How do you estimate millwork for a design-build project? This can be a tough path to navigate for an estimator especially when it comes to custom millwork. We have developed 7 strategies for success with design-build estimates. They are 7 proven steps for success that are a part of the estimating procedures that we follow.
Outline:
The design-build construction process can be a nightmare for the estimating department. You start with hardly any information, millwork is typically not detailed out in the least. If you are lucky the plans show a few boxes on the floor plan indicating “cabinets here.”
I mean, how are you supposed to interpret this:
What even is a “millwork item?”
If you are unfamiliar with how the design-build process works, here is a good explanation from DBIA (Design Build Institute of America): https://dbia.org/what-is-design-build/
This article offers a good overview of the how the process works and why the construction industry is trending in that direction.
The design-build market is projected to continue to grow over the next few years. It is projected to account for about 44% of construction projects in the US in 2021. You can check out the study by Paul Trombitas at FMI here: https://www.fminet.com/the-growing-world-of-design-build/
That means there is tremendous potential in this area. If you are not currently participating in this market then you are losing out on huge opportunities.
With the 7 strategies for success with design-build estimates laid out here you can navigate the process with confidence and win more projects for your company. When approached with a plan and strategy, you can be confident that when you are awarded the project it will be a success! It can be a tough process but in the end it will pay off.
A common saying is that estimating millwork is 50% science and 50% art. If that is the case then estimating a design-build project is more like 25% science and 75% art. Here are 7 Strategies for success with design-build estimates. If you implement these 7 steps you will have a strong set of tools in your estimating toolbox.
Here are 7 strategies for success with design-build estimates so you can succeed in this sector of the market:
1. Plan
You have to have a plan!
I remember the first design-build project I estimated early in my career. It was a community college that was adding a satellite location. I had no clue that this project was different from the other competitive bid projects I had been estimating. The contractor send the ITB, I put a price on it and submitted it. Simple right? Of course not, in the end it didn’t go so well.
The plans were scarce of course, so I got really competitive and only included what was shown on the plans. We got the job because it was a contractor we were in good relationship with, but it was rather stressful throughout the duration of the project. It was full of surprises.
We did not have a plan for estimating design-build projects. Having a plan is the first and most important step of the process. You have to approach this type of project with a different mindset than your typical competitive bid project.
Some key information you need know before you decide to estimate a particular project:
- The general contractor (I don’t just mean know the name of the company, but know who they are, what they are like, what they value)
- The owner (again, not just the name of the company, but know what they value and what their brand is, what they stand for)
- Know your market area
- Know your competition
Spend some time on Google researching the above information so that you have a better idea of the parties at stake in the project.
Establish estimating procedures specifically for design-build projects. You will need to modify your standard estimating procedures (if you don’t have standardized procedures, you NEED to establish them ASAP!)
2. Establish a Team
Once you decide to pursue a design-build project, put together a team that can collaborate throughout the process. Get your design department, engineers and any other strategic thinkers involved early on the estimating phase.
Plan a short 30 minute meeting early on and do a quick high level overview of the project to get ideas flowing. Don’t get too bogged down in the details too early on. Kick around ideas and discuss the project. Make a list of areas that could be potential pitfalls as well as a list of possible VE options.
KEEP IT PRODUCTIVE! I know it feels good to have an hour long meeting complaining about how terrible the plans are and “where are the specifications!?!” But that doesn’t get you anywhere! Set a meeting agenda and stick to it. Honor every team members time and keep the meeting short and to the point.
Later in the process when there are meetings with the contractor, architect and owner, having a team looks really good and shows that you have a diversity of talent that you bring to the table. More than likely you have a great wealth of talent in your company, leverage that as much as possible!
As long as you approach with a dose of humility, you will find that most architects and owners truly value input from the millwork specialists. After all, you are experts in your field and have a lot to share. That is added value in the eyes of the design team and owners.
3. Strategize
Now that you have a feel for the project, the contractor, the owner and your competition, develop a strategy for moving forward.
One of the key factors in developing your strategy is that answer to this question:
“What is most important thing to the owner?”
After all, the owner is the driver of this whole project. So what matters most to them? Cost? Design? Brand? Style?
You should be able to glean that answer from your research in step #1, then you can know what area you need to emphasize moving forward. For example, if you know that this customer is a niche boutique clothing retailer and their brand is very important to them, then you need to emphasize that you understand that and know how to give them what they are looking for. Or if the owner is a bank that values stability, then you should emphasize that your company builds for quality and prestige.
Obviously cost is always an issue, but if they stress that cost is the main concern on the project, then make sure you do your part in searching for and offering value engineering ideas.
It is helpful to have a single sheet summary of the strategy your team comes up with. Keep that sheet visible through the estimating process to guide the team as you go.
4. Communicate
Communication is key! We all know that to be true within our millwork companies. How many strategic meetings are centered around improving communication? My guess is that it comes up all too often in your strategic meetings.
Communication is vital in the design-build process. Here is the key though; you will likely need to initiate the conversation. You the subcontractor will need to be the one to ask the questions. Like the story about the community college I told at the top, my mistake was that I did not communicate. I did not ask any questions. The contractor may not think (or want) to tell you much about the project. So it is up to you to make the phone calls and write the emails.
Jump into a project early on and come up with a list of questions or concerns right a way. You will find that the contractor and the owner will be appreciative of your points and impressed by your initiative.
Also, you will need to be more open with your pricing than you may be used to. I know, we all hate coming up with the shopping list of line by line pricing. But it really is a crucial step for the owner, designer and contractor to be able to get the project under budget. It is helpful for them to be able to isolate the high dollar items and VE them into budget. This “open book” approach goes a long way in establishing trust and credibility with both contractor and owner.
Communicate downstream also. Make sure you keep your team informed about major items or changes, though not to the point of overwhelming the team members. During the estimating phase the project manager doesn’t need to know nitty gritty details of what core the p-lam panels will need to be. But they should be aware that it looks like the project was postponed and will now take place simultaneously with the other large hospital renovation they will be managing also. That way they can speak into the strategy and approach to estimating the project.
5. Document
Documentation is crucial. while it is important on all types of projects it is especially important on design-build projects. With the design being worked out as the project goes, often design determinations are done verbally at a meeting or on a phone call. It goes without saying that it is not ideal to make verbal changes. However a follow up email confirming the change or determination goes a long way later in the project when the designer or owner forgets what they decided on.
It is important that the estimating department keeps all emails, meeting minutes, notes and voicemails in a folder along with the rest of the project documents. That way they are accessible to the rest of the team. This is especially true when a prospect turns into a job (congratulations!) Then engineers and project managers can easily find and access the information they need.
“SHOW YOUR WORK!”
I remember my math teachers basically yelling that to me in grade school. I was notorious for working out math problems in my head and just writing the answer on the worksheet. Sometimes in an effort to save paper, I would do the calculations on the sheet and then erase them afterword’s, don’t ask me why!
I eventually learned to write out all my calculations so that the teacher could see how I obtained the answer I came up with.
I carried that into my estimating also, I have an Excel sheet for each project I work on. It is basically a notebook for all the calculations in a job. Even if it is just for my sake to go back and look at a how I came up with a certain quantity or price later when the project manager has a question. Documenting your thought process can be a life saver when it comes to remembering and being able to explain how to you got to where you did 10 months and 100 estimates later.
TIME SAVING TIP:
Create an Excel spreadsheet template that you can use to create a central calculation sheet for each project. Include in the template the common calculations you use like sheet counts from total square foot, or delivery truck cubic feet calculations. This will save time starting from scratch every project.
6. Marketing
This step is so crucial and often overlooked. This is something I stress a lot to millwork companies I work with; the need to upgrade marketing materials.
That includes:
- Website
- Brochures
- Proposal letters
- Scope sheets
If you don’t have a website, you need one, simply put. That was true before COVID, and even more true now. If your website looks like it was created in the 90’s, it is time to upgrade. Sorry to break it to you but those bright green hyperlinks are no longer in style. Upgrading your image is a must right now. It is well worth the investment.
When it comes to design-build projects it is important that you have an image and resources available for the contractor, designer, architect and owner to get to know your company better. Your website is number one, but also having printed brochures that showcase your recent work goes a long way in establishing credibility and trust. After all, that is the name of the game in the design-build process.
Having current, classy brochures (again, not from the 90’s and full of dust) goes a long way in giving you the advantage above your competitors. At the very least you should have a digital brochure you can send. To really stand out you can mail a printed copy to the parties at stake.
Relay the story of your company and what it is you stand for. Reveal that story through images and case studies of past projects. Emphasize how you have overcome difficult problems as a team.
“You need a story that explains to customers why you are the right choice for their project. Back up your story with proof that you really can deliver that additional value and guess what: Customers will listen.”
Cynthia Paul – FMI MANAGING DIRECTOR
Architects and designers are visual people. Having something they can see and read is very helpful. Having some brochures with case studies for specific industries is a good way to highlight your expertise in a certain area. For example, if you are submitting pricing for a new hospital then have a brochure of a case study for a hospital you recently completed. When you give that to the architect and owner they will be impressed and will lean in your direction when it comes to final subcontractor selection.
Lastly, make sure your proposal and scope are detailed and also look good. It needs to represent your company. This is often the first or only thing that people see representing your company. If you are using the same outdated proposal you have been using for the last 20 years, it is time for you to upgrade. Make it clear and classy. Make sure it has your logo and matches your company branding.
7. Follow Up
This step is so important! Make sure you follow up with the contractors after you submit a proposal. Remember that with design-build it will be a few weeks or months before a final selection is determined. It is still crucial to follow up and at least have a conversation right after submittal. I like to do an immediate follow of the same day of submittal to confirm they received it and double check scope. You may be used to leaving the contractors alone on bid day because of all the chaos, but with design-build it is usually not a hard bid day for the contractors. They typically have a day or two to gather all the pricing before they need to submit their proposals. So don’t be afraid to follow up right away.
After that initial follow up, make sure you continue to touch base with the contractor, mostly to keep tabs on how the project is moving forward and to make sure to keep your name at the top of their selection as a subcontractor.
Don’t expect a firm answer on a decision for a while. There are so many factors that go into determining what subcontractor is selected. Often times the owner and architect are very involved in the selection process also. So make sure you have patience with the contractor.
If you are selected, then congratulations! But don’t let your guard down yet. You still have a lot of work left to do. There will likely be numerous additional pricing rounds. Make sure you have your VE options ready also, they will be quick to ask for those. This is a great opportunity to let your teams skills shine. Having some quick and thorough VE options will go a long way in keeping everyone happy. If you are able to lay them out for the owner in way that is clear and understandable that will help a lot.
Now is good time to incorporate your engineers also. Remember that architects and owners are typically very visual people so a sketch detailing out a certain aspect of design or construction will be worth a thousand words.
If you are not awarded the project, don’t lose hope. There are many more opportunities out there. Or as my friend Ed Rush would say:
“The opportunity of a lifetime comes by every few months.”
Ed Rush
Check out Ed Rush for some awesome business growth tools by the way!
Make some notes about what you learned in the process, make the necessary changes if any, and move on to find another opportunity to pursue.
Conclusion
There is tremendous potential available for your company if you can tap into the design-build sector of the construction industry. There is a significant trend in that direction for construction projects. With preparation you can set your company up to successfully navigate this market.
While there is definitely a learning curve to the design-build estimating process, it is something that you can pursue with confidence if you have a good team and the right tools.
I hope you find this article helpful. Please reach out in the comments below with any questions or input about estimating design-build projects. I would love to hear your thoughts.
Or you can contact me directly here
That is all for now. Let’s make 2021 our best year yet!
Ben Hudachek – Husband, Dad, Estimator, Craftsman
