Attitudes That Cost You Money

Your frame of mind can have a huge impact on your estimates.

By Charles Vander Kooi

This is, by far, one of my favorite subjects! It is probably the most overlooked principle in construction today. Remember, construction is a people business and there is nothing more important when a contractor is dealing with people than attitude. The attitudes of a contractor's employees, especially their estimators, can cost thousands or make them thousands. Let's consider a few:

Office vs. Field Attitude

The first has to do with an attitude of contention that can exist between the field and the office. A person gets promoted to being an estimator, so they start wearing a suit and their hands are always clean. They drive out in a fancy car with the air conditioning on and the stereo blaring. They get out and look over the job with their nose in the air.

"Don't get dirt on me," they yell, as they jump away from some construction task being performed. They walk up to shake hands with the superintendent, but refuse to do so because the superintendent's hands are dirty. Then after they look around piously, they leave the project with the air conditioner blowing and the stereo blaring.

Do you know what they say about that person after they leave the project? "We're going to have their job." And, do you know how field people are going to try to get their job? By letting the costs the estimator bid overrun in the field. Do you know who's going to be losing thousands? The owner of that company.

"Oh," you say, "The owner will fire field people who do that." Yes they will, until they figure out that the estimator is the problem. Then the estimator will be fired.

Contention between the estimator and the field costs thousands of dollars to the construction industry every year. I have actually walked into contractors' offices and heard the following kinds of conversations between estimators and the field.

"I know it can be done in X amount of hours. If you can't do it for that you ought to be fired," says the estimator.

"Well," says the superintendent, "If you think it can be done for that, get out here and do it for that!"

And, then they both slam down their phones on each other. Do you have any idea how much that costs a contractor? Thousands upon thousands of dollars!

I have always liked field people. I treat them with utmost respect and courtesy and always show myself ready to learn from them. They have made me what I am today. They have made me look good when my estimates have looked bad.

I've had field people come into my office after they had heard or seen a mistake in my estimating and say, "Don't worry, we will cover it up. We'll get it done for what you figured." And, they do. No one has a cash register big enough to total what those kinds of attitudes can make a contractor.

The "We Need Work" Attitude

Sometimes people take this attitude, "We've got to have this job!" Work is slow. The contractor has equipment sitting in the yard that is not working. They also have 2 superintendents on the same job and they could sure use another job for one of the superintendents. So they look at this job they are estimating through eyes that say, "We've got to have this job."

With that attitude they begin to estimate the job. Do you know what they are going to do when they put that estimate together? They are going to say, "We'll do this or that cheaper than we normally do it." Not because they will, but because they've got to have this job. They will convince themselves that certain methods or materials will work because they will make them work-because they've got to have this job.

When they're all done with the job, it will cost them what it will cost them. But they will not have enough money in their estimate after having lied to themselves in order to get the job. But, costs are costs are costs, and they have missed the important concept of what estimating is, the science of arriving at what a job costs their company.

When they lie to themselves that way they have no idea where they lied nor how much they lied about. If they want to go after a job, they must know what their costs are, and then trim their overhead and ask for their lowest profit. But they shouldn't lie about costs. This attitude costs the company money in the end.

An Award Winning Attitude

Another attitude to look out for is an attitude that says, "This is an award winner! If we get this job, we'll get a plaque at the national convention in January." So a contractor bombs the job by $20,000 or $200,000 to get their award. Put that money in the job and send it to me. I'll buy you a whole room of plaques.

Future Promise Attitude

A similar attitude goes like this, "If we get this job, it will lead to a lot more work. We can put our construction trailer right by the highway. On its side we will put our name, Joe Blow and Sons and Daughters Construction Co., Inc., Ltd. People will drive by and see our trailer and run right into their office and call us to do their jobs."

So they lie to themselves about the job and bomb it in order to get more work. Except the other work doesn't come or, if it does, people expect it at the same cheap price. Bid every job like it's going to be the only job a contractor ever will do for anybody.

Developers love to use this advantage. They approach a contractor with a set of model homes and tell them, "Do you see that apartment project over there? If you do my models real cheap, you'll be in on the ground floor to do these apartments."

And, while that contractor is going broke on the models, the developer is over talking to another contractor about the apartments. "Do you see those shopping center plans over there?" they ask. "If you do these apartments real cheap, you'll have the inside track on that shopping center."

And, while that contractor is going broke on the apartments, they are talking to someone else about the shopping center. On and on the circle goes because there always seems to be someone who will grab at the ever-elusive carrot. Bid every job like it's the only job you will ever do for that person because it will probably will be.

Profit-thru-Change-Orders Attitude

Another attitude to look out for: "We'll bid this job and make money on the change orders." Who says a contractor will get the change orders they need at the price they want?

Change orders can be very risky. That doesn't mean a contractor does not apply for them, but don't ever go after a job because of them. In fact, do you know what most hassles between owners and contractors boil down to in the final analysis? Change orders!

One of 2 things usually happens when it comes to change orders:

• First, the contractor will not take into consideration all the costs involved in the change and thus cheat themselves.
• Or, second, if they include it at all, the owners refuse to pay the amount of their change order.

Optimistic and Pessimistic Attitudes

Some final attitudes to consider are "optimistic versus pessimistic" attitudes. Some estimators are real optimists. They see every job estimate through rose-colored glasses. The job will have no problems.

They don't figure labor to pour and finish the concrete because the concrete will just fall in place. They calculate all labor at optimum performance and production rates. This job will go so well-as they see it-that the architect or owner will give the contractor a bonus check when it is all done. When the estimator comes for a job review, the contractor looks to see what they left out of the estimate.

Then there is the pessimist. They come to work looking as if the dog died and the cat ate it. Whenever they look at a job, they can tell you everything that can possibly go wrong on that job. When they estimate the job, they take all possible problems as fact and include money to cover their costs. When they come in for a job review, the contractor looks for all the extra things they have put into the estimate.

The Estimating Enemy is Us

"Well," you say, "I would get rid of people like that right away!" Why? They are you and me, and we are they. Each one of us, every day of our lives, fluctuates between optimist and pessimist.

It's Monday morning and you are on your way to the office. It's 7am, yet you're the only car on the freeway. Your windows are down and the temperature is a perfect 72 degrees. Your favorite song is on the radio and a bird flies alongside your car chirping the melody of the song.

You arrive at your office, and the first thing you smell is freshly brewed coffee. You go by the secretary's desk and notice that over the weekend every expected accounts-receivable check has come in the mail. Everybody that owes money has paid. You go to your office, and there in the middle of your desk is a brand new set of plans and specifications reeking with ammonia.

You open them up and say, "It's great to be alive and to be a contractor in my city." You begin to estimate that job feeling enthused about contracting and your company, because at that moment you are an optimist.

Your Dark Side takes Over

Then the phone rings. It's one of your project superintendents. They started up one of your pieces of equipment and left it in neutral. It rolled down a hill and ran over a little old lady and then crashed. The equipment is totaled out and the lady is in the hospital. You hang up the phone and go back to work.

Twenty minutes later the phone rings again. It's your insurance company and he's calling to inform you that your insurance policy has just lapsed on that piece of equipment. You now return to your bid as a different person. Now you have become a pessimist.

"Oh no," you say to yourself. "This job has got a huge hill on it. We're going to lose 2 pieces of equipment over that hill. And look here's an old folks' home right by the project. We'll send 3 old people to the hospital."

And, so you take your estimate sheets and add 3 brand new pieces of equipment: 1 to replace the one you just lost, and 2 more to replace the ones you're going to lose. You also add in hospital costs for 4 people, the one who's in the hospital and 3 that you probably will send to the hospital.

What's happened? You've gone from an optimist to a pessimist. That is human nature. But, you had better take that fact into consideration because your attitude, and how you feel about a job, will influence your estimate.

Sort out the Reality

When an estimator goes over a job, they should be brutally honest and transparent. They should say, "I really like this job. It would be fun to do." Then others can look at their estimate and say, "OK, what did they leave out?" Or, they should say, "This job stinks. If you want to bid it, that's your problem." Then they can ask "OK, what extras did they throw into this job?"

Remember, estimating is a process. It begins with the normal production rates, and then an estimator massages the labor based on the exceptions. Then they take their estimate to someone else and convince them that it can be done for what they figured. And, finally, they take into consideration attitudes and how they have affected their estimate.