Copyright to Kim Tremblay, © 2012.
This article is a repeat of an article of the same name first published on December 13, 2011
Reprinted with permission. Published here May 2012

Editor's Note | Introduction | Mistake 1 - Not Getting the Information You Need Up Front
Mistake 2 - Estimating at the Wrong Level | Mistake 3 - Hanging on to Old Technology and Systems
Mistake 4 - Not Using Current Rates and Costs |
Mistake 5 - Failing to Get Supplier/Contractor Quotes | Mistake 6 - Not Dealing with Project Risk
Mistake 7 - Failing to Review Before, During and After | Conclusion

Mistake 5 - Failing to Get Supplier/Contractor Quotes

You've worked with your customer to understand all of the work involved with your construction project. You've secured your customer's commitment with a contract based on your estimate - which you created using current rates for your labor and materials. They've signed off on the contract and you're ready to move on with project execution.

Looking at your project schedule, it's time to start getting your project resources in place - material orders, contractors, and labor resourcing. You go to place an order for that key material or give an important part of the job to that subcontractor that does great work. You now find out the material is on backorder or the cost has skyrocketed and the subcontractor you really want to use is now booked up and charging premium rates. You're looking at a schedule delay and the project hasn't even started. And unless you've built in a risk factor or contingency (see Mistake #6), your project is already at risk of running over budget.

How to avoid this mistake -
Get a quote for all key materials and labor

This problem area is one that can be easily avoided if you make it part of your construction project estimating practice to require a quote for any material, labor or subcontractor that you consider to be key to the project success. How you define "key" is up to you - perhaps it's a material you know only a few suppliers can supply. Or maybe it's a subcontractor you've worked with frequently, who delivers on time and on budget. Or perhaps it's the site supervisor who has worked on this type of construction project or for this customer before.

Let's say that you have created your project estimate, and one of your work packages requires a material that you believe might be difficult to source locally. Start managing that risk now and identify a supplier that can provide the material in the timeframe that you require. Ask for a quote that is valid for at least the time period leading up to your ordering time. Build in a risk factor on this quote, in case this supplier can't deliver in time, or in the event the quote period expires before you can purchase. And, like everything else, store that quote with the rest of your project documents so that you're not scrambling to find it later (see Mistake #1).

If your project is staffed with company resources, make sure you understand what their availability is. Either create or ask for a resourcing schedule that provides this information. Or better yet, make the investment in a resourcing or capacity planning application that will allow you to easily see availability as you estimate and staff your construction projects (see Mistake #4).

Project managers know that good relationships with their suppliers and contractors/subcontractors are critical. It can make the difference between a subcontractor "finding time" in the schedule to accommodate you or a supplier going the extra effort to get back-ordered material in on time. Just as with your customers, take a proactive approach to managing your relationships with your suppliers and contractors. Stay in touch with them - understand their business cycle so that you won't be caught unaware when you're planning your project. If you know one of your contractors is heading into their busy season, and you've got a couple of projects coming up - take the time to make a call and find out what their schedule looks like.

And, be fair. If your contractor or supplier has put in the effort to provide you with a quote and you get the contract - don't use that quote to shop around for a better deal. The next time you need them, they just might not be as willing to help you out.

Mistake 4 - Not Using Current Rates and Costs  Mistake 4 - Not Using Current Rates and Costs

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