Self-Taught MBA: Accurate Estimates Don't Come Cheap - Fine Homebuilding
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Building Business

Building Business


Self-Taught MBA: Accurate Estimates Don't Come Cheap

comments (0) December 4th, 2013 in Blogs
FPR Fernando Pages Ruiz, contributor

Having worked with five estimating programs enough to become proficient, I favor Xactimate and XactRemodel for cost accuracy and ease of use. Both programs require some training and lots of practice.
You can create complete and accurate estimates off 3D sketches or in plan view. 
In plan view, you can drop estimate items, such as flooring types, structural walls, and even mechanical and electrical items. 
The software generates line-by-line estimates with labor, material, customizable labor-burden, overhead, and profit built in.
Having worked with five estimating programs enough to become proficient, I favor Xactimate and XactRemodel for cost accuracy and ease of use. Both programs require some training and lots of practice.Click To Enlarge

Having worked with five estimating programs enough to become proficient, I favor Xactimate and XactRemodel for cost accuracy and ease of use. Both programs require some training and lots of practice.

Photo: Xactware

Perhaps because the process closely resembles actual construction, requiring meticulous attention to detail, I have always enjoyed preparing cost estimates. I study every detail of the plan, building the entire structure in my mind's eye. Estimating serves as a dress rehearsal for the project and hence provides an excellent basis for job-site management. If you have a powerful, integrated contractor's office platform, such as Timberline, which combines estimating with scheduling, contract documents, and accounting, your estimates become the basis of your business. Profits stem from accurate estimates.

Accurate estimates rely on two related facets: (1) a complete scope of work, which represents all the activities needed to complete a project, from design through occupancy, and (2) real-world cost information. The latter is the most difficult to obtain, unless you bid out every trade on every estimate you generate. A typical contractor may only land one job out of every ten bids given to prospective clients. So if you must obtain subcontractor and material prices on every bid, you may find that subs stop providing you with quotes because it's just too much work.

Some estimating systems come with cost databases. In my previous post in this series, Free Estimates, I talked about free, ballpark-estimating software you can access online for quick-and-dirty bids. To obtain locally accurate cost information, though, you need to invest in a service that samples regional and city-specific material, labor, and subcontractor pricing at least annually, and preferably quarterly. My preferred estimating program, Xactimate, is one of the most costly and challenging to learn, but it's the most accurate and the quickest at preparing a solid bid.

Xactimate Estimating Software

Xactimate was developed to provide claims adjusters in the insurance industry with accurate, ZIP-code-adjusted reconstruction pricing. I learned the software in my capacity as an insurance adjuster, but I fell in love with it as a remodeling contractor.

The program was designed with two objectives: accuracy in pricing and speed of estimating. As an adjuster during a major natural catastrophe, such as Hurricane Sandy, I've had to complete large, complex reconstruction estimates very quickly, sometimes five in one evening at an average of $250,000 each. Since the results of these estimates became the amounts paid to homeowners, my work had to be at least 98% accurate at estimating the real-world costs or I would lose my job.

Xactimate is not an integrated construction office platform; it is simply a super estimating machine that accesses an online pricing database maintained by Xactware, the software developer, with updated pricing data for more than 470 geographic regions. The company researches and validates pricing to the satisfaction of major insurers such as State Farm, Allstate, Travelers, and many others. The program provides a comprehensive structural price list of 10,000 line items with full time-and-material information, including labor-productivity rates for restoration, remodeling, and new construction, labor-and-burden overhead, material costs, and equipment costs.

In terms of speed in estimating, the program accepts line-by-line manual entry of construction operations, but it works most efficiently off a proprietary Sketch program that allows you to draw and estimate a structure at the same time. In the Sketch module, you draw the plan, floors, walls, roofs, and exterior and interior, and then you place and dimension your doors and windows in either 2D or 3D views. Click-and-apply structural variables, such as framing characteristics, wall and floor finishes, and exterior finishes, reduce the need for manual calculations. You can also drop in plumbing, electrical, and HVAC. After you finish your drawing, go to the line-item section, and voilà, the estimate is almost done and you have a very neat little drawing to present to your client. If you do similar work repeatedly, such as removing exterior siding, installing a weather-resistive barrier, replacing the siding, and then painting, you can build macros to drop into any surface area that will calculate all the dimensions, including waste.

Macros Make It Easy

When I was adjusting basement-flood repairs, the reconstruction work almost always entailed the same basic procedures and trades. I built a macro to make my job easy. I would drop the basement-reconstruction macro into my estimate, adjust details as needed, and then turn out a complete, comprehensive estimate in minutes. It's easy to build a macro; just create one very detailed estimate and then save it as a macro (a file you can drop, henceforth, into any new estimate).

For the Remodeling Contractor

For the remodeling industry, Xactware offers XactRemodel, a program that includes all the features useful to a home-improvement contractor without the insurance gobbledygook to crowd and confuse the interface. You can access the software on any number of platforms, from desktop to tablet (or even your phone, if you're a millennial). The company offers an online library of Sketch templates (Sketch Gallery) that you can download and drop into an estimate and then adjust to your specific project. In one interesting feature of the program, you can convert estimates to Spanish with one click.

The program requires training to learn and lots of practice to get proficient. But having worked on five estimating programs during my career, and having learned each one well enough to work efficiently, I can recommend Xactimate or XactRemodel as products that are well worth the time and money invested. The programs are sold on a subscription basis: one month for $89 or one year for $599. 

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