Focus on Estimating: Don�t Underestimate Cost Controls
Designing �value� into plans has become the prime product development strategy for builders, regardless of price point.
The consumers coming back into the market are
requiring builders to provide product that is BOTH cost effective and have a high level of appeal. The success of this effort depends on how well cost controls are integrated throughout the design process and followed
through to actual contract executions. It takes the early involvement of experts in the estimating/purchasing fi elds to make this a reality. At BSB Design we see the need for a better integration of these cost control experts
throughout the process.
Shrinking staffs and lower overhead has meant many builders have had to drop their
estimating staff, leaving them exposed and at the mercy to lump sum contracts. After reaching such overhead effi cient positions,
replacing these key positions is not likely going to happen anytime soon. However, the time to reposition product is now.
Don’t hesitate on making the right product decisions because of staffing and don’t become over-exposed to having your cost controlled by contractors/suppliers with conflicting interest. Utilization of a disinterested 3rd party allows you to incrementally protect your cost interest while maintaining the efficiency of your overhead. The sharpest pencils will be with those that have an interest in overall accuracy of your take-offs without regard to material or labor sales.
Time is Money
With the market recovery comes greater competition and pricing pressures. It is essential to have a quick turnaround time on estimates, capitalizing on and protecting market positions.
Control Equals Success
In this building environment, controlling costs is essential. It is virtually impossible to manage cost without knowing the quantity of materials and labor needed to build your projects as drawn. The better the Bill of Materials and the more the builder knows about what the total cost of ownership is to their end product, the more likely the builder will
be successful at forecasting and controlling their costs.
Having the Right Tools
Effective cost control means providing a product that is highly marketable at the right price. Designers should work hand in hand with estimating/purchasing to make the right decisions along the way, confirming design intent, meeting market objectives and remaining on budget targets.
More is Better
Estimating in stages offers degrees of knowledge, based on the stage of design. The earlier you start in the design process, the more confidence you will have in the ability of the design to hit your cost target. The easiest way to save money and protect the integrity of the product is making adjustments during the earliest stages of design and remaining focused throughout the process.
Move forward with Confidence, not Guesswork
Be confident the designs you have (or create) will hit pricing targets, the margins you have forecasted are achievable from a cost prospective and you’ll be able to accomplish the product repositioning you’ve identified. By introducing reliable data early in the product development process, you are protecting yourself and your bottom line with better decision-making, based on REAL DATA, not guesses.