. This was a really good conversation. Before we have you address the questions that came through the webinar, I’m going to remind our viewers that we love their feedback and I’d like them to take a few minutes either now or at the end of the presentation to take our survey because you’ll help us improve our programs and we appreciate that. So while I was listening to your conversation, guys, I had two questions of my own that I want to throw to you. This one I think is more towards you, Rick. How have you seen organizations group project data reporting, for instance, by business, unit type of projects, et cetera? What has been your experience?

Rick Deans:

That’s a great question, Scott, because one of the key elements of using a database system not only to estimate but to execute your work is to be able to perform what we call benchmarking. I want to know in the future what historically has it cost me, and not just in terms of dollars, but in terms of hours and productivity rates to do this. So many of our customers will assign attributes at the project level, what type of project is it, where it’s located geographically. Obviously, there’s a date element in there, when are we doing this work. Maybe even down as granular level as who the client is. Then that way when I’m looking at a new wastewater treatment plant in Missouri for customer X, I can really dial into my historic data, and having the ability to segregate those projects by those various attributes really allows our customers to take advantage of that data without having to anecdotally call up their colleagues on the phone and say, “Hey, I know, Scott, you worked on a project with similar attributes in the past. Do you recall what it cost you to install the X or Y or Z?” All the data is right there for us.

Scott Seltz:

Great. Now, I have to ask this question because it’s still going on. What would you recommend to an organization that is still using spreadsheets as their main estimating tool at this point?

Rick Deans:

I’m going to let Jody answer that one.

Jody Greer:

Well, I think what it really boils down to, guys, is that in reality, construction management is risk management. When we get to the project, we’re managing our safety risks, our quality risks, our productivity risks, our profitability risks, and at the end of the day, this process all starts. The first thing you touch on a job is the estimate. So the best way to eliminate risks, the best answer is to eliminate risk. When you can’t eliminate risk, then you mitigate that risk. So by moving to software such as estimate, you’re starting your risk management process correctly. You are eliminating the risk of having an error that is going to put you in a position where you are losing money the day you signed the contract. When you do that, that affects every other risk you’re trying to mitigate.

You’re going to have people who are going to try to push production. You’re maybe going to try to use inferior materials, and so that’s going to affect your quality. You’ve set yourself up to fail from the start. So I would highly recommend you move, if not to estimate, move to some database estimating software.

Scott Seltz:

Good. Thank you. This viewer is asking, “How interactive or integrated is the tool with BIM applications or details in CAD, PDF, et cetera?”

Rick Deans:

That’s a great question. I’ll take that one. We do have an additional module of our offering called Ineight Model, and what it’s able to do is able to interrogate BIM models, 3D models, and it does so and allows users of those models to attach attributes to those models. So I can go in and I can identify, for instance, all of the elements that are above 30 feet off ground level, and I can assign an attribute to those. Maybe that attribute is called crane, I’m going to need a crane to install these things, and then I can link that with the estimate, so the quantities that are coming in from the model can populate the estimate. As we get iterations of that model, I can get a quick report that says these items in the estimate are now out of sync with the quantities and this most recent revision of the model. It’ll even highlight them for me in terms of how far away from their previous value they were, and then I can selectively choose which ones of those I want to bring back into the estimate. So it does keep those quantity revisions and those design iterations current with your estimate. So as you go from 30% to 60%, to 90% complete plans, your estimators don’t need to stop what they’re doing and rethink the estimate. All of that information can just simply flow in from those BIM models. That’s a great question.

Scott Seltz:

Very cool. This viewer is asking, “How accurately can this accommodate different specifications and standards in the different parts of the world knowing that will affect highly the cost?”

Rick Deans:

I think that’s a really good question. Jody, you want to take a stab at that one? This is right in your wheelhouse.

Jody Greer:

Yeah, sure. One thing that we’ve talked about a good bit is being able to be in control of cost breakdown structure yourself. That is a very good tool, but I think one thing, the best process for creating new projects is creating a template project so that you already have all your labor and resources and things already preloaded into the project. So what you can do is you can actually set up different template projects. You’re not limited to how many you can have. So you set up different template projects that address the differences that you see in different regions of the world.

Scott Seltz:

Great. This viewer is asking, “How does it address the issue related to access on the site?”

Jody Greer:

For us, that’s where I talk about-

Rick Deans:

I’d like Jody to have that one.

Jody Greer:

That’s where I talk about being able to take a total quantity from that top level bid and total quantity of widgets and split them into multiple different sections where I have different access issues so that I can apply different productivity rates depending on what the access is in those sections of the projects. So again, you’re entirely in control of the CBS. You can structure it in any manner you wish to.

Scott Seltz:

This viewer’s asking, “Is Ineight best suited for certain specific project sizes or types?”

Jody Greer:

That’s one of the things I really like about this system too that I’ve found to be very, very helpful is that being in control of the cost breakdown structure. You can make it as simple or complex as you want to. If I’ve got a simple maintenance project where I’m supplying a crew with specified pieces of equipment for the next month, I could have a one line item estimate, but to the other hand, I just finished a bid a couple of weeks ago that I had 849 independent cost items. So it’s well-suited on both ends.

Scott Seltz:

This viewer’s asking to you, Jody, specifically, “It’s common to hear that an estimate is as good as the information it is based upon and the time available, but also the skills of the estimator. What are the key dos and don’ts in your experience when depending on estimating tools?”

Jody Greer:

Well, the first rule of anything is garbage in, garbage out. So regardless of what timeframe you have to prepare the bid, make sure that you’re putting quality information into it, and using a tool like estimate that really can help decrease your time that’s involved in building the estimate itself and translating it to a schedule and using that information to validate what you’re doing is extremely powerful. I just really, I think the main thing is make sure you’re using that template project so you know all of your resource costs are correct, and don’t force yourself to turn something in that’s not ready.

Scott Seltz:

We have time for a couple more questions. What are the red flags and what should you look out for that could go wrong when using Ineight?

Jody Greer:

Well, now, that’s an interesting question. The reason I’m scratching my head on this a little bit is because I have found this software to be practically bombproof. If you have built that template project and you have the correct data going into it, there are very few instances I have ever seen where I’ve had a software issue with it. Most of the time, any type of software issue that I’ve had was perhaps a project file got corrupted or something like that. We’re unable to open it, and Ineight has been exceptionally responsive to helping us with those situations. I’ve had one particular instance I recall. I had a bid that was due that day and the file had gotten corrupted. I called Ineight and they had this problem corrected for me within about 20 minutes, and it saved us from being in a position of having to no bid the project.

Scott Seltz:

That’s a ringing testimonial right there. We have one last question. This viewer is asking, “How do you compare with P6 or Microsoft Project, and can you integrate them when the customer requires a P6 or MSP?”

Rick Deans:

You want me to take that one, Jody?

Jody Greer:

Oh, sure. Go ahead, Rick.

Rick Deans:

So I don’t really consider us competing in terms of our estimate product with either P6 or MS Project. I think as Jody pointed out in the presentation, they are very compatible. As I’m building out a cost model for the estimate, I can also pass that information to either one of those scheduling systems and create a visual time-based model of the project and then bring that data back into the estimating file. So now for each line item in the estimate, I not only know which resources I’m going to use and how much it’s going to cost me and how long it’s going to take, but I actually know when I’m going to start and finish that activity as well, so I can get a pretty good understanding of what my resource profiles look like. If I need to ramp up, ramp down labor, if I have accommodations I have to account for, I can see what that labor peak looks like. I can see what my cost curves look like, my revenue curves. I can see the difference between those, i.e., my cashflow. So I’d say we’re very compatible and we can all live in the same space. I don’t think it’s an either or. As Jody pointed out I think very articulately during the presentation, he’s really leveraging the best of both worlds to that regard.

Scott Seltz:

Thank you. Well, unfortunately, that’s all the time we have for questions today. Please join me once again in thanking Rick Deans and Jody Greer for their presentation, as well as our sponsor, Ineight. If you have any additional questions or comments, please don’t hesitate to click the Email Us button on your console. We’ll share them with our presenters so they can respond directly to you. If you didn’t have a chance to fill it out earlier, you’ll be directed shortly to the post-event survey. We look forward to hearing from you about how we can make our programs work better for you. Please visit enr.com for the archive of this presentation to share with your colleagues, as well as information on our upcoming events. We hope you found this presentation to be a good investment of your time. Thanks again for joining us and have a great day.