What is a commercial estimator? 

It’s pretty straightforward. A commercial estimator reviews all drawings and documentation provided by the client. From there, they create a cost register with trade breakdowns.

They also meet with the security manager and project manager to discuss any details that might increase the project cost.

In addition, they include preliminary costs (usually directed by others, such as site managers) and apply a margin (typically set by senior management).

And that’s it, the construction cost is calculated.

What happens if a commercial estimator doesn’t do their job properly?

The consequences generally lead to one of two outcomes: over-estimation or under-estimation.

– Over-estimation: the builder may lose tenders, meaning thousands of dollars spent on the tender process (including time from estimators, project managers, and services managers) are effectively wasted.

– Under-estimation: the builder may not have enough budget to complete the construction works, which can result in financial losses for the company.

Side facts

– Sometimes a project runs out of budget not because the estimators made a mistake, but because the delivery team failed to manage costs effectively. However, if no one investigates the root cause, estimators are often the ones who get blamed.

– In most cases, if a builder makes a profit on a project, the credit goes to the delivery team, and they may even receive bonuses, while the estimators receive little to no recognition. On the other hand, if the project loses money, the blame almost always falls on the estimators for not doing their job properly. 

Challenges

– Lack of time. Completing multiple tenders within 3–4 weeks can be stressful because the time spent on preparing cost registers is not evenly spread throughout the process. The days leading up to the due date are especially busy. For example, most quotes arrive about five days before the deadline, leaving only two to three days to review them and go back and forth with contractors to amend quotes.

– Lack of resources. Preparing cost registers does not generate direct revenue for the business, and the chances of getting no return on the resources spent are high. As a result, management often prioritises allocating resources to the delivery team rather than the pre-construction team. 

Factors to win tenders

– Picking the right project increases the chance of winning a tender. It is common to see that, out of 13 builders submitting tenders, only four are shortlisted. Reasons for rejection can include lack of insurance, qualifications, or licences.

– A comprehensive cost register. Too many numbers and line items can make a cost register messy and hard to manage. If an estimator lacks the housekeeping skills to organise the register properly, double-ups can occur, and it can be nearly impossible to locate them, leading to over-estimation.

– Tick all the boxes. Simply provide whatever information the client requests.

– Present well in front of the client. When shortlisted for an interview, prepare thoroughly by reviewing all documents. This is probably the most important factor in winning a tender.