ESTIMATING BY STEPHEN CARR
Of course, producing an accurate estimate is the first way for an estimator to
reduce the risk associated with electrical
construction. Unfortunately, that’s getting
harder. When I started estimating small
commercial projects, all we had to do was
complete a takeoff; add pricing, labor,
quotes and a few markups; and wrap it up.
Even then, it was not really that simple,
and it is certainly more complex now.
All sorts of risks are associated with
electrical contracting, and identifying
them may fall within an estimator’s scope
of work. An estimator’s responsibilities
depend on his or her company structure.
The following are a few risks of which an
estimator should be aware.
Understanding the authorities
There is often a sentence near the beginning of an electrical specification that
goes something like this: “The work shall
be in accordance with, but not limited to,
the requirements of the following.” This
sentence is followed with a long list of
authorities, such as the state, county, city,
AABM, ADA, AIA, ANSI, ASTM, BICSI,
CBM, ETL, FM, IBC, ICEA, IEEE, IES,
IRI, NBS, NEC, NECA, NEMA, NESC,
NETA, NFPA and UL.
Do you have access to the requirements of all of these authorities? If you
don’t, do you know where to find out
what they are? While many of them seldom affect a project, not knowing the
requirements could be costly.
Keeping up with the changes
Change is the only constant in our
industry. For instance, the International
Building Code (IBC) recently updated its
seismic restraint requirements, and, of
course, the new requirements cost more.
Do you have a process for your continuing education? I am surprised by the
number of contractors I have spoken with
who have not updated their knowledge
of the changes in the 2014 edition of the
National Electrical Code (NEC), which
many jurisdictions have already adopted.
Is it legal?
This is a difficult issue for many estimators and companies. Before signing
a contract, many electrical contractors
have a qualified person review it. Some
do that before starting an estimate. Analyzing risky language during an estimate
and putting in allowances for that language is a good way to prevent losses. I
have often seen requirements in a contract that make it impossible to profit
from change orders.
Sometimes, a contract contains illegal requirements. For example, a major
airport recently issued a project labor
agreement (PLA) that violated state law.
Another legal problem I heard about is
the no-damage-for-delay clause that is
being added to contracts. Imagine being
on a one-year project that takes two years
to complete. Then imagine not being able
to get paid for your costs associated with
that delay! (For more info on no-damage-for-delay clauses, see “The Destructive
Power of a Clause” in the September
2015 issue of ELEC TRICAL CON TRACTOR.)
Assessing risk factors before selecting
a project to bid is very important. For
instance, if the contract specifies major
liquidated damages and the general con-
tractor or owner has a reputation for not
finishing projects on time, you may not
want to bid that project.
Project duration can be another problem. I recently worked on a major project
where the electrical work did not really
get going until about four years in. After
meeting with his bonding company,
my customer canceled the bid because
it would have tied up his entire bonding capacity for five years. Since almost
everything he bids is bonded, he would
not have been able to bid anything else
until the project was completed. He
would have risked going out of business
while waiting to do the work.
Not long ago, I bid on the addition of
an electric fire pump to a building.
Fortunately, I was familiar with the
requirements of NEC Article 695. The
engineer had designed the installation
for a standard motor, while a fire-pump
circuit is substantially more expensive to
install. Because there was a specification
requirement to make all installations in
compliance with the NEC, we could have
been in for an extensive fight if we had
bid this incorrectly.
The preceding are only a few examples of problems estimators and their
managers should identify during the
bidding process. Unfortunately, we
sometimes learn the hard way. We usually survive, hopefully learn, and add
another item to our growing list of exclusions and qualifications.
Is it risky business or money in the bank?
AN ESTIMATOR’S PRIMARY JOB is to produce an accurate estimate. However,
estimators may also bear the responsibility for protecting their employers and
themselves from risk. It does not matter if you are a small, medium or large contractor. Someone has to assess and deal with the risk associated with signing a contract
and performing the work.
CA RR has been in the electrical construction business since 1971. He started Carr
Consulting Services—which provides electrical estimating and educational services—in
1994. Contact him at 805.523.1575 or firstname.lastname@example.org. I S T