From Bid to Bottom Line: Estimating with Certainty in Capital Construction

Matt Macaras:

Good morning and good afternoon everyone. Welcome to the InEight Webinar, From Bid to Bottom Line: Estimating with Certainty in Capital Construction. My name is Matt Macaras. I will be your moderator/host for today, and I’m joined by Dominic Cozzetto and we’ll introduce ourselves in just a minute.

So just a few quick housekeeping items. So upon entering the webinar, all attendees are going to be automatically muted. Today’s presentation is really a one-way broadcast providing you information around InEight and estimating. If you are experiencing technical issues, either audio or visual, please use the chat feature. Our host will help with any troubleshooting that’s required from that state. If you do have questions throughout the webinar, please use the Q&A feature, the Q&A chat box to ask those questions and we will try to answer all of those questions as we go or at the end of the webinar.

Okay, just to kick us off, a little bit about InEight. So InEight has been around since 2014 and a number of our solutions have been around for more than 30 years. And what we do is we provide project controls and information management to the capital construction industry. Our platform is used everywhere from estimating through to project management closeout, handover to operations, and even decommissioning of assets. And this includes estimating, cost control, budget management, contract management and change, field execution and advanced work packaging, document control, completions management, as well as scheduling and risk. Our platform has been used on more than $1 trillion worth of projects globally and is currently used in over 60 countries around the globe.

So today, you’ll be hearing from myself and also Dominic Cozzetto. My name is Matt Macaras. I’m the Senior Director of Industry Solutions for InEight here in Asia Pacific and Japan. My background is industrial construction, so I grew up starting out with estimating, moving into field engineering, superintendent, construction management, project management, and a whole range of jobs in between those on projects in North America as well as here in Australia. And I’m joined today by Dominic Cozzetto. Dom, did you want to introduce yourself?

Dominic Cozzetto:

Yeah, thanks, Matt. My name is Dominic Cozzetto. I’m the Product Director for Estimating Tool here at InEight. Before I came over to this side, I’m kind of the opposite of Matt. I grew up in the industrial construction space, but I started off on the project engineering, field engineering project management role there. Then moved into estimating after that and did a lot of big lead estimates here in North America, mostly power plants and mines. So, yeah, very heavy industrial focus for me. I’ve been over on the InEight team for eight years now, so kind of took over our field execution tools when I first came over. I did some scheduling as well, and now I’m over with the estimate team.

Matt Macaras:

Great, thanks Dominic. All right, well, let’s go ahead and get started. Just to set the scene for today and kick us off, I would really just like to start the discussion around estimating processes and estimating strategies. So from your standpoint, just to start the conversation, what are some of the common pitfalls you see in early stage estimating, or just estimating in general?

Dominic Cozzetto:

I kind of hate this question, Matt. I’m going to rail on it just a little bit. I’ve been helping out with marketing quite a bit this year, so I’ve been on LinkedIn, I’ve been on forums, and you get this generalized, kind of cliched, here’s the top five things you need to avoid, but it never really approaches it from all the aspects. It buckets estimating up as one big thing that is universal everywhere, when that’s not even close to being the truth.

As an industrial estimator, what my processes are and what matters to me where my percentage of costs, it lies way differently than if you have an owner using the estimating tool and what’s important to that owner. If you have a designer, what’s important to that designer, if you have a specialized labor and what’s important to them. So it’s a great question, but I think it needs a little bit more clarifying.

So if we take it from that big bucket and really bring it into a focused question and what people maybe should be doing in that, the early stage estimating and what I see the most, I would say cross industry and cross kind of user issues is they don’t standardize a process. They’re just kind of letting each individual group within their company do their own thing. Maybe each individual estimator do their own thing and trying to jam it in at the end.

So the more process-driven that we are as a company and standardized as a company, the more successful I usually see. It’s not saying eliminate those processes from the experience of your estimators, the experience of your project teams. It’s just making sure that everybody is on that same page for what’s required in that early stage. Does that make sense?

Matt Macaras:

Yeah, I agree with you completely, and we’ll touch on it more as we go through the session today, but those processes and that standardization really help us on the back end of estimating as well when we start talking about benchmarking, when we start talking about interfacing that from a project control standpoint.

And I also think that defining those processes and having that consistency, that helps institutionalize the knowledge within your organizations so that people that you bring new people in, they can immediately see and start working with how you’re currently doing things and how you’ve built your business to operate.

If I think of work from a direct contractor perspective, maybe you are building bottom-up estimates and having those centralized libraries. Those people now don’t need to go and create those or calculate those separately. They’re available or top-down from an owner’s perspective, having those predefined stage gates of maybe it’s pre-feasibility, feasibility, all final investment, so on and so forth. So I agree with that, 100%, around those processes are really [inaudible 00:07:01].

Dominic Cozzetto:

And now that you talk about it from that pre-feasibility and through not losing that detail as it goes from one stage to the other, I’ve been in an estimating department, we’ve been very, very busy from time to time, and that estimate gets handed off between different people and different teams. And to be able to have that all in one place so that you know where that original number came from, where that original estimate came from and evolve, it’s something that sounds really easy to do, but I’ve seen lost files on share drives, I’ve seen different solutions being used for different things and trying to keep it all in one spot is actually a big challenge in the industry today.

Matt Macaras:

Yep, yep, I agree. And then that allows you to compare and see how things change over time. If we’re comparing those different stages of estimates, we can see areas of growth or areas of reduction in terms of what the overall price and cost of that project is.

Dominic Cozzetto:

Yeah. You got to know your scope, right? That’s one thing they always drill into our head in the field is know your scope. So the same in estimating as it is in the field.

Matt Macaras:

Yep, that’s right. I understand how it’s changing over time. So with that, to kind of continue on with that theme, so how do you really ensure consistency across your estimators? Whether it’s a large estimating team that’s in one spot or global teams, or bringing in new people to the organization?

Dominic Cozzetto:

We talk about standardizing practices, but from the software side we can standardize the way we structure things, standardize the way that we build our cost structure, our work breakdown structure, so it’s the same every time. I grew up playing sports. I always say you practice the same thing, you get better at the same thing. If you’re trying to change something every time, you never really get good at it.

So by standardizing how we enter data or where we keep each piece of detail throughout the estimates and move forward, not only can we get better and better at that, some of those time entry or data entry, very time absorbent tasks can kind of dwindle away and we can start evolving our practices, getting better and better, and we can start really concentrating on how we’re building that work instead of spending all the time just putting numbers into a system.

Matt Macaras:

Yeah, I agree completely. And there are other things that you can do to help with that standardization because it’s a fine line between standardization but also having the right amount of flexibility to be able to build the estimate the way you need to build it in line with what’s going to happen for the job.

And so being able to have that standardization, maybe we have a standard account code structure that allows us to build our estimates in the detail and the way that the project requires, but still have that aligned with our standard codes from an organization perspective. Could you touch on that maybe a little bit more?

Dominic Cozzetto:

Yeah, I think that one thing people always overlook is the amount of detail that’s inside of an estimate compared to the amount of detail that you’re required to track on a project, and how those cross over so you can actually get data back into that, and we’ll talk about that a little bit more on the benchmarking side, but maybe we can play a video real quick just to show.

I recorded this earlier to show what we’re doing on the software side and what we see. We have a concept of templates and libraries inside of our system and that’s what you’re seeing now is I might just do a lot of 2×1 power plant bids, a lot of combined cycle bids, so I shouldn’t have to start that from scratch every single time. I should understand that I can build something up from something I’ve built and we’ve agreed upon before.

So that’s really what I’m walking through here is being able to use previous estimates that have gone really well, build up a standardized templates, and bring that forward when I start new jobs. So here, I have just kind of a standard structure for this power plants, it’s go by area, by discipline, by trade. So what I can actually do here is I can actually start another project built off of that so I’m not starting fresh every single time, so I’m entering things in the same place every time. I worked at a bigger company and we had discipline estimators as well, so my concrete estimator knew exactly where to put their stuff every single time.

Now, the best thing about this is I can just pick and choose as I go too. One of the first jobs I won was just the undergrounds for an expansion on the power plants and I knew that I had just done a full power plant estimate before that, but on this one, I could just grab those undergrounds out from my previous job or my previous template, bring that forward and it starts automating that for me. So now as a lead estimator, I’m not spending time building this cost structure up hoping that it was the same way that it was before. Matt, anything to add there?

Matt Macaras:

Yeah, I think that it’s great and it’s very applicable for both our contractors and our owners. From a contractor’s perspective, it lets you estimate in a way that you’re familiar with like Dominic was talking about, but it also lets you have … Maybe you do a lot of work for a couple of different companies, a couple of different owners, and each one of those has slightly different ways they want to see estimates built up or slightly different ways they want information presented to them. That lets you build those estimates up in those templates going forward so you don’t have to recreate those templates every single time. You can pull from those past projects or even just create new estimates from scratch based on those templates.

Dominic Cozzetto:

Sorry, one thing that’s really nice about this too is I actually ended up bidding quite a few cement plants at the end of my time with the other company working with the engineer directly where they would give me kind of this top level quantity here. I had the detail underneath it broken out, but they would only give me a total cubic yard of concrete, so I would just enter that at the top for that indicative estimate.

The details were populated below that we had agreed upon earlier, so it really was that fast where I could just change that top level quantity and get a decent indicative estimate for a feed study or a feasibility study, and then I can get into my account codes, check it out, change those up a little bit and see what my unit rates are for all those as well. And not just from the contractor side, but we had the engineering side in there as well, so they had a knowledge of what they had to do to produce the engineering documents for that as well.

Matt Macaras:

Yep. Great. And owners, it’s a similar thing. They know what structures or what levels of detail they need in estimating whether they’re in OOM phase or feasibility, or they’re doing their detailed estimate. So this allows them to build out those estimates or at least the structure of those estimates very quickly in that standardized format.

Dominic Cozzetto:

Right, right. And the nice thing about the flexibility of the system is it doesn’t matter if you’re staying at a very high level or a very detailed level, because since it works at that detailed level, it’s really easy to adapt that to that very 5,000 foot level if you need to. So it’s not specialized in doing one thing, it really loose enough to do everything very well depending on which level of detail you need.

Matt Macaras:

Yep, that’s right. And let’s pivot a little bit and move us towards, so that’s talking about our strategies and how we build up those estimates. When we’re creating our cost items and we’re creating our central cost library, maybe can you talk about other ways that we can build that up, leveraging some of that standardization of resources and maybe some of the other things that we have in estimating there?

Dominic Cozzetto:

Yeah. So we have a concept of resource libraries, so whether it’s labor, equipment, materials, I can go in and build up that library of rates. So if I’m working with specialized unions over here in the states or if you’re working with agreed to labor rates for … I’m sorry, Matt, it’s not called labor unions in Australia.

Matt Macaras:

Yeah, we’ve got unions and those unions have enterprise bargaining agreements, so very similar to [inaudible 00:15:53].

Dominic Cozzetto:

[inaudible 00:15:52]. Yeah. So you have the ability to set that up depending on the region or the localized union over here to where I can have a whole library of those agreed upon wages on my resources. Same with equipment, I do a lot of rental equipment over here and I can actually set up my equipment library for rates from different rental companies. So depending on where I’m at and where that project is, I can easily grab that from the library, bring it into my current estimate without having to mess with rates, or taxes, or insurance, or fringes and benefits.

Matt Macaras:

Yep. And we can tie those … Rental equipment is a good example or a lot of our owners here have labor hire companies that provide labor for operations and maintenance and smaller projects. And having those libraries tied to quotes within the system so we can get updated rates if we need to also helps with that standardization and making sure that we’re using the right rates for the project.

Dominic Cozzetto:

Yeah. Especially if you’re starting to bid things quickly. We did a really nice job of setting up standardized material rates for our electrical department at one point where we would just go out to our partners that were giving us that electrical supply, update those rates once a quarter and then I’m not trying to update them every single time I have an estimate. We had a quarterly agreed upon rates for that material.

If something did fluctuate greatly, they’d call us, give us new rates right away and we’d go and change that in the library and you’re able to change it on your current bids as well. But I put together a quick clip here to show the equipment just as a quick show and tell, so bring that up real quick.

So it’s really nice to set these up, especially if you’re working across many different areas, a big geographical location or you doing different types of work. I just use the construction equipment as the example here, but this works for labor material, subcontracts, whatever need be where I can actually jump in there, give my rental rate for this.

It’s nice with the equipment, I can actually put a consumption rate inside there, how much fuel it’s using per hour used, what type of fuel it is in the system and set that up even for just one area. I have this set up for one area here. I have a generic area. I have in here, just like an Australian west area where I can just bring this in. And then when I start a new job, I don’t have to go through and update all those labor rates. I can just start that new job, bring those in and run from there. Just do quick spot checks on it.

I was actually in charge of this at my other company for our labor rates as well, so I’d go to the local unions, I would go to our specific hired specialty resources as well. You update this once a year, you bring it into your estimates, it goes through, it populates the entire thing, so I can bring it in. And you can see from this, I can have it saved to different zones, different states over here, different regions, different rental companies. So I can actually just bring that in. And since it’s already applied inside of the estimate, it goes through updates those resources on the estimate for that specialized region or company and we’re good to go, so it saves a lot of time through that data entry.

Matt Macaras:

Yeah, significant amounts of time. We’re not pulling from spreadsheets that we get on every new estimate, not having to redo all of those calculations on every new estimate. Now, what happens if let’s say there are always changes as estimates happen, right? As we go through that, and sometimes those rates change from your what is in your centralized library, how do we handle that?

Dominic Cozzetto:

You can update it within your resource library on the specific estimates. You hit one button to refresh it where it’s assigned the cost structure and you’re good to go, as easy as that.

Matt Macaras:

And that changes it for that one particular estimate and you don’t need to have to worry about changing it for all the others because you may have multiple estimates in flight and those rate changes may apply only to that single one.

Dominic Cozzetto:

Right. We had an estimate I did in Northern Colorado for some gas work welders. Man, if I would’ve grown up again, maybe I would’ve been a welder. They’re in short supply, they’re getting paid good money right now, but we had to actually update those almost right before the bid went in because a lot of the welders had their own rigs and you had to hire the rig on as a subcontractor, but the welder on as a direct hire. So doing little things like that inside the estimate, very simple to do from, from this aspect.

Matt Macaras:

Yep. And so what this is allowing us to do is we’re applying these resources, which Dominic said can be equipment, they could be owned equipment or you have your own internal hire rates, externally hired equipment that you’re getting rates from equipment vendors or rental companies, labor rates, materials, a whole bunch of different things. And all of this information is then used and can be used to build up our estimates in a very detailed fashion, but with consistency, standardization and using this information for rapid creation of those.

Dominic Cozzetto:

Yeah, I know we’re showing mostly construction here, Matt, but we do have engineering companies using this to do their engineering estimates as well. So your resources look different there because it is a pipe detailer, it’s a structural steel detailer, whatever it is, but it’s the same process, it’s the same workflow that it is for no matter what.

Matt Macaras:

Yeah, that’s a great point. So as we’ve gone through and we’ve been building up our estimate, we’ve created our estimate from a template that we’ve had in the past. We’ve updated our quantities, adjusted the estimate based on what the current scope is. We’ve standardized that or aligned the project specifics to our organization’s standards. We’re now building out our detailed cost and we’ll talk about how we align that to the schedule in a little bit. But once we’ve built out our estimate, how do we ensure that what we’re estimating is in line with what we’ve done in the past?

Dominic Cozzetto:

It depends on where you’re at, what you call this, we call it benchmarking in the company that I was from or historicals. You set up a chart of accounts or an account code. Basically, a tracking number where if you’re doing similar work on multiple projects, you’re tracking it a similar way.

So we used account codes where I grew up, but basically, if I’m installing structural steel for an industrial structure, I charge it to the same chart of accounts every single time. So then at the end of the job, I get actuals. So maybe it’s 25 man-hours per ton for my structural steel that I completed on the cement plants. I can now use that as a comparison for my next estimates. So now I have my estimate quantity out, I’ve quantified everything inside there. I’m going to man-hour it. Now, I can bring up my benchmarks from previous jobs and see that my man-hour per unit is in line.

Civil, you do it the other way around. You do a unit per man-hour instead. You may do something like … Our engineering companies, I see them like hour per sheet of a P&ID for some of our pipe detail or pipe engineers, that sort of thing. So you’re basically taking actuals from previous jobs that were either successful, unsuccessful, you kind of want a nice mix of each so you have a range of them. You’re comparing them to what you’re actually estimating right now to making sure you fall in line with that.

This is where you can get aggressive as an estimator. This is where you can get conservative if you see risks that are maybe in presence. I like to look at things that aren’t those as well, kind of a complexity ratio or elevation. If you’re installing pipe at an elevated pipe rack, it’s going to take longer than it is when you’re putting underground and that sort of thing. So a lot of ways in the system to take a look at that to make sure you’re in line. What do you usually see, Matt?

Matt Macaras:

Yeah, very similar things and that’s what my experience was as well is we would go through, at the very beginning of an estimate, we would identify what were the projects that we had done previously that were in rough alignment with the project that we were estimating.

You mentioned power projects earlier. Maybe it’s a 2×1 combined cycle. There’s no point comparing the piping that we did on a combined cycle project to the piping that we’ve done on a coal fire project. It’s a significantly different type of work and at a different scale. So we would pick past projects based on similar region, similar labor conditions, similar types of work that’s being performed, and that’s what we would compare against.

And we can compare against and we did compare the bottom line dollar or even the individual line item dollars a little bit. But the real value in this is I think being able to compare the productivities. What is the productivity in the hours that you’re looking at for your current estimate comparing that against what you’ve done in the past? Because as we know, we’ve just come out of period of inflation, prices change, cost changes, and it can change quite drastically very quickly. But productivity, those productivity rates by and large are going to stay the same over periods of time. Hopefully, they get better and you can see those trends, but productivity has a lot more stable. Is a lot more stable to compare against than price changes.

Dominic Cozzetto:

I agree with you. And this is where we really start to stand out because we are integrated with our control, our project control solution with our field execution solution where when you’re done with your estimate over on the estimating side, you can form that, you push it to your project control solution, track your hours there, track your costs there, throw it out to your field execution solution. So now, you have your form and your field personnel claiming hours and quantities against those account codes, against those WBSs and that flows back into your cost control and back into our estimating system for you to use in the future.

You don’t have to worry about trying to wrestle that data from a different solution into a spreadsheet, build a spreadsheet, compare those during your estimate time, hope that everything was charged in the correct places. Because there are rules on our project control side that validate and check that you’re charging things to the right place.

So that’s really what I wish was there when I was an estimator. I spent tons and tons of time building these productivity sheets and these past cost sheets where now that’s automated in the system, so I just select my job. You can even not best practice, you can even select a current project that’s ongoing to compare against that. Well, we can argue back and forth if that’s best practice. It’s nice to see it is doable. You have to really trust what that project team is claiming out in the field, so you might be getting some skewed numbers, but that’s really where we start standing apart.

So now, I’m saving a bunch of time where I used to have to build spreadsheets and hope everything is in there correctly and nobody broke a cell on something and copy and paste the new one in to where that’s in the system now. So as an estimator, I just saved a bunch of time doing that. I can start really planning my job and see if I can identify any areas of opportunity in any areas of risk that I might not have had time to do that in the past from building these other account code sheets.

Matt Macaras:

Yeah. And I have, we’ll call them fond memories, similar fond memories to yourself, Dom, around leveraging, building those spreadsheets, even pulling them from a binder and having them printed out, and we would flip through them and going through our estimate reviews and saying, “Okay, which projects did you compare against?” And that was a very tabular way of looking at it as well.

What we’re able to do now is really see it in a heat map. Here’s your dot of what this current estimate is at, and you can see where your comparative projects lie in that heat map. So you can really easily see, is my productivity too hot on this one, or am I being too conservative on it? So it makes it real easy to see.

And what all of this does is it’s increasing your confidence in the estimate. We know that, hey, we were successful on these projects or maybe we weren’t successful on those projects, but we know what it actually took. So now, when we’re comparing it to our estimate, we can have a higher level of confidence to say, yeah, we believe this is the right number because of X, Y, and Z, and we’ve compared it to projects A, b and C.

Dominic Cozzetto:

And the nice thing about that is because it’s integrated across, you are asking the field to give you the data back in the same way that you sent it over to them. So we could talk for hours about what the right level of detail is to require back. I tell fun stories of trying to track light, medium, heavy, and extra heavy steel separately in the field and how that doesn’t work when you’re hanging steel, because you’d end up there with a stopwatch the whole time.

So the nice thing is that data goes over, here’s my structure that I need to get back from my field personnel. It’s already in that format, so it does take some discipline from your field personnel to do that, but you have an iPad now. You can click on that iPad, it’s already set up for you for what you’re going to do for the day, the week, multiple weeks at a time. You’re entering time and you’re putting your hang list in there so you know what your quantities are that you’ve installed and that’s coming back into the system.

So where there used to be kind of an interpolation between what’s getting tracked in the field and what was that really mapped up to in the estimate, that’s eliminated now, so that is automated to come back through and you’re eliminating that guesswork.

Matt Macaras:

Yep. Yep. Great. And so let’s expand further on eliminating that guesswork and increasing the confidence in our estimates. So as you’ve talked about and alluded to, estimating within InEight is connected to the rest of our capital projects platform, project controls platform. So when we go ahead and complete our estimate, we’ve won the work or the project proceeds, we published that to our control budget, and we’ve then manage the execution of the project from there. But while we’re still in the estimating phase, we’re able to tie back our estimate to our schedule itself. Could you maybe elaborate a bit more on that, Dom?

Dominic Cozzetto:

Let me ask you a question from that, Matt. What’s the difference between a planner and a scheduler?

Matt Macaras:

Answer it for me.

Dominic Cozzetto:

A planner actually has experience, they’re planning the work. A scheduler is running a piece of software.

Matt Macaras:

That’s right. They’re the operator of traditional scheduling solutions. That’s right.

Dominic Cozzetto:

There we go. The most experienced and best estimators I learned from used to be project managers. So they were in the field, they knew how to build that project. They could take numbers and drawings from their estimate and build a plan out of it instead of just building a Gantt chart out it.

We’ve tried to replicate that in the system and I’ll bring up another video right now to kind of show you what we’ve done through our first iteration of this integration with our scheduling software. And we understand that you’re very short on time most of the time. So what we’ve done here is connect straight to our schedule platform, which is a very complete CPM algorithm based schedule tool where now I can say organize my estimate however I want to inside of here, and I can actually start using this to build a schedule.

So instead of getting it and just punching numbers in and data punching, I can actually go through and I want these start and finish dates. I want to create a cost curve because it’s probably required with my bid items when I put in my proposal. I’m able to go through and determine what level of detail I want to actually push this over to the schedule. So not every little chicken gut and feather activity I need to push over there.

I can just roll this up to what levels I want to, depending on how I’ve actually structured this, select those, easily say, “Well, it’s this one for the entire thing.” And we’ll start building this up. Now, this is a very basic solution. This might take quite some time, but I can even do this with my project management too. So I can assign those resources we were talking about earlier all in one line item and actually push that over to kind of duration based cost that instead of a schedule.

We’ve actually built this, so you can’t just create it from the estimate side. I’ve worked with separate schedulers that were assigned to us. They want to get in there, they want to control when that data is coming over. So I actually pulled that over. It created activities for all those that I showed on my estimate side. I can rearrange these if I want to even before I start messing with logic or start dates or constraints inside of here. And I can actually build that logic into this system just by dragging and dropping. There is a logic panel that you can assign over there as well. But just as a simple example here, building some logic throughout these, man, if my scheduling was ever just this easy where it was all waterfall like this, I would’ve been a scheduler for longer, but just a quick example on how that does that.

Then on that project supervision, I can actually change this from a task dependent cost to a level of effort. So then the way I have it set up inside of the estimates, I can say, “Okay, we’re just going to have everybody out there this entire time.” So that’s my level of effort for that, and that’s going to actually bring back at complete duration for those resources and drive the cost off of that duration instead of having a separate Excel based or spreadsheet based kind of indirect schedule.

So I can get back in my estimate. We don’t do that automatically. I would hate to be in here and just having cost change on me, and I don’t know why because somebody else is in there using that system. But now, I have all my dates that I need inside of my estimating system. We can go in, we can see where that supervision has grown and how much cost that’s actually driving now as well. So saved quite a bit of time there.

On my bigger estimates, I do that by discipline. So I have my concrete field engineer, superintendent actually level of effort over to just the concrete activities. But then you actually bring those dates over, you produce a cost flow curve inside of here. So you can set that up to actually do some job financing and everything else. So a lot of great features built into this.

The best thing on this, Matt, is we control both sides of this. A lot of people who integrate to schedules from other estimating software, you’re hooking up to an API hoping that doesn’t change from that other software. Where if we’re making changes, we’re enhancing each side, I talk to our scheduled director on an every other day basis most of the time just because we’re buddies, but then we know what each other is doing. So if anything changes, you never see anything break from our side. It’s always up-to-date, it’s always live, it’s always good to go.

Matt Macaras:

Yep, that’s right.

Matt Macaras:

That’s all right. And those duration-based resources are a perfect example of ways that you can ensure your estimate is accurate. If you’ve got duration-based resources such as your office trailers, your dongas, large equipment such as cranes, staff, all of that is schedule-driven cost. So as your schedule changes through the life of that estimate, you can continue to update your estimate automatically instead of having to remember to go in and change dates in an Excel file or change dates in a specific field. That happens just through the evolution of the schedule and syncing those back up so that you’ve got a time-phase estimate and a cost-loaded schedule that matched the day and matched to the dollar.

Dominic Cozzetto:

You say that maybe at one point in your life you forgot to update a date filled, Matt.

Matt Macaras:

It might’ve happened once or twice.

Dominic Cozzetto:

Okay.

Matt Macaras:

It might’ve happened once or twice, and I’ve seen it happen a number of times.

Dominic Cozzetto:

Seen it happen a lot.

Matt Macaras:

It does. It does. And some of those costs, they’re not insignificant. If you’re missing a couple of weeks of a large crane, you can be in the tens, $20,000 range easy or something more like that.

Dominic Cozzetto:

Absolutely.

Matt Macaras:

Yeah. So with that, allowing us to time-phase our estimates and cost-load our schedules, you pointed out that we can see the cash flow. So from an owner’s perspective, this is telling us what our financing needs to be. When do I need to have money available from lending or from where my finance is coming from? From a contractor’s perspective, this is allowing us to see when are we going to be breakeven or better on a particular project given the payment milestones that are being proposed from an RFP. So what’s allowing us, as you said, to understand what the finances of that project are before we actually start getting into that execution.

Now, with finances, we’ve talked about building out our cost on a project, but on every estimate, we’ve got contingency. How do we leverage the connection between our solutions from estimating the scheduling and risk to calculate our contingency?

Dominic Cozzetto:

Yeah. So within that scheduling tool, when we integrate those activities, we actually take that cost over to the scheduling tool as well. Within our scheduling tool, we have a risk module. So you can actually assign risks to those activities. Those dollars come across. You can run a Monte Carlo simulation against them to actually cost adjust and schedule it. Sorry, risk adjust your cost and risk adjust your schedule.

It is very simple. It stays within the same tool. So now, I’m not just relying on some home-built spreadsheet that I have, but we actually have this risk software that it’s really great in the industry and you can bring that into properly risk adjust.

One thing that I would answer now is we threw around a bunch of titles and we talked about what does a good estimate actually look like. And my opinion has evolved with the evolution of risk software, because I don’t think you’ve done a proper good estimates, “good estimate” unless you’re being realistic and risk adjusting your costs and risk adjusting your schedules.

There’s always a subjective matter on how aggressive and how conservative you want to be within inside of those adjusting. But if you’re not actually talking about the risks about the opportunities during your schedule review, you’re actually not doing things that probably the top 10 contractors that I always see in ENR are making their standard processes now.

So by keeping that inside of our tool and making that just another tool in your toolbox from you, you’re getting those costs back that you should actually be accounting for on these projects. Now, whether or not you go super risky, super-conservative, that’s up to you. That’s at the state of your business. That is what it is. But if you’re not even addressing them, you’re not doing yourself a service on it.

Matt Macaras:

Yep, I agree. And what it’s allowing you to do is make an informed decision. If you’re late stage, and this is your detailed estimating and you want to run it at a conference level of P80 or P90, and that gives you a specific contingency value, it’s your choice to whether or not you want to include that contingency value, some of it, all of it, more than that in your estimate, but it becomes an informed decision at that point. It’s not a guess based on an Excel register of risks identified by the estimators.

Dominic Cozzetto:

And that’s inside of the software, it goes to the project team, so it’s not … In my questioning, is this the latest one that we updated that was on my shared drive or it was on somebody’s desktop and it’s not there? It’s inside the software with your schedule, with your estimate, with your project controls. So you’re not wondering if you have the latest up-to-date piece of material that you should have.

Matt Macaras:

Yep, that’s right. And as those evolve, so if we take an hours stamp view here for a second, as we evolve through the different phases of a project to OOM, to feasibility, pre-feasibility to feasibility, we can run that risk adjustment or those Monte Carlo simulations at different confidence levels based on what level of or what stage you are in that project lifecycle.

Dominic Cozzetto:

We’ve actually seen a huge trend over here where especially on a lot of these mega projects, the contractors are required to do a regular risk assessments based on the current state of their projects and the current duration of their projects. So it is something that is now being asked for when the bid goes in to have a risk assessment with your proposal. So we’re starting to see that more and more. And as an owner, why wouldn’t you? Why wouldn’t you require your contractors to at least identify risks that they see? And then you start sharing those risks and there’s a good conversation that happens between owners and contractors at that point too. So something new that’s popped up over the past 5, 10 years.

Matt Macaras:

Yep, yep. No, definitely. All right, that’s getting us towards the end of the webinar. Dom, did you have any final thoughts for the group before we move into questions that we’ve received from the chat?

Dominic Cozzetto:

I think the biggest thing that this does for the industry as far as just connecting the data from bid through execution back to benchmark is it gives you a confidence in the numbers that you have there. Nobody ever wants to say, “God, I’ve sat in an office. Well, where did this number come from when you’re doing an estimate review?” If everything lives in the same system, it’s really easy to track that down.

As a lead estimator, that went from the most terrifying question you could have to, no, it’s all right here. Might not know it by heart, but give me five seconds, I can click into it and tell you where this number came from. So that confidence in your number is really telling when you have that data connected in the entire project lifecycle. So that’s probably it.

Matt Macaras:

Yep. No, I would agree with that. And then the standardization of having all of that data in the same system so that when you are reviewing estimates or you moving from one phase to another phase, you have confidence in the information that’s there, how that’s been put together, and you’re not having to re-familiarize yourself with, “Okay, how did we estimate on this particular estimate versus how did we do it on a different one?” And that standardization speeds up the estimating process itself. And again, also, as Dom says, gives you that additional confidence that the number is the correct number.

Okay. All right. We’ve got a question that’s come from the group online. I’ll go ahead and read it. This is from Steven and his question is, the current discussion is what we’d call reference class forecasting. The bigger issue we face is what does a good estimate actually look like when it’s measured against project outcomes. In Australia, getting reliable project actuals in the same format as the estimate is almost impossible. How does InEight address this?

Dominic Cozzetto:

Yeah, I wonder when Steven typed that in, because I feel like we talked about that quite a bit, but that is really that detailed level of account code and how you’re tracking in the field and how you want to get that data back. So the way we do it is being able to integrate to our project control solution and into that field capture solution so that data is coming back the way that you want it from your estimate and then doing those benchmarking those comparisons from before.

Matt Macaras:

Yep, yep. I agree with that. It’s having that alignment against those standard codes that, that work is being performed against. So we know and having those defined rules of two and a half to six inch carbon steel piping is these are the defined rules that are built into InEight from a field capture perspective that feed that progress into there. And then that then-

Dominic Cozzetto:

Just on top of that real quick, Matt. Steven, one thing I see people mess up on a lot is to set those account codes and never evolve them. And that is probably one of the worst things you can do is because that really needs to be in agreement between the office and the field on what level of detail they can actually capture in the field to give you relevant data back.

So that is a team effort that I see in the most successful companies that we have using this. It’s not just a, “Hey, this is how you’re going to capture it.” It’s a conversation from the field back saying, “We could, but that’s going to actually add an extra person just to track time against certain cell quantities.” And that doesn’t make any sense either. So make sure you open up that conversation and continue evolve those.

Matt Macaras:

And evolve them over time. You can always go into more level of detail later and compare your benchmarks at a roll-up view until you’ve got that detail built out over time as well. So it’s not a set it and forget, it’s a set it and let’s continue to evolve. Very good point.

And we’ve got another question from Steven. So an infrastructure authority in Queensland provides in-house training on at-risk. So how does InEight’s Monte Carlo scheduling and risk tool integrate with Excel-based probabilistic tools like that? Could outputs from InEight be aligned with regulatory requirements for public agencies?

Dominic Cozzetto:

To give a very simple answer, yes, they can be exported to Excel. I’m not completely familiar with the format of at-risk is, but you put something in Excel, you can rearrange it however you want to, to get it in there, I’m sure, but yeah.

Matt Macaras:

Yep. Okay. That is all the questions that we’ve got. With that, we’ll go ahead and say thank you to everyone for joining. We appreciate the attendance and we’ll look forward to talking to you soon. Thank you.

Dominic Cozzetto:

Thank you.