How to Select the Best Construction Estimating Software Solution for your Construction Business

When you first investigate computer based estimating software, you will find that there are many software vendors selling solutions which range from a few hundred dollars to many thousands of dollars. In fact some estimating software packages can cost upwards of 15-20 thousand dollars and in some cases, as high as $100,000. That is quite a range of price.

Often, estimating software is selected based upon the cost, features, functions, reviews, word of mouth, or other avenues. In many cases, potential customers do not consider how they are doing their estimating processes today, what they would like to improve, how automation can, will, or will not help them, and what an estimating system should do for their business.

In many cases, the construction professional will try and find a way to adapt their business to the way a software package operates, rather then determine the best way to adapt the software to enhance their current way of doing business. In many cases estimating software may not be flexible enough to allow a construction professional to "customize" the software to work in conjunction with the best business practices of the company.

An example of this is the cost information which is provided by many of the more advanced construction estimating software vendors in the market. Often, you will see software vendors either providing their own cost data information (often on a monthly subscription basis), or they will resell industry cost database information such as RS Means or Craftsman.

This is a good baseline for starting to use a construction estimating software solution, but all too often, construction professionals will begin to find that the data is not accurate for their specific geographic locations of work, their local distributors have different prices than what are provided in the software costbook database provided by the vendor and costbook updates provide by the software vendor are not timely enough to reflect local price changes in materials (labor prices are usually pretty consistent over time).

As a result, the construction professional is not satisfied with the software vendor's estimating solution, the adoption of the software will diminish, and the construction professional will either begin to more and more get frustrated while searching for another software solutions or revert back to their original estimating process. Often this is either a basic spreadsheet or paper and pencil.

This creates an interesting buzz in the marketplace and on construction forums where construction professionals will compare, contrast or complain about various estimating software packages because they do not do the job they were expecting, are not reliable, and in many cases are down right inaccurate...enough so that the estimator no longer has any faith in the results provided by the estimating software. At best, the software is either used for "guesstimates" or becomes "shelfware".

The problem with this perspective is that the estimating software is perceived as "bad". In reality, the software might be just fine (operationally), but it is the cost information and cost data which is not correct for the particular construction professional. Also, in many cases, software vendors will "lock down" the cost data either because they make money off of the data or do not want the customer to change the information because they have specific features and functions in the software which are dependent upon the information contained in the cost data (such as estimating assemblies or multi hierarchical costbook databases). This creates a very inflexible solution which requires the construction professional to either adapt to the software or simply decide not to use the software.

The best estimating software solutions should allow the construction professional to completely leverage existing industry database cost information as well as provide the ability for the construction professional to create their own costbook database of information and even combine the two. This should be extended to have the ability to create as many costbook databases as the construction professional would like to accommodate multiple types of estimating situations.

A quick word on the estimating process. The most accurate method of estimating is to use the Unit Cost Method of estimating. This means that each material item in a costbook database would have at least a material and labor cost. Even better if the item provides for the ability to track subcontract and equipment costs and well as labor rates. These costs are then defined for the item at the "unit of measure".

So for example, you could be working on reinforcing steel in a foundation and putting in 1/4" diameter, #2 rebar. This item is typically categorized by the LB (foot pound) as the Unit of Measure. There might be a material cost per LB of .78 and a labor charge of .76 to install the rebar for each 1 LB. The Unit Cost Method of estimating would take the material and labor costs and multiply these values by the total quantity (by LB) required for the job. This would give you the total cost of the work for this item in your estimate. You would do this for every item in your estimate. Some people might say this is very time consuming, but this is the most accurate way of estimating the work.

In addition, some construction professionals might say that the material and labor costs are inaccurate. These prices were taken from a national industry costbook database, and in fact, could very well be inaccurate. A good software estimating program would allow you the ability to change any information about this item required to match your own labor and material costs. One important consideration for this is that you should base your current estimates not only on an updated costbook database, but also on the results from historical estimating. This way, you can see if in fact you made any profit from your last job and factor in this experience in terms of changing the prices of items to reflect your profit margin. This is in addition to including standard profit and overhead costs in your jobs.

Some construction professionals will say that all of this cost database construction and pricing definition is very time consuming, but in reality, we have found that most GC's would require from 300-800 items in a customized costbook database. This would take care of about 90-95% of the typical estimating requirements of the construction professional. This is a far cry from the 30,000-60,000 items which are typical of an industry costbook database....and much easier to update and manage.

So the point of this article is to tell you that the first thing you should consider when looking for an estimating system is the ability to create your own costbook database, and be able to leverage existing industry costbook information to do that. In addition, this should be an easy process and be able to leverage all the capabilities of the estimating software, such as reports or other functions. This way, you will be able to find an estimating software solution which fits your business rather than trying to fit your business into the methods and practices of the estimating system software!