Have The Right Structure of Your Estimating/Tendering Department

Estimating, contrary to its dictionary definition “an approximate judgment or calculation as of the value, amount, time,size, or weight of something” (http://www.dictionary.com/browse/estimate), is now a more precise and accurate process of evaluating the cost of a proposed project. Mega projects such as airports, harbors, skyscrapers, railways, dams etc requires a combination of planners, quantity surveyors, contracts specialist and estimators to produce a fully conforming bid to the client, in a limited timeframe, leaving no room for errors for the contractors’ to bear loss later.

In order to synchronize the time and resources available for a bid/tender, two distinct hierarchies have been observed in different multinational companies. Pros-cons of both will be discussed briefly below:

Scenario one:

This is the case when Company has a pool of sharing resources, mainly; Procurement, Quantity Surveyors, planners and Contract Personnel’s, a manager heading each department, providing services to Site and pre-contracts (or estimating/tendering). Personnel reporting to each heads are shifted as per the needs and at the discretion of their respective managers.

Chief Bid Leader and Chief Estimator simultaneously heads a bid, reporting to pre-contracts manager (or Estimating/Tendering Manager). Bid leaders are either site experienced project managers, who are waiting for their next project to be won, or permanent staff of pre-contracts but with extensive site experience.

Once a Tender is assigned to a bid leader, an estimator is assigned by the chief estimator; and other team members gets assigned from various supporting departments; a procurement team , a QS or two, a planner, a commercial personnel and a technical team with engineering input. As we all may agree that estimator needs the input from procurement, Quantity surveyors, technical, planners and commercial/contracts personnel’s to incorporate the cost impact in his/her estimate.

The whole team is then monitored by bid leader and data is being fed to estimator, until final bid is ready. (Apart from the estimate, it would also require some specific submission documents such as , company profile, methodology of work, bonds, etc).

Pros:

• In the event of multiple tenders, resources are shared and there is potential cost savings to the company overheads.

• Responsibilities and accountabilities’ are shared by each departmental head.

• Reasonable site experience is gained by most of the staff, which is crucial for estimates.

• Since, Project teams are involved in the process, hence, the mistakes in estimates, which traditionally are dumped over the estimator, are usually gets a shared blame and personnel on site gets to understand the estimating constraints.

Cons:

• Two hierarchies are formed, that is, reporting to bid leader and to respective departmental heads, which cause friction in smooth flow of the process.

• Staff allocated by various departmental head may get replaced in the middle of a tendering process and replaced by someone new, which could be detrimental for the tender.

• Estimator suffers the most, as he/she has no control over time lines of receiving quotations, getting the take-off, design constraints, planning constraints on time and hence, all of that could land him/her into severe trouble, if the information is not received or not received on time.

• Bid leader finds it difficult to control the personnel assigned and dually reporting to their managers and finds it difficult to achieve the tender programs deadlines.

Scenario Two:

In this formation, Estimating Head works with his/her unique team of estimators, Quantity surveyors, planners and submission personnel and prepares a bid. Bid leader would be none other than the Senior Estimator, to whom the procurement, planning, QS and technical staff reports too. (Including the staff responsible for submission, secretaries and assistants).

PROS:

• Estimator is solely responsible of all the aspects of the bids. He / She will be acting as a subhead of his team and will manage the tasks as per the strict time constraints.

• Team members are permanent to estimating department and can work with piece of mind on a dedicated tender. They will adjust to the estimating processes and will work more confidently and objectively.

• Internal review meetings, external meetings with sub-cons/suppliers can be done with smooth synchronization of work load of each team member due to a single form of reporting structure.

CONS:

• Additional Overheads to the company, for a dedicated staff, which cannot be shared, ideally.

• Friction between the allocation of work and workload constraints from senior managements due to Overheads increase and presumed less productivity/profitability.

• Sole Responsibility/accountability is on Estimating Head, who should be an experience personnel in the field. Lack of experience can bring about disastrous consequences later.

• Project Team, as always blames the estimators for the mistakes, who are unaware of the tendering process, the time constraints and client/consultants pressures during the process.

Personally, the later option is what I found more productive, result oriented and bore less errors in estimates. However, there might be other more successful options, and are welcome to be shared with other.

As shared earlier, estimating department is the key to your business success, nurture it well and reap the benefits.