Construction Estimating Services: Freeing Up Time or Losing Control?

For busy contractors, finding the time to prepare an accurate estimate can be daunting. Add in a lack of resources and you’ve got an even bigger challenge. To help take some of that burden off, some of contractors outsource part of their estimates to a construction estimating service. But while it can be a cost-effective way to free up valuable time, outsourcing also comes with plenty of risks. If you’ve been on the fence about it, we’ll help you decide whether or not using an estimating service is a good choice for your business. 

Key Takeaways

• If you’re strapped for time, you can outsource estimating and quantity takeoff to an estimating service.
• Estimating services can provide contractors with many skills and software they may lack.
• At the same time, contractors relinquish some control when outsourcing estimates and need to establish procedures to supervise the estimating service. 

How Construction Estimating Services Work

Before you submit a bid on a construction project, you have to prepare accurate, detailed estimates. This is a time-consuming process many contractors simply don’t have room on their plate for. Enter cost estimating services, which offer contractors a way to outsource the preparation of entire construction cost estimates (or just the quantity takeoff). 

These companies provide estimating services for a wide range of projects, including commercial estimating for commercial projects, industrial projects, and residential estimating. They also provide estimating services for various trades, like landscaping, earthwork, and HVAC. 

Before you go full-steam ahead on outsourcing though, make sure you weigh the pros and cons of using an estimating service. 

Pros of Using an Estimating Service

Estimating services provide several advantages over preparing your estimates in-house.

1. First, construction estimating companies may have specialized estimating skills that the average contractor lacks. This is particularly true for small contractors who don’tprepared enough building estimates to justify hiring a trained estimator. An estimating service can provide contractors access to professional estimators who excel at preparing estimates from construction plans. 

2. Estimating firms may also have access to estimating software and databases (such as RSMeans) that aren’t always cost-effective for small contractors to purchase. For example, a company that provides estimating services for general contractors may use On-Screen Takeoff®, PlanSwift, or Bluebeam. Similarly, takeoff companies providing services to MEP subcontractors may use Trimble AutoBid, FastDUCT®, or FastPIPE®. Depending on your business, it may be more cost-effective to outsource estimating than to hire a trained estimator and purchase estimating software. 

3. Because estimating services can assign multiple estimators to one project, you may experience quicker turnaround times. For example, a service can assign the structural steel to one estimator and the drywall to another. Plus, having a large pool of estimators allows them to prepare multiple estimates simultaneously. 

4. The estimating service could be able to provide higher-quality estimates by assigning each trade to an expert estimator specializing in that trade. This provides the contractor with broader expertise than they can get by hiring an estimator. For example, the roofing could be assigned to an estimator who has worked for a roofing contractor. 

5. Lastly, using a construction takeoff service to determine material quantities gives project managers more time to focus on getting better pricing, reducing material costs and other activities that have a bigger impact on the company. By reducing the project costs, the contractor can either increase their chances of winning the project by lowering their bid estimates, or increase their profit.

Cons of Using an Estimating Service

While the advantages we mentioned above may sound appealing, we would be remiss if we didn’t mention the several disadvantages that can come with using an estimating service. 

1. If you use an estimating service, you’re automatically relinquishing control over your estimates. Like working with any subcontractor, you no longer control when and how the work is performed. Because of this, it’s important to set firm procedures and expectations. 

2. Integrating an outsourced takeoff with your company’s estimating and cost-coding structure could be difficult. For example, if the estimating service organizes the materials using the CSI MasterFormat® and you use another cost-coding structure, you might have to do the tedious work of reorganizing their takeoffs to match your costing system.

3. Information the estimating service learns about the project while preparing the estimate might not be transferred back to you. This could include the planned use of materials, the construction methods, and any problems with the construction documents.

   For example, suppose the floor framing requires two lengths of joists, and the estimating service uses the longer length for all the joists, expecting that the extra material from the short joists will be used as blocking. If the framing crew cuts a full-length joist into blocking, they’ll run short of materials. Materials have to be used in the same way they are estimated, which becomes harder to ensure when the estimating service uses a different estimator on each project.

   The construction documents show what is to be built, but how to construct it is left up to the contractor. The contractor’s method of construction, which the estimator selects while preparing the estimate, affects the costs. If the estimating service’s methods don’t match yours, it could increase costs or cause construction problems. The good news is that a lot of problems with construction documents can be identified while preparing the estimate - and the earlier these issues can be raised, the less impact they have on the construction process. Still, while issues found while preparing the estimate can be addressed without delaying a project, problems that come up during material installation often cause construction delays. 

4. Communicating with the service’s estimator is more difficult than communicating with an in-house estimator. When the estimate is prepared in-house, field personnel can easily ask the estimator questions about the estimate and the planned use of materials. When outsourcing the estimate, communicating with the estimator may be more challenging, especially if the service is in a different time zone. For questions that come up in the afternoon, contractors in California may have to wait until the following day to get them answered by an estimator in North Carolina, delaying the project. This is even more difficult if the estimating service is outside the USA.

5. Estimates can be inconsistent because each estimate may be assigned to a different estimator. When using an in-house estimator, management and the crews learn how the estimator prepares the estimates and approaches the project’s construction. This isn’t the case when different estimators are used for each project. 

7. Construction practices vary throughout the country. A national estimating service is unlikely to understand your market's unique construction environment. For example, they may not understand how winter weather affects construction in a ski town, which can increase construction costs due to lower productivity and increased weather protection. 

8. An estimating service doesn’t have access to your company's historical data - the most accurate data for cost estimation. 

If you do decide to outsource estimates, always make sure to establish estimating oversight procedures. While it won’t eliminate every risk we mentioned above, it’ll help ensure you get quality estimates. 

How to Choose an Estimating Service

Choosing the right estimating service is just as important as hiring a good estimator or subcontractor. One bad estimate can put your company out of business, which means caution is key here. Here are three things you can do to make sure you hire the right company.

First, start by asking a few questions about the estimating service: 

• How many years of experience does the company have? Does their experience include projects similar to what your company builds? Experience matters when hiring an estimating service. They should have experience and knowledge relevant to your company’s work.
• Do they employ certified estimators? What experience do their estimators have in the construction industry? Will the same estimator be assigned to all your projects? The experience and skill of the people performing the estimates are just as crucial as the company’s. You want assurance that a qualified estimator will do all your estimates.
• What estimating and review processes do they use to ensure they produce accurate estimates? Ideally, the estimating service should provide at least one independent review of the estimator’s work by someone as qualified as the one preparing the estimate.
• What software do they use? Will this software integrate with your company’s estimating processes and software? Incorporating the outsourced estimate into your company’s estimating process is essential. You don’t want to spend all the time you save using an estimating service reformatting the estimate.
• How are addendums and drawing revisions handled? Is there an extra charge? Estimates will need to be revised. You want to know upfront how this will be managed.
• What documentation is provided with the estimate? Does the estimate include marked-up project plans showing the material takeoffs and how the materials are used? You want to know just what is included in the estimates. Asking for sample estimates can help you determine what you’ll be getting.
• What’s the typical turnaround time? Do they guarantee the estimate will be delivered on time? Getting the estimate when needed is critical to getting bids to the clients on time.
• What technical support do they offer? Who will be your point of contact? When are they available? You want to know they will be there when you need them.
• What is the cost for an estimate? What additional charges might be incurred? Is there a cost for technical support? You want to make sure there are no surprises.
• Who is responsible for takeoff errors? Do they carry professional liability insurance? You want to know that they will stand behind their estimates. They often will not guarantee the quantities because they don’t have control over the material installation, but they should be providing estimates with sufficient materials to complete the job. 

This is by no means an all-inclusive list, so don’t hesitate to ask any other questions that come to mind when talking to a service provider.   

Don’t forget to ask for references as well. You can vet the estimating service by carefully questioning their references about the estimating service’s work. The questions listed above are a good starting point. 

Lastly, ask them to prepare a sample estimate so you can experience their work firsthand before totally committing. And remember - reviewing the estimate isn’t enough. You should prepare an estimate for the same project and compare your results to theirs. This will let you know how accurate they are, and will expose any differences between your methods and theirs. 

Wrapping Up

Preparing accurate construction estimates is a critical function for any construction company. But if you lack the funds to hire a dedicated estimator and buy the right software, outsourcing could be a good choice. Just make sure the service you hire exercises the same level of care you do - and never submit an outsourced estimate without reviewing it carefully. You don’t want one lousy bid to put your company’s financial health on the line.