Nailing the estimate

Features - Operations Focus // Demolition Cost Estimating

A quality estimate can mean the difference between winning and losing a job. Greg Menen, vice president director of demolition scrap services for Rocky Mountain Recycling, and Michael Casbon, technical director for ERM, talk about what it takes to generate successful bids.

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September 13, 2018
Adam Redling

Successful demolition estimating can mean the difference between winning and losing work and making and losing a profit. That’s why it pays to have a demolition estimator on staff who can navigate the nuances of various projects and sites to formulate well-crafted bids.

Greg Menen, vice president director of demolition scrap services for Rocky Mountain Recycling, Denver, and Michael Casbon, technical director for Indianapolis-based Environmental Resource Management (ERM), teach the Washington-based National Demolition Association’s (NDA’s) Foundations of Demolition course aimed at helping estimators fine-tune their processes. Construction and Demolition Recycling talked with Menen and Casbon about what it takes to formulate competitive estimates that help set contractors apart.

Construction & Demolition Recycling (CDR): What are some critical things professionals need to do during the initial site visit?

Greg Menen (GM): This answer will depend on the contractor themselves, but there certainly are some standards that should be thought about during the visit. These may include:

  • Assessing the structure to be demolished, including determining how the building is constructed, what type of materials are used and gathering enough information to develop quantities if documentation has not been provided.
  • Determining working conditions and what your limitations are to allow for a safe project to take place.
  • Assessing the entry and exit points needed for the operation.
  • Determining if there are any hazardous conditions, including but not limited to, hazardous wastes and structural deficiencies.
  • Defining all required isolation requirements for associated utilities and any stormwater runoff requirements.

As noted above, these are only some of the items that would be required. Each project is different in the demolition world, and so scheduling a return visit can be one of the most important [steps to take] at the initial walk-through.

Michael Casbon (MC): It’s really important to listen to and understand the instructions to bidders, the scope of work, etc. The successful project winner generally has a very good understanding of these details.

CDR: What are the best ways to prepare quantity takeoffs for building demolitions?

GM: In my mind, it comes down to being able to define the types of materials you will be handling first. This means putting them into categories to determine if the material can be recycled or if it needs to be disposed of, as well as determining if the materials will have an income value or if it will bear a cost to dispose. These categories may include ferrous and non-ferrous metals, which generally will carry recovery value; debris, which will be considered material that needs to be landfilled; and recyclables, which may include items that can be reused but still carry a cost for disposal, such as concrete and asphalt, rock, clean wood, carpet or ceiling tiles. Finally, another more difficult category is asset-valued equipment. These items might reflect usable motors, electrical switchgear, rolling stock or anything that may have a resale value.

In all cases, it is important to determine the actual quantities to be handled and removed from any project site. It is also important to confirm what material is actually on-site versus what one might simply see in a set of drawings. Generally, in the demolition business, drawings are old and do not reflect the many changes that have taken place over the years. So it is important to confirm actual site conditions.

MC: Quantity takeoffs are pretty straightforward. Understanding your company’s production rates is the key. If you do not have a good handle on what your crew can accomplish, your estimates will never be correct. Using data from similar jobs and conducting postmortems on all of your jobs is a great way to develop that information.

CDR: What are the most important considerations when factoring equipment and labor?

GM: Availability has to be at the top of the list. In order to factor both, you have to know if the equipment and the needed labor will be available when the job will start.

Pricing for equipment will vary based on company-owned and rented pieces. When generating the estimate, it should be known what equipment will be available at the time the project will start.

To factor the cost of labor, the estimator needs to know if the project being complete is union, nonunion or if the work is to be done under prevailing wage. Once the estimator knows these requirements, correct rates and burdens can be applied to the required support needed for the job.

MC: Again, it is important to understand the production rates of each piece of equipment, each operator, etc., and you need to make sure that the equipment [and staff] that you use in your bid will be available at the time of award. In today’s labor market, skilled workers are at a premium.

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CDR: What about estimating the cost of general conditions?

GM: This again will depend a lot on the contractor and how their own estimating rates consider the required support items during the course of the project. Some contractors have many of the general condition items included into their overhead while others will account for each item and then price them out accordingly to the project schedule. In general, I find it is always helpful to work from a form which lists most of the general condition items that might be required and simply add them into the estimate by lump sum or by time and cost. If an item is included in the overhead or in another unit rate, it can be skipped, but it always is a good idea to review the list to assure nothing has been missed or skipped.

MC: The big question is do you have all of your overhead and general conditions included? If you do not understand the details (and often, general conditions are considered details), it can cost a job a fortune. For example, if you do not know what your cost of doing business is and underestimate it, it will all come out of your profit or cause a loss for the job.

CDR: What are the must-do steps when preparing a basic and conceptual estimate of a demolition project?

GM: It’s important to read and understand the scope of work and the specifications. This has to be the foundation of any estimate, as it will tell you the required outcome of the project as well as set the parameters that you will have to work within. Once you have a full understanding of these two items, you can then figure out how to complete the project from beginning to end. With this information, you can draw from your equipment and labor resources to establish the effort and associated costs for this. Finally, a must-do step has to include a full summary of material that is associated with the project. Using this, the estimator can then determine the transportation and disposal costs, as well as any potential return for scrap or salvage items.

MC: After you understand the specifications, you need to break the job down into manageable tasks, price each task and then move to the next. This will also help with your scheduling and show areas where simultaneous operations can occur. After all, a big job is just a set of small jobs combined into one.

CDR: What distinguishes well-constructed bids from those that are less likely to be successful?

GM: Detail, defined scope of work and clearly presented assumptions and clarifications—all these items play a role in helping the entity controlling the award to fully understand the demolition contractor’s bid. This information not only provides the necessary explanation of what the demolition contractor intends to do, but by providing necessary assumptions and clarifications, it gives the contractor the opportunity to show what they understand and what they may or may not have included in their bid proposal. A well-versed contractor can distinguish himself or herself from others by simply providing a clear understanding rather than a simple lump sum price.

MC: Specificity, in a word, is the difference. Contractors that put the time in and produce a professional package and answer all the questions are going to move to the front of the pack. That’s why showing understanding of the specification in your submittal will go a long way.

CDR: How should one analyze the success of his or her bid?

GM: The best analysis comes from reviewing your estimate upon completion of a project. Knowing that you generated an estimate that matches the quantity of materials, the efforts needed, correctly applying the types and numbers of equipment required and the time needed to complete the tasks would show success. This type of post analyzation not only can reaffirm your skills as an estimator, but is vitally important to understanding where discrepancies may have occurred. This also provides the company with the ability to adjust or confirm production rates for future endeavors.

MC: I always say that successful bids are not always the winning bid. What I mean by that is that many times the winning bidder may have made a mistake that caused them to be the low bid. Companies should contact the tender team to discuss their bid, find out the weak points and the strong points and learn from every bid attempt. If you are not improving your process on every bid, you are falling further behind the competition.

CDR: What Are the common missteps that hinder the success of a bid?

GM: Making assumptions is probably the No. 1 misstep that can come back to bite you in any estimate. When you assume as an estimator, you do not know the actual [conditions] and, in some cases, there are significant variations that can ultimately cost the contractor a lot of money. The second misstep is not fully reading and understanding required specifications. A common misstep is missing requirements noted in specifications, and when these are tied to your contract, it can account for additional work or effort that was not included in your original proposal.

MC: Not understanding local regulations, work permits, landfill requirements, trucking routes, etc., can be a killer. It only takes misrepresenting one of these things to put your bid in the losing bracket. And again, not fully reading or understanding the specification is probably the most common error.

CDR: What are some things estimators can do to improve their processes over time?

GM: Just like most positions, experience as an estimator comes over time. The more you see, the better you will understand. It is always a good idea, however, to spend time in the field. This includes working on project sites to better understand what efforts are required through labor and operator production. Simply seeing how things must be done on the project site provides tremendous information when generating an estimate. The estimator should learn how and why things are done and not simply rely on unit rates. As previously stated, it is extremely important for estimators to complete a post-project review of their estimates. This information not only provides the details about where the estimator was right, but also where they were wrong, where they could be more aggressive, if their quantities were correct and if there was a better way to complete the job.

MC: I think doing postmortems on jobs comparing the estimate to actuals and adjusting one’s estimating technique accordingly is the most important thing. You also have to understand what reality is for the workforce and not try to make everything the “best case” in the estimates.

CDR: Are there any other takeaways that estimators should be cognizant of in preparing estimates?

GM: It needs to be remembered that demolition estimates rarely supply products, but rather focus on labor, equipment, transportation, disposal and recycling. Since labor and equipment are an integral part of making up the demolition estimate, it is important for the estimator to spend time learning about the means and methods that are used in the field so that they can then put together an accurate estimate of the time and schedule required for costing purposes. Just as important is understanding scrap values. Since scrap is a commodity item and can change in value before and during the course of a project, understanding the values and how the market works is very important to any demolition project. Estimators should take the time to learn as much as possible about different types of scrap materials and how they are valued, and most importantly, how to recognize the true value they play as part of the demolition project they are bidding on.

MC: Make sure there are not other company names in the document from previous bids. Essentially, you should proofread and make sure the bid says exactly what you want it to say, and always check your numbers to make sure they all match and are correct.

The author is the editor for Construction & Demolition Recycling magazine and can be contacted at aredling@gie.net.