What’s the secret to successful companies in the construction space? It’s being able to tighten your estimates and make the right bids. Joining Eric Anderton is Paul McKeon, CEO of B2W Software. Paul’s visionary leadership has driven continuous, cutting-edge product development and revenue growth. In this episode, he shares key tips on how to land more work and make bids that feed your growth. Paul also shares valuable insights on how to incorporate software successfully to optimize your systems and make better estimates. Stay tuned!
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How To Tighten Your Estimates And Land More Work With Paul McKeon
You can’t build the work until you land the work. You know that is true, which means your estimating has to be on point. That is why I’m excited to have him as a guest on the show, Paul McKeon. He is the CEO of B2W Software, a software package for heavy civil construction companies. During our conversation, we discuss the importance of being detail-oriented, communication of information from the field to the estimating department, and what goes into making an estimator who is successful and able to land the right projects with the right clients so that you build a strong backlog. Feel free to share this interview as you read it with other people who you think may benefit from it. I do appreciate his time, and I thank you for reading.
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Paul, welcome to the show.
Thanks, Eric. It is nice to be with you.
I’m very excited to have you on the show because you work with heavy highway and civil construction companies. I have a number of excellent clients in those areas. You can see the hardhat of Teichert in the back here. It is one of the killer companies here in California. I have a question for you. In your experience, what sets apart the most successful heavy highway and civil contractors from the herd in terms of their ability to land work they are estimating?
It has been the case that over the last several years, there has been an evolution off of spreadsheets onto more formalized systems like B2W Estimate, for example. In a margin pressured space, it is very competitive. There is an awakening or an understanding that the estimate forms the basis for almost a mini P&L for the job. It is the forecast for profitability for the job.
The companies that do put the most effort and detail into their estimating are generally the ones that are the most successful. The ones that take the time to understand, “What is it going to cost me to do this work in terms of materials? How can I go in and use a tool that will help me understand how the bid changes based on different pieces of equipment based on different production rates?”
Taking the time to do detailed estimates and get down to the lowest cost to do the project that is before them is a critical thing. When you are up against someone that is using a spreadsheet, often folks are more throwing some type of a guesstimate or an anticipated unit cost for individual components of work in the bid. That becomes quite erratic and generally not very successful.
What you are looking for then is consistency and the detail of information. What sets apart the most successful companies in terms of how they gather the information necessary to put out a detailed estimate?
Typically, in these heavy highways or infrastructure-type bids, whether it is a private project, a state or Federal project, it is a process of determining what type of equipment you will use, which is analytical. You are tweaking the bid to look at different production rates. It is the process of trying to negotiate the best rates for materials that may be involved in the project. It involves going out and looking to get quotes for a broad range of subcontracted work within the bid.
When you are using a formalized tool that can be done far more efficiently, you can send out hundreds of requests for quotes to subcontractors and material suppliers with literally a mouse click. You get back the information that lets you better understand, exploring who would be the best provider of different services and materials within the bid. At the end of the day, what separates the most successful would be the folks that take the time necessary to do a very detailed job looking at a project.
The companies that put the most effort and detail into their estimates are generally the ones that are most successful. Click To TweetThese bids are often 200, 300, 400 or 500-line items of work on the DOT side, for example. There is a tremendous amount of detail that goes into those estimates. The folks that take the time to explore how they can do the work in the least costly way are the companies that are the most successful, for sure.
As you are describing this, what makes up an ideal estimator from a behavioral point of view in your experience in a heavy civil company?
The best estimators are the ones that are the most detail-oriented. They are patient and highly analytical. They are not in a rush. They are taking the time and have a disposition and a personality that is conducive to being detail-oriented, analytical, and thoughtful. These bids can get into a real flurry at the tail end, with subcontractors often changing their prices and material prices, perhaps changing last minute. Trying to be level-headed, patient, and analytical are the skillsets and personality traits that make the best estimators.
It sounds like also there has to be a willingness or an ability, at least to an extent, to relate to people, reach out to them, and form those relationships where perhaps you are able to negotiate in a successful way, not just analyze a set of documents and draw conclusions from that. Is that right?
Yeah, there is no question about that. Certainly, highly successful estimators and chief estimators have a strong rapport with the folks that they are relying on for equipment, materials, and the various sub-contracted trades. Those relationships do play a critical role in terms of being able to get not just good proposals back but, I will say, timely proposals back. Often, what happens is the subcontractors, material suppliers, equipment companies, and so forth are looking to do business with people whom they have a good rapport and have worked with for a long time, so that is a major benefit as well.
As you work with companies and estimators, you know how it is that someone puts a lot of blood, sweat, and tears into putting together a big bid, and they lose out to their competitor by a very small margin. In your experience, what is the main reason somebody is consistently missing out? Understanding that detail orientation is extremely important. What do you find gets missed the most?
At the end of the day, the thing that leads folks to not be successful in bidding is not getting into the level of detail, trying to do it perhaps too quickly, and trying to do it the wrong way with a spreadsheet, for example, where you are not able to get into the level of detail. The problem that causes is you do not ever fully understand how you could change things within the bid. You do not have enough information to be able to tweak and refine the bid.
That is a big problem. That leads often to a lack of success. Interestingly, conversely, there certainly are times where somebody that uses a spreadsheet and doesn’t use a formalized system maybe successful on a bid but to their own detriment. I have seen some bids where the difference between the low bid and the next bid is pretty dramatic. You can lose a lot of work. In some cases, it is a double-edged sword because you can get a job that you did not fully understand and put yourself in a bad spot.
That is true. As I’m approaching an estimate in your experience, where do the most successful companies start? How do they start getting their arms around an estimate and a project so that they can begin that process of executing an estimate in a detailed way?
What is interesting about the most successful companies that I have worked with is that it is not just around a specific job. They are analyzing what they are going to do on any given bid. There is more that goes into it than just the bid itself. For example, they will want to look at market conditions, their backlog, resource utilization or is there a job that they can bid on where it is going to fit well into the types of work that they are trying to do over the course of the next year, 2, 3 and so forth? There is a more holistic view early on in terms of the market, their backlog, and the type of work that they may feel they need to go out and get. That kind of discussion takes place before the estimate.
That definitely shapes the estimate. For example, if someone has a good backlog and they bid on a project, they may bid it in a way that they have a, “If we get it, great. If we do not get it, that is fine too.” Often, they will win a job, perhaps because somebody else or another bidder or several other bidders has already got a pretty big backlog or what have you. You want to win the work that is going to be the most beneficial for you as it fits into your backlog.
You have to take a strategic approach right at the beginning whenever you are looking at a project.
That is exactly right.
Obviously, every company is different, and therefore, they execute work in a different manner. The best companies are effective at getting the information from the field that they need to shape a realistic estimate. Talk a little bit about how estimators and the best companies facilitate that communication between the field and the estimating side of the business so that they do produce those accurate, detail-oriented estimates.
For us, we have a platform of different solutions for the construction space. Our second most popular tool is a tool that uses B2W Track in the field. That has exploded over the last several years. The critical part there is that when you bid on a project, it forms the basis of a mini P&L or a forecast for profitability. What is critical as the work is being done is that the folks that are doing those estimates are getting some feedback around how their assumptions panned out. When we said that we are going to do excavation at a certain rate of a cubic yard per day and so on, how is that work proceeding? Is it on track? Is it not on track? In our case, those details come back directly from the field into the estimating tool for the project.
Somebody can go in and see, “This is how we bid it. This is what is happening in real-time.” That gives you the ability then to have some real-world experience as you continue to bid on similar types of jobs. You can say, “On one spot, I thought our production would be lower. It turned out to be higher. This next job I’m going to bid on seems similar. That may be an advantage for me in terms of creating a more competitive bid.” That kind of feedback, understanding the difference between how it was bid and how it was built, is vital in continuing to refine your estimating across specific types of work.
Let me take a step back then. Typical construction companies have folks who have been in the business for a long time. Maybe they are comfortable in that spreadsheet environment, and they are old school, so they are wedded to their process. How do the best companies facilitate that technology shift from an Excel-based system to something a little more sophisticated?
It was the case several years ago where a lot of times, the push to do something more formal often came from the estimating team. That is still true but part of the shift is that now, a big driver is a management. Management is more pushing for tools to automate the business operationally so that they can drive profitability and efficiency for the business.
What happens when you get resistance to that?
In the most successful companies that I have seen embraced technology, there is a mandate from management that if they are going to invest the kind of money that is often invested, the teams are going to use the tool. The companies that fail are typically ones where the management might have come along and said, “This is what we want to do,” and then they’ve got tremendous pushback, and it never took hold.
You want to win the work that’s going to be the most beneficial for you as it fits into your backlog. Click To TweetThe truth of the matter is that there is a recognition now that certainly, in the estimating piece, for sure, you have to use far more effective, detail-oriented, powerful tools to be able to do these estimates. There is another component to it as well, which is not only can you do more detailed estimates but in some respects, you can do them, believe it or not, quicker than you could do it with a spreadsheet. Secondly, you can bid for far more work. It is not just more effective bids. It is the ability to bid on far more work than you could possibly do with spreadsheets.
I know that your company is very much focused obviously on software and helping folks with that. As a software provider, why is it that technology changes in a construction company fail?
What happens is there are a lot of times where management mandates the tools, and then they do not continue to force that mandate. That is certainly one contributing factor. Another contributing factor could be that perhaps a company made the wrong decision. We have seen that where they have purchased a set of tools that they thought would work one way, and they did not.
They invest a lot of time, energy, and effort to try to stand those tools up, and they are not going to work for their business or it could be that you buy a set of solutions from a company with those solutions in a general sense could work but for some reason, one critical aspect of driving success with the implementation of software or the adoption of software is the implementation.
You have to be involved with a company that is going to guide you through and take the time to do a very detailed implementation of the software. It is not just the implementation, for example, of the estimating tool. It is looking more holistically around if you were going to use 4 or 5 different solutions that support your operations with estimating, tracking, scheduling, and equipment maintenance.
Those things all touch each other, so you need to holistically understand how do you want them to all work together and what type of reporting and integration with accounting. All those types of things have to be looked at, explored, and planned for as part of the implementation. That is a big driver of success or failure, for sure.
As you are speaking, I’m thinking one of these challenges is that construction companies are presented with software solutions on a consistent basis in a variety of different areas. Your company provides a variety of different software solutions. As an owner of a company, I’m not buying software because I love software. I’m buying software because of what it does for me, what it produces or facilitates. In your experiences, is it better for a company to start small or bite the bullet and go after eating the elephant all at once? What is your experience there?
To some degree, that depends on the company. Beyond the services and the team that is provided by a company like mine to work on implementation, training, and so forth, you want to make sure you have a company that is prepared for whatever it is they are going to embrace. There are certainly times when a company is fully ready to embrace the whole thing at once. There are times when a company, maybe technology, is somewhat new to them, and they want to take a crawl, walk, run approach.
They might roll out 1 or 2 pieces of the puzzle and then plan for the rest down the road. What is critical is that even if they are only going to plan for the rest down the road, we still would want to understand, for example, what is the rest of the implementation going to look like? What are the requirements? That can influence what we do upfront, even on 1 or 2 pieces that they may invest in the upfront.
I understand that. It is interesting because it is such, number one, an investment of money obviously, and a considerable amount of money depending on the scale of the implementation but then also a tremendous amount of investment of time. It is disruptive. What do you do as you are going through implementation to help the construction companies overcome those obstacles and roadblocks? What do you do from the handholding point of view that sets you apart, perhaps from other companies? What insights have you learned?
For us, it starts in the sales process. We use a solution-based selling process. We do not just jump online and show someone our software. We do a lot of work upfront to understand what are the challenges, what type of business are they in, and what problems are they trying to solve. There is a lot of information that is gleaned even in the sales process upfront that is then taken forward with the implementation team.
What is critical is that before you start to implement anything, you try to understand everything. Where implementations fail is when you jump in with both feet, you charge down a path, and you find 10 or 12 different things that you did not fully understand or know that can cripple or ruin the implementation. It is listening to the customer. It is forcing them to take the time to give you the information that is needed to do an effective rollout. We have a milestone-based implementation where we are not going to let someone get to the next milestone until they have finished the current milestone.
It is guiding them in a detailed way and forcing them to think critically around what it is they are trying to accomplish. That is vital. At that point, when you get to the training, then you are training people, and they are looking at the software and information that they are familiar with, ease of use is a big part in terms of how they use the software but they are looking at information or reporting, for example, that is familiar. The integration with accounting software has been all mapped out and implemented. Again, it is taking the time to be thoughtful and thorough before you jump in with both feet and drown.
What are red flags for you? Let’s say you are working with a construction company, and from a niche perspective, they are a good fit. In other words, your software can help them but there are red flags from a management or leadership perspective that tell you that, “We could take these guys’ money, and we could go down the road with them but it is not going to work.” Tell me what some of those red flags are.
One key component is that management fully embraces is going to drive and mandate that these tools be used and used correctly. The red flags that we would get in the implementation process early on would be somebody trying to rush the process. Sometimes, it is difficult. You have people that do not want to make some level of change or they see that things have to be done exactly as they think they should be done when, in the course of rolling out something like our tools, that would not be the right way to do it. Those are the red flags where people start to not perform in terms of providing the right kind of information, the right detailed information. They do not get pushback from management to say, “B2W knows what they are doing. We need to follow their process if we are going to achieve success.”
It is interesting because I’m picturing you going into a construction company where you’ve got a bunch of A-type personalities. As the software provider, you have got to step up quite a bit and let people know when they are going down the wrong path and say, “This is not going to work if you go this way.”
That is very true. That was a learning phase for us. The growth of the company too is to understand that you have to get buy-in from management. There have been times, even in the course of the sales process early on, where a company’s copy may generally be in a space that certainly is a good fit for our software but they have such an unusual workflow in such unrealistic expectations that we won’t take the business. That is important. The bottom line is if a company fails with our software, that is ten times more impactful than if they are successful. We need to make sure that we are driving companies to success with the tools.
I would imagine from a sales perspective, there are times where you have to be able to walk away from a deal to best serve yourselves as a software company but then also maintain your reputation in the industry.
Yeah, there is no question. There certainly have been some processes that we have been involved with large companies where they have such unique expectations and requirements that are not standard. There is a desire to want to move the software in a direction that it is not designed for. Sometimes, pretty deep into the process, we will ultimately say, “This is not going to be a good fit.” We are going to respectfully bile out.
With that in mind, what advice would you give to a construction company CEO in terms of how to identify a software company that is a good fit to work with them?
You should talk to multiple vendors and get a sense of even beyond what their software will do and not do and how someone else’s software might do things differently and better. Click To TweetIn the heavy civil construction space, I would say there are maybe three or so potential vendors that you could choose from. All of those vendors certainly have products that are feature-rich. They have somewhat of a similar group of capabilities. Another aspect beyond the fit of the software is the fit culturally of the team.
You should talk to multiple vendors and get a sense of even beyond what their software will do and not do and how someone else’s software might do things differently and better. Is the company a good fit? Do you feel good about the company? Do you feel like it is going to be a good partner? At the end of the day, I tell folks, “You are not investing in software. You are investing in a partnership. If the partnership doesn’t feel good upfront, that is probably not a good sign.”
Taking another step to the side here, regardless of the software that I might or might not choose, if I’m looking at my company at the moment and either I’m landing work that I bid poorly on, and I’m losing money on it or I’m missing out on some bids that I would like because of a couple of points here or there, how can I immediately begin to take action to improve my estimating?
It would depend on what you are doing and your estimate. There are a lot of factors that go into the success of an estimate department. There are certainly the people. There are cases where people have done it a certain way forever, and they just do not want to let go of how they have done it. That is generally not a good sign.
At the end of the day, if you do not have the right tools, you are not going to be successful. You are not going to go out and dig a hole with an asphalt paver. If you are trying to use a powerful tool for the wrong problem, you are not going to resolve it. Folks ultimately have to come to the fact that you have to do things in detail and be thoughtful to be able to bid effectively.
That is going to help you understand which job you shouldn’t take and help you do better in the jobs that you want and need, the more successful you get. Success breeds success. The companies that are the most profitable are the ones that have a big backlog. They are estimating is successful. They build a big backlog.
They are able to be picky about going at the jobs that they want and strategic around continuing to keep that backlog pretty full, so they are maximizing the profitability, which involves a whole host of things like cashflow analysis and the work that is on the books by phase code. It involves resource utilization for bidding on big work. I know that in six months, with all the work that is on the books, we do not have enough dozers or we need a different crane. All those pieces of information shape how you will bid a project and, frankly, whether you will bid a project.
I really appreciate that. Tell us a little bit more about your company then. What is it that you guys do for construction companies?
At the end of the day, what we do is provide a platform of tools. It is called the ONE Platform. Those tools handle a range of workflows outside of accounting, which start with the estimating piece of it, picks it up in the field tracking component, B2W Track, which allows folks to be in the field and collect information about the production, labor usage, equipment usage, and material usage.
Those tools are giving, for example, the foreman instant feedback around how they are doing on the job each day based on the estimate. They can see that the minute they complete a field log, automating the payroll, everything goes automatically to payroll. It is giving you a tremendous amount of information to understand how is the project going day-to-day and what do you need to do to bring it on track if it is off track or what you can do to drive an even higher profitability than you had perhaps originally intended.
We take it from there with our scheduling and dispatching tool, where that tool is essentially helping you manage all the equipment moves and the material purchases. It is a powerful tool that is, with the click of a button, notifying all the employees around what job they are going to be on tomorrow, where and what time, notifying the form and a project supervisor automatically that a specific piece of equipment is going to be coming off the job tomorrow morning at 7:30 or you will be receiving another piece of equipment. There is tremendous detail.
The uniqueness of all these workflows is that they are all shared in a common browser-based platform. It is one platform that supports all these workflows. You do not have disparate windows systems that do not integrate. We pick it up with equipment maintenance. It is a powerful tool that helps you essentially drive equipment uptime with proactive equipment maintenance and repair.
Again, in terms of the sharing of information real-time across this platform, if someone in the shop, for example, says that next Tuesday, they are going to take those are number 36 down for repair for the day. The folks that are scheduling work know that piece of equipment is not going to be available. The way in which all of these workflows are sharing information in real-time is a real driver around awareness of what is going on. The final piece for us is that we have a tool for allowing folks to go paperless.
Let’s say another part of the platform that lets folks go in and customize with our help safety forms, where they can create their own safety forms or use safety forms that are more standard that comes from us. It collects all that data. It all becomes reportable in terms of KPIs and reporting. For example, if a foreman were using that component in the field and they said on a form, there was an injury, they select injury and hospitalization simply by selecting those two things. It sends an email and/or texts to a range of people that you have previously defined. Again, creating a tremendous amount of awareness across the enterprise drives, at the end of the day, more efficiency and higher profitability.
When people engage with you, where do they typically begin? Obviously, you described the elephant.
I would say that 90% of the companies that get onboard with B2W buy our estimating tool. There is another huge percentage that will buy the estimating tool and the tracking tool because there is such synergy between those two directly. It goes down a little bit as you get to folks that will also, at the same time, upfront invest in scheduling maintenance and inform but that is growing the number of people that are basically diving in and getting all of it is going up dramatically. There is a whole number of reasons why that is true. For our company, we have deepened and broadened our offerings significantly in the last several years. They are powerful, feature-rich tools, a huge focus on ease of use, which is critical in the construction space.
We have a powerful mobile stock where you can take a tablet, go out in the field, and do all these different workflows. By customer demand, we have another component that we released, which allows folks to even capture time in production on a smartphone for people that aren’t working, perhaps directly on a crew.
It could be folks that are out working at the plant, the quarry or someone that is on a project running a greater for the day but they are not out there in the context of a crew. They are out on the job on their own but it gives them the ability to put in their production and time, which gets instantly sent to the office and is approved. That becomes the basis of their payroll. Those costs roll into the project as well. It is powerful and flexible. We unveiled that at our user conference in California back in February 2022.
You said that people are embracing more than just the estimate or the schedule part of your offering for a variety of reasons. Can you give me a couple of those reasons because again, I’m thinking that as a construction company owner, there is a tremendous amount of work involved? The more that you take on, obviously, the more work that is involved. What are some of those reasons that people are deciding to do that?
First of all, we are understanding what the business challenges are. What do you use for tools now across those workflows that I defined? We can understand where there is the opportunity for them but at the end of the day, what happens is in a presentation, which will typically, if not almost always, include all of our tools. They see the synergy around all of these workflows.
The growth of the company, too, is to understand that you have to get buy-in from management. Click To TweetIf you have estimate, it instantly feeds to the field. Field instantly feeds back to the estimate. If you are in the field and you have a piece of equipment that goes down, you can create, using the field tool, a repair request for the maintenance division, which with a single mouse click goes to the maintenance product, a third workflow.
As that particular request is being scheduled by the team out in the garage and the maintenance team, that schedule is instantly updated back inside of fields. They can see I reported this problem on Tuesday. Wednesday, they can open up the software. The good news is it is going to be fixed by Friday morning. With scheduling, if you are using our scheduling tool and someone is scheduling the equipment moves, the crews, and the production targets for the work that is going to be done across all the jobs tomorrow, somebody in the field that goes to do their field log for the day, “I’m on this job. What phase codes am I supposed to work on? What is my target production? What does my crew look like?” They click one button, and it gets all that information from the scheduling component. It motivates folks to want to embrace all of it. It is 1 plus 1 equals 5. There is so much synergy, information, and situational awareness you get from using all of them that it becomes very powerful.
As I’m thinking about long-term improving my estimating department, I have listened to some of the advice that you have given here, Paul, and it has been right on point. What are 2 or 3 action items I should take right away to begin to up my game and improve my hit rate with the right projects in the right locations?
You need to look at how you are doing. In some regards, you probably need to look at who’s doing it and how you are doing it. If you are consistently not winning work while you are winning work that is not profitable, there are only two factors that go into that, the people that are preparing the estimates or the tools that they are using and/or the way in which they are using the tools. I would take a holistic approach and try to understand, “Why are we failing? Why are we not doing as well as we could do?” With that, understanding that, “How are we going to improve that?”
It may involve having to deal with telling folks that work in estimating, they need to do things differently. It certainly could involve using a different tool if they are using a spreadsheet that is generally not going to lead to success. It is trying to understand, “Why are we not being successful? Is there some coaching for the team that is required, and/or is there different technology that we should be using in a different approach to drive better success?”
Paul, I appreciate your time. Let the readers know how they can get ahold of you.
B2W Software, you can go onto our website. You can get all kinds of information there. You can schedule a demo. You can go in, see videos and testimonials and wee about all the different workflows that we support, see videos and how that software works. That is a good start. You can call us on our 800 number and talk with the sales folks. They will be happy to help in any way they can.
Paul, I appreciate you taking the time to join us.
It is my pleasure. Thank you very much.
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Thanks again for reading. I trust you enjoyed my interview with Paul. There are a number of takeaways there in terms of how you can improve your estimating not only from a technology point of view but also from a process point of view and a people point of view. Make sure you have the right people in the right positions who are detail-oriented and are able to build relationships with vendors and others so that they can maximize the effectiveness of the estimates that they are putting out for your company.
If you have any questions about the show, feel free to reach out to me anytime. You can go to my website, ConstructionGenius.com/contact. Feel free to give us a rating or a review wherever you get your podcasts. If you have suggestions for topics or guests that you would like to be on the show, reach out to me. I’m always open to suggestions. I appreciate you reading.
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About Paul McKeon
CEO Paul McKeon founded B2W Software, and his visionary leadership has driven continuous, cutting-edge product development and revenue growth. Paul is intimately involved in all aspects of the company and inspires passion, ownership and excellence throughout the team.
With an extensive background in the construction industry, he plays a major role in shaping a responsive, client-driven product roadmap. He also mentors the Sales organization on a solution based selling model. Paul and his wife Jessica have five daughters. In their spare time, they enjoy boating, golfing, travel, the arts and music. They are also major philanthropists in the New Hampshire seacoast region where they live.
