The Power of a Quality Cost Estimate - Friday in the Field

David Luch
For my Friday in the Field, I sat down with Marketing Manager Laura Okell to discuss my experience working on design-build efforts in the Metro-Detroit area.

Laura Okell: Hi David, thank you for sitting down with me today, I know you are busy on-site in Detroit.

Thanks, I’m happy to chat with you Laura. It is a busy time but that’s par for the course with what I’m working on right now.

LO: How do you mean? What are you working on right now?

Since I joined Faithful+Gould in 2015, I have been working as a lead estimator for one of our major automotive manufacturing clients in Detroit, Michigan. My role is to provide cost advice on sole sourced design build project as part of a schematic master program of roughly 20 major building and renovation projects on our client’s campus, accounting for approximately $1 billion in construction spent.

We have a responsibility to be constantly looking for ways to provide our client with the most up-to-date information.

I say that we should always be busy because in design-build efforts for such expansive projects, there are countless decisions to be made within a very quick span of time, with little room for error. We review and validate design-build estimates at the schematic design phase. We also support the negotiation of lump sum contracts at the end of design development. We prepare our estimates independent of the design builder and provide checks and balances to the owner on these fast track projects. We have a responsibility to be constantly looking for ways to provide our client with the most up-to-date information. As representatives of the owner working within the team, it helps to have our immediate feedback so that the client can make informed decisions on cost and scope, moving the design process forward as quickly and efficiently as possible. When you’re approaching a project with that in mind, there really isn’t any down time, you’re constantly looking ahead to how you can not only meet your client’s expectations, but surpass them.

LO: I like that way of looking at it. What have you and your team been doing to add that value?

A traditional estimate generated by a general contractor is usually localized and limited to the project types that specific builder can perform. The Faithful+Gould estimate we provide includes a knowledge base of numerous project types that reference national and even global historical data, when appropriate. In my current work, we’ve created a cost benchmarking database that is tailored specifically for this client to support cost estimating on their facilities.

LO: How have you established that database?

Part of our cost intelligence team located in Minneapolis and led by Technical Director Chad Chapman, established this method utilizing software and data analytics to allow clients to make informed decisions on construction costs. The data that we have available to use, and our use of said data, sets our service offering apart. The client trusts us to represent them and assess fair market value pricing provided by trade contractors. To do this, we have to be aware of everything that will go into establishing that price. Working with contractors, who by nature are looking to maximize their profits and may push pricing, we need to come up with a solution that is both fair to the contractor and represents our client’s interests.

A traditional estimate generated by a general contractor is usually localized and limited to the project types that specific builder can perform.

LO: How can a team go about doing this?

There’s obviously a lot to consider, but for one, consulting teams must have an understanding of the market and what variables might be driving the contractor’s requests.

LO: What sorts of variables?

Well, for instance, a contractor may argue over pricing due to current market conditions, labor shortages or if there is a lot of work in demand. We’ve seen that lately in pre-cast parking structures, which are at a premium right now because there is a lot of work going on in these kinds of structures. We need to be able to anticipate trends like this and work to get a price that makes sense for our client - a competitive market price. We have been successful so far and we have consistently been able to have our prices met or reduced, keeping the work under budget and in line with the client’s goals.

LO: That’s impressive. How have you been able to do so?

Personally, I would say that my experience in the Detroit area marketplace has greatly influenced my work on these projects. I’ve worked in the area for more than 30 years in various capacities, working across a variety of project types including hospitals, sports stadiums, office buildings, you name it, before moving on to manufacturing buildings. Throughout, I’ve gained experience working for both sub-contracting and general contracting builders. This has allowed me to develop a tried and true awareness of local market conditions and a level of confidence with the local contractors and sub-contractors, who know and trust me. That can be invaluable when working to provide pricing and there’s also really no substitute for the knowledge that comes with experience. I’ve been able to share my knowledge of the intricacies of the Detroit marketplace with our Faithful+Gould Minneapolis estimating team. This has helped to legitimize our entire team’s pricing and the extent of the scope included in each estimate.

LO: What would you say is the key to a quality estimate of this nature?

The key to a quality product in estimating is the understanding of the detail that goes into each estimate, whether it be civil, architectural, structural, mechanical, electrical or what have you. Our team’s understanding of these project details provide the owner with a cost of construction that represents competitive pricing for the marketplace and is simply unmatched.

The key to a quality product in estimating is the understanding of the detail that goes into each estimate...

I’ve explained to our estimating team that from a general contractor’s point of view, you’re often on your own with these types of estimates. It can be very overwhelming. If a team can display our level of accuracy and detail in pricing, it really builds a level of confidence for the contractor and/or owner in their work, knowing they have a good product behind them. That’s an added bonus our work supplies clients.

LO: You noted “looking ahead” earlier, how do you feel about your work going forward?

I am quite confident in what we are doing and that we will reach our overall goal of completing this extensive project on time and under budget. Furthermore, providing this level of service to our current client has been so rewarding, I’m hoping we can extend our services to other clients in the area.

LO: Do you see potential for growth there?

I do, and I believe our presence in the Detroit area is poised for substantial growth. Having worked in the area for much of my career, I understand the kind of support that the market there requires first hand. We provide the depth and resources necessary to provide this support, with a large staff of estimators with multiple trade experience that far surpasses any competition and a cost intelligence data base that helps us to produce estimates that are high in quality.

Ultimately, we can drive growth with client satisfaction testimonies, which we have already experienced in 2017 with our current client. We are building a solid foundation as an organization in the area, and there are many new opportunities that align with our expertise in this arena.

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