How to Make Construction Estimates More Accurate In Six Steps

Searching “how to improve data quality” on Google returns over two billion results. It’s a universal challenge for every business. 

From SMEs to multi-national corporations, keeping tabs on data is an enormous task. How do you make sure the estimates you create are accurate, up-to-date, and relevant? 

When talking about estimating within the construction industry, inaccurate data and poor estimating can impact the success or failure of a project, leading to cash flow problems, losing tenders and even the risk of insolvency.  

So, how do you make sure your estimates and tenders are as accurate as possible? We have outlined 6 simple steps to improving your estimating data: 

1. Establish clear data governance
2. Take responsibility for data and processes
3. Work collaboratively to identify business needs
4. Look at the whole process
5. Quantify the costs and risks of poor data
6. Give data the respect it deserves

 

Step 1 – Establish clear data governance

According to data experts Experian, “Data governance is a structure put in place allowing organisations to proactively manage data quality. The basic components of a data governance framework are policy, processes and roles and responsibilities.” 

For busy estimating teams, solid data governance is vital. Without it, there is tremendous scope for errors and duplication. A limited audit trail makes it difficult to see how prices were arrived at. For this framework to succeed, the entire organisation must adopt a data governance mindset:

• Data owners – senior team members who are accountable for the quality of a dataset.

• Data stewards – responsible for the quality of a particular set of data on a day-to-day basis.

• Data producers – people in the organisation who create or capture data.

• Data consumers – people who use the data in their day to day jobs.

Individuals can inhabit more than one role in the above data framework. For example, estimators and quantity surveyors can be data consumers, producers and stewards at the same time. The important element here is to understand who is using the data and who is responsible for it to gauge the impact it can have on the wider business.

 

Step 2 – Take responsibility for data and processes

With a clear data governance framework, individuals are held responsible for the quality of the data produced and managed. 

For quantity surveyors and estimators, this means putting in place clear, auditable processes that members of the organisation can follow when necessary. Data owners need to follow the following guidelines to ensure clean estimates -  

• Empower the people doing specific tasks to estimate the time they need through bottom-up estimating.  
• Plan for various scenarios, such as material delays, price spikes, and logistic problems. 
•  Essentially, high quality estimates can only be achieved if the data available is high quality. 

But that is easy to say. Every company claims to have clear processes in place – yet the construction industry is littered with examples of estimating errors, time, and cost overruns. This can result in catastrophic business failure throughout the supply chain.  

At the very least, it creates a huge reputational issue for the sector and has a negative impact on trust. Calling in to question the industry’s ability to deliver and whether organisations are setting a fair price. 

Running on detailed and complicated spreadsheets makes errors in formulae or macros easy to miss. Extrapolating incorrect data throughout projects can result in huge cost overruns. Moreover, if others cannot easily understand or use the spreadsheet, this presents both a risk and a lost opportunity for the business. 

Read more about the disadvantages of using Excel in construction.

 

Step 3 - Work collaboratively to identify business needs 

A key challenge within the construction industry is that team members often work in silos. So, what can be done to address this problem? 

Within organisations, it is important to put in place processes and systems that enable closer collaboration and data sharing. Giving contract managers access to past project data will prevent them committing to overly low costs or short project durations. For quantity surveyors and estimators, this could mean: 

1. Choosing software that can be easily accessed by colleagues and other departments. 
2. Transferring over data from legacy, inaccessible spreadsheets. 
3. Allowing other departments, such as finance or legal, to advise on local tax and legislation. 
4. Holding people accountable for the quality of data in the system so that everyone can be confident that the information is correct, complete and timely. 

But with many choices on the market, choosing the right software for the organisation is both a challenge and a responsibility. This is where the IT and the estimating departments need to work closely together, both to identify what the business needs and to work out what software will help address those challenges. 

Learn more about ConQuest, our construction estimating software >

Book a demo >

 

Step 4 – Look at the whole process

It’s important to consider the whole process of capturing, storing and managing your data. 

To ensure that you collect the best prices for estimates, quotation requests must be sent in a timely manner to a broad set of subcontractors. All quotations should have a standard collection process to allow for accurate comparison. Finally, store your data so it is accessible for future reference, with a full audit trail. 

At every point in this process, there is the opportunity to improve the quality of your data through well-executed processes and systems. Clients will not wait for estimates. It takes too much time contacting suppliers directly for every project. Price libraries, real-time data, and having access to past project data will increase the speed, efficiency and accuracy of your estimates. 

Conversely, a disjointed or manual system without adequate governance can lead to duplicated work, errors in estimates and increased risk to the business, often manifesting itself in cost overruns. 

This is particularly important when controlling your supply chain and ensuring you have an accurate audit trail of subcontractor costs. Data management includes automatically documenting when your supplier opened the specification and drawings, so you can prove they had the correct information for pricing. This allows you to defend your company’s reputation in the event of a dispute. 

 

Step 5 – Quantify the costs and risks of poor data

Change is never easy. There will always be people within an organisation who are resistant to change. 

This could be the estimator who has always worked with a spreadsheet and doesn’t want to learn a new system. It could be the IT team who are worried about the support implications of another piece of software. It could be the finance team who simply see the investment as a cost. 

If this is the case for your organisation, then make a business case for change. By identifying the costs of poor data management and the risk this poses to your organisation, you should be able to address each of these concerns head-on. 

Start by identifying problems within your data, for example, spelling errors or duplicate records. Note the risks associated with these problems, and then try to quantify the costs, for example: 

1. Misspelled supplier email address 
2. Missed business opportunity 
3. Increased project cost by £_ 

 

Step 6 – Give your data the respect it deserves

Data should not be considered an add-on. Tools and software that help you manage data are not an unaffordable luxury. 

Instead, think of your data management systems as the engine room of your business. Without that engine, your business would cease to run. 

Investing in the quality of your data without considering how secure your systems are can have huge repercussions for your business. Out-of-date technology and processes put businesses at a higher risk of cyber-attacks. Infrastructure and security measures are key to preventing cyber incidents, and the speed and cost of disaster recovery if an incident happened. 

Moving to cloud-hosted software is one way of making sure your data is secure. Core business systems are protected through datacentres, a failsafe network, and constant reliable data backups. Data can be recovered in the case of a cyber incident, making it safer than relying on on-premise servers, and especially paper-based processes. 

So, how does cloud hosted software make estimates more accurate? Common issues such as connectivity, speed and accessibility are solved when moving to the cloud. Employees can work wherever whenever, safely and securely, and with access to all the resources they need. Having data available in one place improves collaboration and prevents incorrect estimates being given. 

 

Reaping the benefits of accurate estimating data in construction

The benefits of improved data cannot be underestimated.

Construction companies operate on wafer-thin margins, often running complex projects with many subcontractors and stakeholders. Ensuring that cost data is accurate can mean the difference between a project’s profit or loss, or in the worst case a company’s survival or demise.

In the digital age, we expect to be able to get answers from our data, and we need to be able to rely on that that data for business decision-making. The only way to reliably do this is to give data the respect it deserves and place it firmly at the centre of your business.

With a clear data governance policy in place, individuals have responsibility for the quality of the data produced. Combine that with a sound business case for driving data improvements, you will soon be reaping the rewards.

 

Find out how to make your estimates more accurate with Access construction estimating solutions.