Contractors - Don't Let Your Estimator Be Your
Salesman
Author: Ron Roberts

While meeting with a new client recently, our discussion
revealed a power struggle he was experiencing with his
estimator. We talked through the issues and reached the
conclusion that he needed to find an estimator that fit the role
better... and to immediately pull two outstanding bids before
they killed the company.

While reflecting on the conversation a couple of days later, I
realized that several estimators had placed previous clients in
harms' way with their aggressive pricing and lack of knowledge
of field crew productivity.

A common problem I've run into with contractors is their poor
understanding of the role their estimators should be performing.
In most cases, it should not be the estimator's role to make
pricing decisions.

A full time estimator should be held accountable for meeting
two goals: predicting the cost of construction and predicting
the man-hours needed to complete the project on time. Failure to
make accurate predictions of construction cost and project
man-hours should be considered poor job performance.

From my observations, the estimators who consistently put their
companies on thin ice usually were overly aggressive in their
pricing in an attempt to win bids and were universally unable to
predict labor hours. Almost every one of them operated from the
same two flawed assumptions:

1. Any work is better than no work.
2. It is the field crews' responsibility to meet the budget.

It is not easy to land high profit jobs in this industry. The
quickest path to financial security is to avoid money losing
jobs. No work is usually better than bad work.

Good estimators know that the key to their success is
accurately estimating the man-hours needed to do the work. They
rarely assume the field crews will move faster than they
normally do.

Unless the estimator and project manager can come up with a
short cut from the normal approach, the estimate should be based
on the average labor performance of past jobs. Pie-in-the-sky
hopes for above average performance are destined to come
crashing down when the crews try to close out the project.

Naturally, in order to accurately estimate the man-hours the
labor productivity information must be available through the job
costing system. Refer to last week's newsletter for tips on how
to collect the data your estimator needs to accurately predict
man-hours.

Now, let's revisit the subject of pricing decisions.

The salesman should have the final say in setting price.

He is the one who has been talking to the customer. He is the
one who should have already determined whether the company has a
competitive advantage the client is willing to pay for. He is
the one who should know what the competition is likely to offer.


Relying on the estimator to make the pricing decision is a
recipe for disaster. Estimators almost always base their pricing
decisions on the size of the current backlog.

They completely ignore whether the client is willing to pay a
premium or whether the client is bound to be troublesome. It is
a single factor decision, "how much work do we currently have on
the books?"

The qualities and characteristics that make for a good
estimator are completely different from the qualities and
characteristics that make for a good salesman. The estimator's
role is accuracy. The salesman's role is persuasion.

If you are a small contractor who has an estimator but does not
have a salesman, go hire a salesman (or do it yourself). No
business should be without a salesman. Having a salesman is more
important than having an estimator.

If you are a small contractor who has a salesman but does not
have a full time estimator, your safest course of action may be
to let your construction manager create the estimates. He will
usually have a far better feel for costs and man-hours than will
the salesman. The salesman will have a far better feel for the
price the client is willing to pay.

The two working as a team should land and produce highly
profitable work!


About The Author: Ron Roberts, The Contractor's Business Coach,
teaches contractors how to turn their businesses into a profit
spewing machines. To receive Ron's FREE Contractor Best
Practices Newsletter visit http://www.FilthyRichContractor.com.