Giving Away My Legos

I left my boss’ office feeling totally deflated. That morning, I was ecstatic to learn that I would be part of the estimating team on a large and “nasty” highway widening bid. We were up against stout competition, and this was a target bid for us. It was fraught with phasing, risk, and complexity and would take years to build. We had 30 days to put it all together. I was honored to be included and assigned to what I believed were some of the toughest items of work, especially given that I was young and new to the company. I tried to mask my displeasure when told that another, more seasoned team member would be preparing a separate estimate on “my items”. Lacking in both experience and maturity, I took this as an indictment of my ability though it was explained that these items were so critical that we needed multiple eyes on them. I didn’t want to give away my Legos. This was wrong. We were second on the bid, I learned a ton during the process (ironically much from the person I was so worried about encroaching on my territory), and I later realized how much sense the two-pronged approach made for the company.

Photo: Britanica

When resources permit and depending upon a variety of factors, it makes sense for highway contractors to have team members put together multiple, independent takeoffs and cost estimates for critical items or even turnkey bids. There is no perfect formula for when and how “doubled up bidding” should be implemented, and contractors should use their discretion.

What value can this create?

• Foster creativity, debate, and healthy competition amongst the broader team that inevitably leads to a better bid.
• Risk minimization because two people are less likely to make the same mistake or miss an important detail as one.
• People are instinctively more on their game when they know their work will be compared to another’s.

Which items or bids might best fit the profile for consideration?

• Atypical work in size or scope for the company.
• Critical or “must have” bids.
• Work involving high liquidated damages or A+B.
• Design-Build and/or Public Private Partnerships (PPP).

Concerns and Mitigation Strategies

• Double Work: Waste potential exists. For “bread and butter” work, doubling up may not be the best use of resources.
• Disagreement: Team members can be fervent in their beliefs or approaches. Debate is encouraged. Still, time is of the essence and cool, humble heads prevail. Everyone at the company is on the same team.
• The Hangover: When twice the amount of people work on a bid and it is lost, the deflation can be twice as strong. Celebrate effort and focus on what you control, not necessarily the bid results entirely.
• No Peeping: Independent means independent and there should be clear guidelines around internal information sharing, privacy, and process between estimators and/or estimating teams.
• Resources: This strategy favors the larger contractors with more robust estimating staffs. Teams and bids should be assessed with common sense and there is no one-size-fits-all prescription.  

Construction is about transference and management of risk. When risk gets out of balance, things go awry. Refer to the financial statements and earning calls of almost every large, publicly traded heavy civil contractor involved in Design-Build and/or Public Private Partnership (PPP) highway work in the United States from 2016 to 2020 for examples of what this looks like. Hint: It’s not pretty. Double estimating has its place in highway bidding and can help manage risk and create value in the right applications.

Thanks for reading. At Edgevanta, our proprietary SaaS platform enables highway contractors to track and forecast critical market dynamics and increase the predictability of the project acquisition process.

Sincerely,

Tristan Wilson

CEO and Founder

Edgevanta, LLC

‍