Why Aecon Prefers Facts Over Feel in Estimating

Learn how Aecon increased their productivity by using InEight’s estimating software. Watch the webinar and learn how you can be more productive.

Aecon Group Inc. is Canada’s largest publicly traded infrastructure development company, effectively managing projects across several verticals. Like most successful firms in the industry today, the company is embracing technology to tackle some of its biggest challenges, particularly in cost estimating.

In this webinar, Aecon’s Vice President of Estimating, Mike Albani, discusses why he prefers facts over feel when it comes to estimating projects, and how his company has been able to maximize productivity rates in the field, tackle key industry challenges, and manage critical data through a single source of truth with the help of InEight software.

Transcript

Rick Deans:
Hi, this is Rick Deans with InEight. We’re in downtown Toronto. As you can see, there’s a lot of construction going on around us. We love it here. We’re going to be visiting with one of our customers, Mike Albani, with Aecon Construction. Mike and Aecon have been good customers of ours for many, many years, and we’re going to learn how their projects are powered by InEight.

Rick Deans:
So, we’re here with Mike Albani with Aecon. Mike, it’s always good to see you.

Mike Albani:
Hey, Rick. Thanks.

Rick Deans:
Why don’t you introduce yourself?

Mike Albani:
Yeah, sure. Mike Albani with Aecon. Just to give you a little background about Aecon, what we do, we’re Canada’s largest publicly traded infrastructure development company. We traded on the Toronto Stock Exchange, and we’re in a variety of work from nuclear to gas to fiber optic, all kinds of wet and dry utilities, civil scopes of all types, and we self-perform a lot of what we do. My role is vice president of estimating on the civil East component of the company.

Rick Deans:
What are some of the industry challenges that you’re seeing, Mike?

Mike Albani:
Well, I think one of the big things you’d see across the board with all companies is people. Not enough people in the industry. There doesn’t seem to be … certainly enough that are maybe trained, but there’s just not enough in the industry. It’s hard to acquire them. As we look at that, some companies, even Aecon, used to grow kind of organically and then we grew through acquisition and then we grew through hiring, and quite a few of the new hires are coming from overseas nowadays.

Rick Deans:
Okay.

Mike Albani:
Another challenge that we have as an industry, as we’re in construction, is project locations. Geography makes a big deal. So, we might be able to hire a person for a project, but they don’t necessarily want to move or relocate for the next project. So, some of the new entrants into the business see that they like to live in urban centers, and unfortunately, not all the work is in urban centers.

Rick Deans:
I’m hearing another term now bandied around called an ‘interest gap.’ With technology booming in areas like retail and entertainment, what do you think construction needs to do to really attract some of the younger crowd these days? I mean, these are folks that, again, if we were having this discussion five years ago, we’d say they grew up in a house that always had a computer. Now, we can say confidently, most of these folks grew up with a smartphone.

Mike Albani:
Yeah. That’s true. That’s true. I think what we’ve seen already in the field, for example, where a lot of our people are is their adoption of these technologies. So, for example, electronic timesheets. We used to be a little hesitant to roll things like that out to the field because of the people on the jobs that would be reporting the information. But now, with the younger folks that are foreman and running crews, they want it. They just don’t want to do-

Rick Deans:
There’s almost an expectation now, isn’t there?

Mike Albani:
That’s right. They don’t want to deal with the paperwork. Yeah.

Rick Deans:
Interesting. One of the things I’ve noticed, I’ve done some research on this, and the average age in construction is about 42 years old, and if you go out into the field, the average age of a welder is about 52. There just don’t seem to be enough young people coming in to replace the seasoned vets at a pace at which we can sustain this. What’s Aecon doing to help attract some of the younger generation, and have you got any mentorship programs in place?

Mike Albani:
Yeah, we do. We actually have a co-op program. It’s employed in different ways across the company. One such example was in Bermuda. We’re rebuilding the Bermuda airport and there’s a team of students that has gone through rotations on co-ops, for example, to help improve their new entrants into the business and give them a chance in the co-op side as well.

Rick Deans:
Excellent.

Mike Albani:
Because they’re on a relatively small island compared to the population in Canada, and we have co-op programs throughout different business units as well. We interface with a lot of different universities and colleges in Canada to bring these people on.

Rick Deans:
Well, one of the words that we hear, one of the terms that we hear a lot, Mike, is ‘digital transformation.’ What does digital transformation mean to you and to Aecon and how have you embraced it?

Mike Albani:
Well, to me it means employing digital techniques into company systems to make projects better, basically. It certainly does affect processes that are in companies, and people, and the training of those people. What have we done, I guess, certainly over the years, I think probably one of the first systems that we bought was InEight’s Estimate package way back. But other systems that we’ve acquired digitally relate to things from surveying to BIM. We’ve got different mass-haul packages to analyze haulage trends and requirements. There are a variety of systems overall that we’ve taken on. Probably the challenge that we have with it all – we take on these systems as I think many companies do – but tying the data all together is something that is pretty important.

Rick Deans:
The back-end integration.

Mike Albani:
Yeah, that’s right.

Rick Deans:
Are you taking steps to address that?

Mike Albani:
We are, but not fully across the board. I think we’re trying to avoid that mile-wide/inch-deep thing. I think when….

Rick Deans:
You look for the high areas of value and focus on those initially?

Mike Albani:
Yes. That’s right. That’s right. There’s a lot being done with BIM, or IDD as they call it here. Tying that in with scheduling, with project reporting, and of course, the CAD files, and weekly updating type of thing.

Rick Deans:
Was there a particular “aha moment” when you realized your organization needed to embrace digital technology?

Mike Albani:
Yeah. I think it goes back to probably when I started. My boss got a little bit of budget money put together to buy InEight Estimate. That was back in the early 90s. But I think the key thing with that is he had a vision and he could see what the savings were going to be for that and where we needed to head to. It was a big benefit for our company, and something it helps us avoid too – ‘dinosaur’ comes to mind. With the people of today, the new people entering the market and the industry, they want to have technology tools. They don’t want to be held back by old systems or outdated or manual-type processes. So, they capture using this technology pretty well.

Rick Deans:
Well, you’ve been a customer of ours for many, many years, Mike. Can you tell us a little bit about how that relationship started?

Mike Albani:
Yeah, sure. We got a little bit of budget money back in … I think it was about 1993, after several years of asking actually, and I think we picked up the first two or three estimating licenses at that time. The first job that we bid actually was a toll highway that had come out for bidding. We were a partner in the project, and it was a billion dollars. That was unheard of back then in our world. It turns out we got the job. That was just coming at the tail end of a recession that Canada was going through and that really put us back in the black. So, I think without that project, we might’ve been broke if we didn’t have that award at the time. So with that, we just kept using InEight Estimate through to today.

Rick Deans:
So, Mike, tell us how many people at Aecon are using our tools.

Mike Albani:
Well, we’ve got about 175 people, I’d say, across the company. What we’ve found more recently is, it’s not the estimators, of course, who are using it, because we run InEight Estimate; it’s purchasing people are looking to get in the system. Schedulers are in the system. Field engineers who are on the jobsites, they’re opening up the projects, and some of the managers as well. So, they’re looking at the data and looking at the productivities and material and subcontracting needs.

Rick Deans:
You’ve been in the industry for 27 years. You’ve got a variety of software packages here in-house. Can you tell us how InEight compares against some of the competition?

Mike Albani:
Yeah. I had the opportunity to train on another system that we own. It’s a rival system. We use it for other purposes and joint ventures and so on, to read other files. But yeah, there’s certainly some key things that I still see today that exist in your software that is somewhat unique. We like the fact that, ever since the beginning, it seemed to be written by estimators. That was the feel. It felt like an estimator had designed the software and was the architect of things, so we really appreciated that sense of things. Yeah. Some features, we really liked the fact that the pay items, it gives a clear definition to the cost items. People get that. They understand it once they’re explained it.

Mike Albani:
We like the Bid Wizard. We like the ability of copy and pasting. Line numbers, for example, they’re automatically generated in the system. We don’t have to manually adjust or enter those. They’re just kind of back of mind. Another good thing we do, we bid work all over Ontario and across Canada. Something InEight Estimate allows us to do, actually, is swap out whole resource tables, one for another, just with a few mouse clicks. So, that saves a lot of time and it doesn’t require any more manual input.

Rick Deans:
So, speaking of the Bid Wizard, Mike, tell us some of the ways that impacts your estimating team.

Mike Albani:
Well, one thing that we desired to do with the Bid Wizard is copy from kind of standard or some people call them ‘storehouse’ estimates. We standardized Estimate basically on the provincial specifications. So, all projects need to follow a set of specifications in some areas that we work in, they’re standard. They modify them on a project-by-project basis, but at least out of the gate, once we apply Bid Wizard, we’re on a level playing field, everybody’s on the same wavelength with the project, we meet specs. It’s kind of a checklist that we’re following, but it comes with crews and productivity. We don’t miss items that can otherwise be missed if we don’t follow a standard. It also lets us train up people a little more quickly. I’m kind of a guy myself who needs to do things multiple times, over and over again, to be able to understand and learn them.

Mike Albani:
It kind of is a computerized or a digital mentor, in a way. If people see the structure and how to bid things, they probably haven’t been presented that in school. So, if they see the structure and can follow it, that’s what we’re looking to do because we’re trying to create common budgets. That’s another benefit of it. So, we create a common budget for the jobsites out in the field and the people running projects are used to seeing the same breakdown for the same items. They get used to what that item includes.

Rick Deans:
So, Mike, are there any other benefits of using the Bid Wizard that you’re seeing here organizationally?

Mike Albani:
Yeah, sure. Speed-wise, what we looked to do, not only to improve the consistency, was to improve the speed. So, we found when we surveyed the estimating team that they took a certain amount of time just to prepare the estimate. Create a new file, import things into the project. So, what we found actually from that, and then running the Bid Wizard, it’s roughly about for every hundred bid build jobs that we bid we save about one estimator a year in doing those, and we bid more than a hundred per year. So, what that does is allows the estimators … essentially what it gave us was another estimator on staff with no added salary, and what that does, though, in effect, is allows each estimator to divert their time or reallocate it towards analyzing the bid, which is what we should be doing. Not mouse-clicking, copy and pasting, retyping, and things like that. They should be analyzing. That’s kind of what their job is and that’s the role that they really play.

Rick Deans:
I’m going to put you on the spot here a little bit. You shared with us an internal presentation that had some metrics about a particular bid proposal that had a certain number of line items. Do you remember roughly what that looked like, how much effort it took, and how much time it took to create a relatively detailed estimate based on those line items?

Mike Albani:
Yeah, sure. When we apply the Bid Wizard, it can work differently depending, of course, on the value of each item. It’s proportional to the number of lines in your bid. But some people track how fast an estimator can put work together. When we ran it on a typical off-the-shelf bid build-type project, Bid Wizard was applying the CBS structure at the rate of about $50 million an hour. So, that’s multiple times more than any estimator can do. The bid is not completed at that stage. I’m not trying to fool anybody, but the structure is there, the crews are there. It’s the analysis that has to go into it at that point. But it allows estimators to focus on that analysis instead of the keystrokes of putting the bid together.

Mike Albani:
So, something with the Bid Wizard – I talked about the consistency. Of course, what we do is utilize the bid and the structure to create the job cost reports, the budgets, so they become consistent. Other things that we’ve used it for too: consistent bidding means consistent purchasing practices. So, materials that we need to buy and subcontractors we need to give subcontracts to, we get all that information from the bid. It’s exported. Now, the benefit with the budgets being aligned with the estimate is that, when we read the information when the job is complete, say we don’t throw the cost information in the garbage, we can bring that back full circle and use the same information in future jobs, and that kind of leads us into the benchmarking.

Rick Deans:
Yeah. So, let’s talk a little bit about the benchmarking. How are you using the benchmarking and what sort of organizational value do you get from that?

Mike Albani:
So, we do things a little bit different, I guess, than many people might. We’ve got a lot of history on certain types of productivity for work scopes. A lot of data can be confusing because you can read numbers how you want. So, what we’ve done, we’ve approached the data that we have with an analysis tool. So, we run that separately. That’s something we developed on how to do that analysis, and then we break down, instead of looking at individual data points, we look at, if you will, A-team, B-team, C-team-type productivities. Now, we have productivity curves for different scopes of work, and each curve is specific to which team. A-team, B-team, C-team, for example. So now, what we can do, we can say which team is available for this next project, and we just need to identify that in the job properties benchmark setting of the project and those benchmarks get automatically updated inside the bid that estimators can reference. So that is handy in itself. We’re bidding future jobs based on facts of our previous performance.

Rick Deans:
Making better decisions based on hard data.

Mike Albani:
That’s right.

Rick Deans:
So, let me ask you this, Mike. Have you done some analysis of the metrics to see what that variance between estimated values and as-built values has been? Do you see that decreasing over time?

Mike Albani:
We do. I think we’re probably not too far out of alignment with the industry norms. You read reports. It’s been not been keeping up, construction, with other areas. I think we see the same thing. In more recent years, it’s probably a little bit trickier to keep up because lots of work out, lots of new people in the business, and lots of training to be done, so some people can still be in the educational mode.

Rick Deans:
So, you mentioned the use of the Bid Wizard, you mentioned the use of benchmarking and looking at past performance metrics. Do you find that this helps Aecon win more projects in today’s marketplace?

Mike Albani:
Similar to a stock portfolio, I think part of the key is to shed the jobs that you don’t want. So, knowing that upfront, I think that’s the first power of it. I think in the industry, if you talk to a lot of people, there’s more optimism at the estimating stage than maybe results in the field. So, it kind of takes off the rose-colored glasses a little bit and presents more true information. Like I said, it’s the facts you’re working with, not the ‘feel’ side of things. Sometimes the feel is needed. It’s a bit of an art doing estimating and building jobs, but more things should be based on the facts.

Rick Deans:
So, we’ve always thought estimating is a science and an art, so maybe this is tempering that art a little bit with some science and stuff.

Mike Albani:
That’s right. Just to relax a little bit and get a little bit more control.

Rick Deans:
I’ve heard estimating be called a thankless profession and I’ve been around a lot of these workshops where, when we bring other people into the organization and they realize how much work and how much detail goes into an estimate, they seem to have a greater appreciation for the art and science of putting an estimate together. Can you talk about that at all? Have you seen any of that manifest itself here at Aecon?

Mike Albani:
Well, yeah. I tend to agree with you, Rick. It’s probably that the estimator loses when he wins the job, and he loses when he loses the job too. I think the nicest feeling you can have as an estimator, when somebody builds a job, when you’ve got a very tight correlation between how the job is being built or how it was built and the estimate, I mean, that’s a pretty good feeling. We’ve got comments from our field superintendents before that said that they built the job in the field and then said, ‘That was a nice bid.’ They’ve got targets that are achievable, it was laid out clearly. What I try and teach the team is that the estimate in itself is a bit of a storyboard. So, we actually gave a presentation at one time about Disney’s Toy Story 2, if I’m allowed to mention that.

Rick Deans:
You certainly can. I don’t think they’re a competitor.

Mike Albani:
They talk about it. It’s on the web, and they have a video on how they produced Toy Story 2 with the markups and the drafts of each kind of scene. We ran through that and I explained to the estimating staff and the young people who had joined the company that really, what we’re doing with an estimate is making a storyboard, but it’s in words and it should be in order. It should be logical, and those things are how the job is going to get built now. So, when you can hand the budget over to a jobsite and a superintendent, and he can follow that budget and it’s very clear, he knows how the movie’s supposed to run. So, it’s very much clearer and it should match the budget a little bit better that way.

Rick Deans:
That’s a creative way of presenting the information. What other technology or software are you using in your department, Mike?

Mike Albani:
Sure. We brought in Base Insights actually for power BI reporting against InEight Estimate file, so it allows us to report across all our files, which is unique.

Rick Deans:
What do you look for with some of that cross-project reporting, Mike?

Mike Albani:
Some things are pretty unique, actually. So, one of the first things we wanted to do, and we did it, was implement goals. Typically, people think about goals for teams or field people management and so on, but we really wanted to implement goals for estimators. So, we can actually do that through the tool, just using InEight Estimate as the setup to define the goals, and within each estimate that the estimators produce themselves, it tracks how they’re doing against their goals.

Rick Deans:
Can you share what some of those KPIs or what some of those metrics you’re looking for would be?

Mike Albani:
Sure. One thing that we like to do is make sure that estimators get training in all the work that we do. We want them to be knowledgeable in all of that work, so it can be difficult when you’ve got dozens or hundreds of estimates going out the door in a year to understand what each person is truly working on. There’s a lot of lines in an estimate. So, Base Insights really pulls in all that information for us. We can tell if a person’s bidding storm sewers or a water main. Are they bidding bridges? And we can give them goals.

Mike Albani:
We’d like them to understand more than storm sewers. They can move into water main or curb work or bridges or paving. So, we can read that information from Base Insights and get reports. We can look at win/loss ratios of estimators. It tells us what jobs they’re working on. Do they have work in hand and are they working actively on projects for example? We’re just trying to figure out and use the tool to understand, ‘Can we assign more work to them or are they full at the present time?’

Rick Deans:
Sure. Sort of load balance if you will.

Mike Albani:
Yeah, that’s right.

Rick Deans:
Where would you like to see technology in general head in the next five years?

Mike Albani:
I think where we need to get to is tying in common data across the systems that are out there. There’s no real industry standard, so I think the companies each need to realize that the data can’t exist in several silos, they need something that ties it all together, and they need common systems to bring that to them. I think that’s key. Today, the separate silos are requiring duplication of effort, there can be inconsistent data streams, the data itself can contain errors. It’s a little bit too much management on the data side, but more should be focusing on how that data can be used to build better projects.

Rick Deans:
You know, you referenced the siloed nature of data in some instances. One of the statements that I’ve heard used a lot in the industry is, ‘I want a single source of the truth.’ What does that mean to you?

Mike Albani:
I’m a huge fan of having a one-stop shop. I love having everything on one page or in one file complete from end to end, where it applies. I think that is the key for a lot of systems too. The problem between systems, if you have different software vendors, there’s a bit of a monkey in the middle where the subscriber to those software packages get caught up, and we’ve seen it where packages become incompatible when you try and do upgrades with one and the other. I think really the drive should be more towards sole sourcing where appropriate, because those links are kind of provided by that software vendor.

Rick Deans:
Well, Mike, you’ve been a great customer for years and certainly provided us with a lot of great ideas to make the software better, and we certainly appreciate your time today to help us out and talk to us about your use of our tools.

Mike Albani:
Yeah. Well, thanks, Rick. I appreciate the time too.

Rick Deans:
Thanks. Be sure to check out InEight.com for a complete listing of our upcoming and previous webinars.