Preconstruction’s Hierarchy of Needs to Support Estimators

Today’s estimators find themselves in a changing industry. Prior to the 2000s, the construction industry was known more for its lack of change. Today, construction is changing in many ways including, but not limited to, contract delivery methods, staffing requirements, job expectations and the use of technology.

To stay ahead of these changes, construction companies can reliably lean on a pyramid, or “hierarchy of needs,” to help them focus on what their organization needs regarding investments and resources.

Level 1: Basic Needs

At the bottom of the pyramid are the basics. To exist, estimators need projects and very basic tools to support an estimating process. Pen, pencil, paper, ruler and a calculator will do just fine at this level. Without these basics, an estimator isn’t going to care about digital, on-screen, quantity take-off tools or fancy cost database assemblies.

Level 2: Workflows and Processes

Even a one-man band for a small company needs to define his workflows for the essential steps, which include identifying scope, quantifying scope and pricing scope. Notice we haven’t touched technology or cost databases yet?

Level 3: Simple Technology

The third level of needs is simple technology. At this level, estimators need minimal technology, such as simple spreadsheets for improving efficiency and a word processor to strengthen their writing. Once an estimator has his most basic needs met, he can begin to look to simple technology to help organize data, facilitate calculations and communicate scope and cost information.

Level 4: Cost Database

At this point, an estimator might find value in creating an organized unit price catalog, such as a line item cost database. A cost database isn’t initially important and isn’t a basic need because a skilled estimator already has many unit prices in his head from years of experience. However, a cost database can make estimators more efficient, enable them to bring on more junior expertise and share data, and help in market sectors/types in which the company has a lack of experience. It’s important to note that more complex database features such as assemblies have little value without the cost items and unit pricing to go along with them.

Level 5: Better Technology

Cost estimating applications are found at this level. They can be basic, but they are an advancement on basic spreadsheets and word processing functionality. Generally, a cost estimating application will be a third-party application and not within the Microsoft family (i.e., MS Excel). Beyond a simple spreadsheet, a cost estimating application can help reduce errors, increase efficiency and introduce standardization. At this stage, it may be helpful to introduce a digital solution to enable on-screen quantity take-off (QTO) capabilities. An on-screen take-off solution is the fully digital version of the older digitizer generation. It works with .pdf or .jpg images and the user performs the QTO process on the screen.

Level 6: Cost Assemblies

When an estimator has created a unit price catalog or cost database and has a cost estimating application, the next progression is to develop assemblies using line item data from the cost database. Assemblies aggregate line item data into logical groupings to define whole or partial systems. This makes the estimator more efficient and has the potential to reduce error. It is also a great teaching tool to share knowledge of construction systems with junior team members.

Level 7: Cost History

The seventh level is cost history. Significant and notable differences exist between the line item cost database and cost history. The line item cost database can be bought in holistically or in part from past project data. In contrast, true cost history cannot be bought. In many ways, it is the secret sauce of a construction organization.

There are two elements to cost history. The first is the source, which is the mountains of data accrued by an organization over the years and the organization’s unique approach to estimating work. Included are the pricing for labor and materials purchased on projects, which are tied to specific and definable scopes of work, as well as the underlying indirect fee structure supporting the execution of the work.

The second element of cost history is a tool that makes the robust data source readily accessible and mineable. A true cost history platform enables a firm to intelligently sort and filter cost information by project type, materials, labor, vertical market sector and any other combination of metadata captured by the organization. A cost history platform gives tremendous business intelligence to a construction firm. It can become a valuable data set and should be regarded as proprietary information containing trade secret level information.

Level 8: Integrated Solutions

Near the top of the list is integrated solutions, which deal with advanced technology such as 5D. 5D isn’t a tool, workflow or data structure—it is all of the above. 5D, or virtual planning design and construction, cannot be done by the preconstruction professionals alone.

True 5D is based on a highly integrated, collaborative platform that uses a single source of truth project model, based on a common data dictionary and shared expectations regarding modeling for design and modeling for analysis. True 5D is reliant on a well-thought-out BIM Execution Plan (BxP), which is collaboratively created and supported by the whole team.

Level 9: Artificial Intelligence

Based on what is known today and trends in other industries, artificial intelligence (AI) is the future. AI is a broad term that covers many things. For preconstruction professionals, it primarily represents the automation of mundane tasks such as quantity take-off, but it also represents business intelligence strategies and the use of data analytics to provide deeper and smarter analysis of data.

AI can provide better critical decision-making capabilities because decisions are based on a more complete, accurate foundation.

This level cannot be introduced to a firm until (and only if) all of the other needs are met, because AI without a cost database is useless. AI without integrated model-based solutions is not possible. Also, AI without robust data sources is worthless. Estimators' roles will not be eliminated, but they will shift to becoming data scientists and data analysts. Estimators will build and manage the systems, algorithms and workflows to process and present the data. Estimates will evolve and move toward more visually intelligent, graphically communicative information.

Construction companies will soon begin planning their next year of financial, process improvement and organization goals. All firms, should use this information to evaluate where they are regarding their level of sophistication compared to where they plan to be in the next one to five years.

By clearly defining where a firm is on this hierarchy, teams can wisely and confidently decide where to spend time and treasure without being overwhelmed by the approaching change.