Changing the game in estimating can be a pain in the neck but utilizing gathered information will help strategize and turn the tides in the business’ art of war. In this episode, Melvin Newman, the President of PataBid, accentuates some key points to nail your estimates and win the right projects, clients, and locations. He also captures the value of socializing the estimates in your organization to be creative in increasing hit rates and winning more work. Melvin also shares his insights on how time inversion impacts the hit rate of a contractor in winning the work. Let’s dive deeper into this conversation with the estimating genius Melvin Newman!
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Nail Your Estimates: How To Use Information, Creativity, And Collaboration To Win More Work With Melvin Newman
Estimating is part art, part science, and a pain in the neck. The beginning of success for every construction company is nailing your estimate. That’s what we’re going to talk about here on Construction Genius. My guest is Melvin Newman. He is the President of PataBid, and he knows what he’s talking about. He has over fifteen years of experience as an estimator and project manager in key aspects of construction and prefab in the mechanical, electrical, and general contracting industries.
The good news is Melvin knows what he’s talking about. You’re going to pick that up right away as we dive into all things estimating. Enjoy this conversation. You want to tune in to the whole conversation. There are tons of great gems in here. One of the things I like is talking about socializing an estimate in your organization and getting different parties involved in looking at a bid so that you can bring the creative genius of the whole organization to bear on an estimate. You can increase your hit rate and win the right projects with the right clients and the right locations. This is going to be killer. Tune in to this interview, enjoy it, and share it with other people. Thank you for tuning in to Construction Genius.
Melvin, welcome to Construction Genius.
Tell us a little bit about yourself and your background, please.
Was born in Kenya, Africa. That’s one that throws people for a loop. I started my career in construction in Eastern Canada. I’m working as a project manager. I like to say I worked my way up into estimating because it was on the second floor of the company that I was working for at the time. I spent about fifteen years working in construction estimating. That has been a fascinating experience.
During that time on my first day in estimating, the chief estimator walks over to my desk and drops about 50 pages of takeoff, a red book all prizer, a NAPHCC Labor manual, a calculator, and a pencil. He says, “Your job is to extend this.” I’m looking at this and I’m like, “It’s 2010 or 2008. What are we doing here? Computers have been around for a long time.”
He looked at me and he was like, “Do you think you can do better?” At the risk of sounding arrogant, because I’m a 21-year-old, I was like, “This could be better.” This guy was absolutely brilliant when it came to construction, but the technology was not his strong suit. I got introduced to what could be done in construction at that moment. I stayed in estimating like I said up until last year. During that entire time, my focus has been on let’s try to bring technology, especially into estimating. Let’s try to change the game there.
What attracted you to estimating, specifically having started in project management?
To be fully transparent, I am not a fighter. I’m not the guy that likes to walk in and yell and scream at the client, the suppliers, and everybody all at once. It was necessary. I did a good job at it. I just didn’t enjoy it. On the estimating side, everyone is your friend. They want to get carried, but then once they get awarded the job, everything changes. We all know how that game is played.
Estimating is a fascinating statistics game. It’s all numbers and I love crunching numbers and big data. When I was in high school, I wanted to go through for software and that sort of thing, but I went through the dot-com bubble. My dad was a mechanical engineer. I went to him and he’s like, “Son, they’re always going to need to build things.” I went into construction but brought a lot of that software tech desire and ambition with it in estimating specifically, the stats and the data, like what you can do to refine an estimate and the whole strategy. You’re talking about the Art of War in a microcosm. That was what drew me in.
Let’s talk about that a little bit then. As you look at an estimate, and this may vary from project to project, what are the key statistics that you are looking at? What are the key data points that you are looking at that can help you to get insights into your strategy?
The first thing you do is open the front end. Especially if you’re in one of what I call the complex trades, so mechanical, electrical, and fire protection. Your first step is you have to open that front end. For a lot of companies, this is where they screw up. They think, “I’m going to skip right to Division 25 and Division 26. I’m going to go right to my spec.”
You’ve got to read the very front end, the tender, and find out what the schedule is. There are a number of projects I’ve bid on where a sub to me skipped over the schedule and I’m talking to an earth mover. I’m like, “You know this is happening in January and this is Canada.” You’re not going to be digging this without some major equipment here to break up the frost. That first thing is the schedule.
It sounds like you’re talking about getting a feel for the project. Is that what you’re saying?
100%. Before you do any takeoff, go through the documents. Flip the drawings. One of my favorite tasks with my estimating teams was always whenever a new tender opportunity came in, we would lay the drawings out either on the screen or heaven forbid, paper. We lay the drawings out and gather everyone, the admin assistant or anybody who was walking by. We do a drawing flip and everybody would then write down on a sticky note what they thought the project was worth. We put that up on a board.
At the end of the day, whoever was closest to that would get a drink. If we won it, it might be a nice drink. If we didn’t win it, it was a bottle of water. That’s the get engaged, understand the project, and understand a lot of the key front-end risks before you even start to put any takeoff in. The thing that people don’t necessarily realize is every problem on that project from health and safety through finances is committed to in that first estimate. If you don’t understand that diving rate, you can set up your company for a world of hurt.
It’s interesting. What you were saying there is that you would socialize the estimate with all people who might be involved in helping out putting the estimate together. Is that right?
100%. Even not necessarily putting the estimate together. It’s always best to get as many eyes on it. You never know what somebody is going to see. You never know what somebody’s feeling is going to be. At the end of the day, the PM is responsible for that estimate. If you engage everyone on it, it’s that esprit de corps or the team environment. All of this is to build toward that day of closing. We all know that day of closing is the utter gong show. It doesn’t matter what you’ve done strategically. Something always goes wrong on the day of closing. If you’ve got the team involved, it makes that far easier.
Why do you think some companies struggle to get the team involved?
In personal experience working with a number of different companies, not a lot of companies realize it’s a team. There is a tremendous amount of us and them in construction. Especially when it comes to estimating. The project execution group tends to view the estimators as and this is a whole other thing. A lot of companies put the junior people in estimating first. That I feel is an abject disaster.
They see a lot of when something succeeds, it has got to be the project execution team. When something fails, it has got to be the estimating team. There are a lot of conflicts that can arise from that. If that’s not nipped early and taken out, that can build a culture that’s very poisonous to building a good estimating environment.There is a tremendous amount of us and them in construction, especially when it comes to estimating. If that's not nipped and taken out early, that can build a poisonous culture in building a good estimating environment. Click To Tweet
You open the front end. You start socializing the project and socializing the plans. As you open up the front end, the schedule is something that you have to take into account and the physical location like you were mentioning there. What are some of the other things that you’re looking for to make sure that you have a good understanding of as you’re putting your number together?
Access is a huge one. Simply getting to the workplace. If you’re doing residential, typically access is not a problem. It can be if you’re walking into a major developer that’s doing a whole neighborhood at once. That’s a consideration. When you’re walking into those neighborhoods, the time of year is huge. If it’s going to be all a mud bath while you’re trying to get to the house that you’re building. That’s a challenge.
I bid on one of the tallest buildings I’ve been in my life. It was 68 stories in Edmonton. The company that won it, unfortunately, hadn’t built anything over ten stories before. Getting to that workplace, the first five stories are going to go brilliantly. When we worked it out, I worked with a phenomenal team of people out of Toronto who had been in construction for decades. When we sat down and looked at this, it was like, “By the time you break the 10th story,” I’m not sure if you’re familiar with MCAA, The Mechanical Contractor Association of America. They publish actual documents on factors that you have to account for when you’re going up.
When you get to floor 68, your productivity is going to be 2 to 3 hours a day at best. You’ve got to get materials there. All of that material is coming after hours because these buildings are being built downtown. You never have access. The crane is booked 100% of the time from 6:00 AM to 6:00 PM by the concrete guys.
Your materials are being delivered to the floors at 2:00 in the morning. These are all massive risks that aren’t even necessarily detailed. That’s why going back to socializing the estimate is huge because somebody in your company has experienced this before. It doesn’t matter what size your company is. If your company is small, maybe don’t dive into a 68-story building initially. Outside of that, somebody has done this before in your company. Find them.
That’s excellent. It’s so interesting because you’re looking at a 68-story building and you think one floor is like the next, but the higher you go up, the more that the dynamics change.
Simply riding the man lift because the elevators aren’t working. When you’re building this thing, the elevators aren’t working. If you’re lucky, the GC has put two-man lifts on the building. More often than not, they only put one. By the time you get to your workplace, you can spend an hour and a half riding that man lift up.
All of these are fascinating. We all like to talk about massive projects, but it doesn’t matter. You could be building one small residential house as an owner-operator. The scale of the risk of access is the same. The raw value if you screw up on the job if you’re an electrical guy or the GC might impact you to $100,000. Whereas the guy who screws up on that 68-story, that’s a $100 million.
If you look at the percentages, they’re invariably within the same window. It doesn’t matter the size of your company. You have to consider this when you walk into the estimate. This is something that I struggle with a lot of the trade schools in North America. They don’t teach people coming out of the trade schools even what these terms are.
You get these electricians, these concrete guys, and everybody coming out of these trade schools, and they’re incredibly good at their job. They know what they’re doing for the installation, but then they want to go start a company. That’s where they end up in a lot of hurt because we don’t teach these people what these risks are. Access, liquidated damages, what’s the impact on the schedule, and those sorts of things.
Where do people waste time when it comes to estimating?
It’s my favorite term. The time inversion.
Tell us about that.
When you’re doing an estimate, you have to do the quantity survey. You have to count everything. This is especially relevant to those complex trades, the mechanical, electrical, fire protection, and building automation folks. Building automation guys have it particularly rough because they’re given a design. Everything they’re installing is proprietary. They have to make it up on the fly in the two weeks they have to bid on it.
Let’s say you’re the electrical contractor. You have to count everything on that project. If you look around your room, you can see you got to plug in. What you see is a face plate and something you plug into. Behind that, there are boxes, screws, wires, and connectors. All of that has to be accounted for. Electrical is the worst trade when it comes to this level of complexity. You go through, and I ran the analysis on this because I started out in an MEP company, a company that specialized in mechanical, electrical, and plumbing.
I ran an analysis of the estimates that we were producing there. I realized that 85% to 90% of the time we spent on those estimates was counting widgets. At the end of the day, when I took all of that in on a project where we were buying the equipment and buying the pieces out, everything that we had counted was only worth 25% to 30% of the job. I’m like, “We’re spending 80% to 90% of our time estimating on the not high-value aspects of this.”
You have to do it. You have to go through and quantify these things, but we’ve got to find a better way to do that. That’s where the inception of PataBid came from. What we do is try to develop the technology to invert that time inversion. That 80% to 90% of the quantity survey time that you’re spending can be reduced to maybe 30% to 50% of the estimate. Now you can go out and negotiate those packages better. You can talk to your sub-trades. You can go meet them because you have time. You can take the schedule to them and get a common understanding of what the work involves.
Let’s talk about that because it’s interesting. The idea is that the takeoff and understanding of the drawings can be a very technical thing but it’s also a very intuitive thing. You bring up something very interesting. If I can claim back some time, then I can do a better job communicating with other subs and with other trades so that I can get a more accurate estimate. Tell me how that time inversion impacts the hit rate of a contractor in terms of winning work.
When you’re literally throwing time out the window, when it comes down to that closeout, everything at the end of the day in the estimate revolves around that closeout. You will not have the time to properly ascertain the risk, to properly understand all the quotes that are coming in, and to prep for all of that. It will fall apart. I’ve watched it happen many times.
The thing that kills is when you have two awesome opportunities come in. Now what? You simply don’t have the time to commit to that takeoff in parallel. What invariably happens if a lot of contractors is they’ll try. They end up doing a crap job on all of them, and it comes to nothing. Now your hit rate tends to zero. You’re talking to probably one of the craziest guys in construction who loves estimating because of all of this.
If you don’t have that time to properly tackle multiple estimates coming in, we’re in a time period where construction is flourishing. It’s incredibly difficult. We’ve got massive supply chain issues still. We’ve got ongoing insane labor issues, but the actual projects aren’t stopping. You will get multiple requests for quotes. Our clients that we deal with on day-to-day are telling us this. They get multiple opportunities to bid. How do they choose? If we can’t fix that time inversion, your hit rate is going to suffer for that, and the jobs that you win are going to have a subpar estimate done. That is incredibly dangerous from a corporate level.It's difficult if you don't have that time to tackle properly multiple estimates coming in, and we're in a period where construction is flourishing. Click To Tweet
I pictured that, you’ve committed to an estimate and maybe not the cherry project that you’re looking for. All of a sudden, another project comes on your radar but you can’t do it because you’ve already sunk time and effort into that one. You can’t flip the switch and take that one on as well because you don’t have the time.
If two show up on the same day, that’s a golden opportunity. That never happens. What always happens is less than optimal one shows up, and you work a week on it. You’re 30% into its three-week bid period, then another one lands. It’s for you’re A-team clients. It’s an A-grade project, but the problem is you can’t ditch the other one because you’ve got relationships built on that. Now you’ve got this relationship that you end up in two must-bid situations. They’ll both invariably close within a day or two of each other.
In your career as an estimator, how did you build and maintain relationships with your project partners in terms of negotiating the different packages, and negotiating the different aspects of an estimate so that you could, on the one hand, get the best number for yourself but on the other hand, support your project partners, and build that mutually beneficial relationship?
It was a bit of a development. Initially, in my career as that young upstart who should have kept quiet so people didn’t know I was a young upstart. Instead, I opened my mouth too often. It developed over time. What I found works well is to get ahead of your partners. Get as far ahead of them as you can. I had a tremendously farsighted and brilliant manager out of Ottawa when I started my career. His name was Tony Dolan.Get ahead of your partners. Get as far ahead of them as you can to build and maintain a relationship with them. Click To Tweet
He taught me that on the execution side, “We are the mechanical electrical trade. We should know more than the engineer on the project. That is how you build out and get ahead of everything.” I took that very seriously and moved it into the estimating. How do we get ahead of the GC? How do we get ahead of all of our partners so that we can come to them not necessarily with the problems on the job, but the problems and the solution? A solution that is in our best interests for the price.
What I found advantageous is where one of the parts of PataBid came out. The very first part was simply to find bid opportunities. It’s a completely autonomous platform that runs itself built on NLPAI. If you want to go down a black hole, I can take you there. Basically, what it does as it started out was to bring me all of the bid opportunities happening in North America every single day.
From there, use the AI to filter everything down to what I was looking for. That turned out to be incredibly powerful because I could see an opportunity before my future team member’s business development people have even seen it. I would call up the estimator and the GC I wanted to work with and say, “This project came out. Do you want to work together? Can we set up a meeting in 3 or 4 days to talk about the schedule?” I’m going to know about the schedule by then because I’m going to read that the day of.
I would oftentimes get the whole like, “We heard this project was coming. We had no idea it was out.” I’m like, “It came out yesterday. Let’s work on this together.” That would immediately build socializing that estimate, both internally and externally. That immediately builds a team-playing environment. You’re putting yourself a bit at risk because you never know what these people are going to do, but you want to work with your partners on the project.
I found that worked tremendously well to get ahead of all of the information, then collect all the stats on it. It’s a fantastic amount to understand, “I can see this GC bids on XYZ all the time. When that comes out, I’m going to go talk to that guy.” I can see that their competitors bid on ABC and sometimes Z. Maybe the competitor wants to get more of Y. Now I can go and start to pitch this to them as the unassuming little sub-trade, but when you start to do that, you build that environment where you can take over.
It’s interesting how you can set yourself apart with the timeliness of the information that you have.
Knowledge is power at the end of the day. There’s that old adage that knowledge is power. Sharing knowledge is incredibly powerful. If you can get ahead of this, and understand the risks before you even call up, you can find these 2 to 3 days before the GC finds it. The GC will then navigate through all their own internal processes. It’ll be at least a week and a half before they’ll even send out the invites to their sub-trades. If you are that sub-trade, now you are way ahead of your competition. You are way ahead of the game. You’re playing at a new table there, and you can start to control that narrative. That is a huge advantage.
It’s great. When you said knowledge is power, it’s important to explore that. When you’re talking about this idea of coming to a GC with information on a project they perhaps don’t know about, you establish credibility, authority, and trust. That knowledge is power. Take a deeper dive into that. If you’re coming to the table with knowledge that they don’t have, it can set you apart from your competition in a tremendous way.
You have identified those risks already and strategic advantages. Sharing strategic advantages is always a double-edged sword, but if you’re working in a collaborative environment, it’s a tremendous advantage. It’s knowing more about what your competitors are doing, and understanding and monitoring what they’re doing on the whole market.
Now, you can start to drill in and see, “I know that I can win here.” This goes back to what we said at the beginning, that time inversion issue. It starts right at the front end. How do you identify something worth spending your time on? Sometimes that question is a moot question because you have to do it for a relationship. That is one aspect of it, but if you’re shotgunning estimates out, you’re doing it wrong.
You need to understand where your competitive edge is and where your relationships lie. We did this analysis one time from one of the companies I worked for. I realized that some of the clients that our project execution team hated the most and could not stand to work with paid their bills on time. They were giving us work. They put us through the meat grinder, but they were financially and business-wise fantastic clients.
The ones that we enjoyed working with the best, we never got money from them. It was a fascinating one when we did this because a bunch of our execution team was screaming to let go of some clients. We came back and we’re like, “We need to do more with them. They are our bread and butter.” That all came back to that data and knowledge running those analytics, understanding where our market was, and what we were doing. It drove our execution team around the bend. I did feel for them in the end but it worked well.
You have to identify what a good a good client is because they may put you through the meat grinder but if they pay on time, that’s tremendously beneficial. One of the great struggles that a lot of companies have is the plans that they get to estimate are either inaccurate or they change by the time the project is getting built. When I say inaccurate, maybe they’re not even detailed enough. How in your experience do you bridge the gap between the plans that you have that you are estimating? You’re looking at the plan and it says this but I know in this circumstance, this is what’s going to happen. As an estimator, how do you make those leaps from concept to reality?
Your biggest tool in there is your risk register. This is something that I learned from the general contracting side of things. Those general contractors can do very well. Quite frankly, they need to teach their subcontractors to do it. It doesn’t matter what you do. If you’re the drywaller, the concrete guy, the earth mover, or the MEP trades, maintain a risk register for every single project.
Explain that to me because I’m a dummy. Tell me what you mean by a risk register.
A risk register is basically an Excel sheet. It’s a table. You put in what you’ve identified as your risk. Schedule, taking place in the winter. The schedule is incredibly compressed. Drawings, as you mentioned, have zero detail. The client was difficult. You then put to this, “What is this worth? What is the adder to do this in the winter that I identify? Is this 100,000 extra because I now have to get a much bigger JV excavator in? Is this the compressed schedule? Do I have to run a night crew? What is the adder and loss of productivity on that?”
You then go down that list, and this is where you want to socialize this. You want to bring in your superintendents and your PMs. Once you’ve done this as the estimator, you want to show up with what you think the monetary values are of these. Pre-populate it, and then you have a discussion or a back-and-forth on what’s the probability of this happening. Is the probability that we’re going to run a night crew 100%, or will we only have to put that night crew on for the latter half of the project?
You all know, especially if you’re in one of those later trades like drywalling or floor finishing, you are compressed to the end of the schedule. It doesn’t matter what you do. The floor and the foundation aren’t there. You’re not starting early. You play that back and forth with the whole team. What’s the probability of this going ahead? It’s simply the value multiplied by the probability, and that gives you a dollar amount at the end. You want to put that into your risk bucket at the end of the sheet.
You want to put that at the very end of your estimate as your risk allowance. You want to put that in a completely separate bank account that only the CEO can release to your project team. You want to try to make sure that your project team is either good or doesn’t know about it because they cannot depend on it. The goal is not to use that bucket if at all possible. Invariably, it will have to be tapped into. There are unforeseen changes. Some can be accounted for and some cannot be. You may have to tap into that, but that is what the risk register is there to do. It goes back to socializing that estimate.
Let me ask you, I’m the CEO of a commercial construction company. I have my estimating team and my project management team. The goal of the estimator is to land work. Sometimes that means I put a number in that is not necessarily creative, but it’s a tough number. I know it’s going to be tough for my project team to hit. I land a job. The project team looks at what I’ve bid and the schedule and all that stuff. They immediately begin to have some bad feelings toward the estimating team. There’s a challenge there. As the CEO of the company, give us some advice to manage that dynamic and that potential tension between your estimating and project teams.
One of the best things to do there is feedback from the execution team. This is something that I stipulated. If any PM was to come upstairs and talk to my team, they had better show up with the negative and the positive because there’s no way that every job is only negative. We’d be out of business. We’re doing something horribly wrong if every job is only negative.
If you’re going to show up upstairs, maybe an estimator missed something. Maybe they miscalculated something. We need to know that so that we don’t replicate that. Equally important is we need to know where we doubled down. If we cover all the risks, let’s say, we’re never going to win a job because every single job also comes with benefits. Where did we improve?
You used a slightly different technique to install this way. I need to know what the benefit of that was because we’ve got a job over here. We’re putting ten of those in. You say that you beat the labor by 5% to 8% on that. We didn’t carry anywhere near enough project management time, let’s say. That’s good for us, but if we only carry that, we’re going to screw ourselves on this winning the bid. We will be non-competitive because you haven’t told us where we can also reduce the cost.
The risk register on two faces is both the risk. I’ve used it in the past as a benefit. You list all the risks at the top, and then at the bottom of it, you list all the benefits that you can anticipate. I’m going to buy my material. Because of my buying power, I’m going to reduce my costs here. One of my favorite ones was we were working on a project in Vancouver. I don’t know if you know that area. Basically, it’s all on sand. It’s a major excavation project. We carried a substantial amount of risk in disposing of that sand.
When they went to run the project, it turns out that sand is highly valuable to some berry farmers. It was cranberries. There is a massive cranberry production in the Vancouver area. There’s a whole bunch of these farms that do this, and they begged for that sand. They made money selling the sand to the cranberry farmers on the project. It was an interesting turn of events. Knowing that and going to bid on the next job in Vancouver, it’s okay. We can sell this now and that’s going into the risk register. What can I sell it for? What’s the probability I can make it? Here’s a positive number in that risk register now. All of that gets turned over to the execution team.
Interesting because on every project, there are potentially new opportunities to mitigate against risk or to make money that come up that we may have never come across before. That needs to be communicated and captured in order to be able to leverage that information for another opportunity in the future.
One of my favorite projects with this exact thing was in Ottawa, Fleet Street Pumping Station. It’s a heritage station. It was built in the 1700s or 1800s. It’s way early on. It’s entirely powered by the run of river water. The pumps that pump potable water into Ottawa are directly coupled to turbines in the river. The whole station uses almost no power. We had a project. The project came out. They wanted to replace the penstocks at the head end of the turbines that fed the water.
There was some massive 36-inch heavy steel pipe that had to go into the building. My mentor, the guy I mentioned at the beginning of the discussion who had dropped all the papers on my desk, called me over. He was like, “Melvin, what do you see here? How would you do this job?” I came up with this way of getting stuff in. He looked at me and he was like, “We’re going to do it in a 10th of that time.”
I’m sitting there and I’m like, “You’re nuts.” He went to the managers and said, “Here’s what we’re going to carry on this project.” They said he was nuts. He said, “No, this is what we’re going to do. We close the job or we don’t bid it this way.” We were 25% low when we submitted the price. Everybody was losing their shirt on this guy on everything. He said, “No, I’m going to go down to the site on the day this pipe arrives.” He left and he was on-site at 6:30 in the morning on the day this happened.
I’m sitting in the office. The manager comes to me and he is like, “Melvin, I’m going to head out to the site here and see how bad this is going.” He comes back at 1:00 in the afternoon. He sits down beside me and my manager. I’m like, “How bad is it?” He’s like, “They’re done. It’s in. It’s completely finished.” I’m like, “What?” He had still carried a couple of days to get this pipe in. He’s like, “Yes, it is finished. They were eating lunch when I got there. They wouldn’t tell me how they put it in,” but we knew we could call the superintendent the next time we had a job like that.
It ended up working out tremendously. You need to bring all of these people together. If you are going to take that risk as the CEO, that’s what you have to look at. Do I trust my team enough to pull this off? It’s one thing when you make that decision consciously. That can work. If you make it unconsciously and you don’t realize you left something out of the estimate, that’s a whole different situation.You need to bring everyone together. You have to trust your team to pull it off. Click To Tweet
It’s interesting. If I would give one word of advice to the CEOs from a non-technical perspective, the relationship between your estimating team and your project team is usually a direct reflection of the quality of the relationship between your head of estimating and your head of operations. If you’re seeing a tremendous amount of conflict there, the first place you should look is the relationship between the head of estimating and the head of operations.
You should also look at where your estimators come from. Were they straight out of the field and never given an education in office politics? Were they junior people that you hired out of college? A lot of that can come from a fundamental misunderstanding of what estimating is.
What is estimating?
Estimating is educated guessing and imagination. You have three weeks to commit to a job that’s going to take you three years to build. In those three weeks, you have to understand every aspect of that build and you’re committing to it. A lot of project managers who strictly have done project management, you can say that they can empathize with it but they don’t actually understand what that means.
There is no late delivery of an estimate. If you’re a week late on your project that has gone on for three years, nobody is even going to blink. If you’re a month late on it, nobody is going to blink. If you’re two months late, people are going to start to question things. If you are one second late on that delivery, you are out of the tender. You are literally out of the running. They won’t even open your envelope. They will hand it back to you. There’s a very different dichotomy there between these two sides. You said it. Check the relationship between your head of ops and your head of estimating. That is a critical relationship.
You described two different types of estimators there a minute ago. You talked about the junior person and the person who’s coming out of the field. The person coming out of the field into estimating, that’s something that happens. They have a tremendous amount of technical understanding and real-world understanding. What I’d like you to do is give us for that junior person, then from that person who has experience but it’s field experience coming into estimating. What are 2 or 3 things that I want to emphasize when I’m developing a junior person, and then 2 or 3 things I want to emphasize when I’m working with someone with experience but field experience coming into estimating?
Junior person mentorship, 100% mentorship. Pair them with a senior person. Ensure that they work together. That junior person is going to come out of school with a lot of training and a lot of ideas. They’re going to be enthusiastic, but they won’t understand what they’re doing. Take them to your fab shop. Take them to the site and ask them to try to pick up that 4-inch valve there or that piece of structural steel over there, or even the machine to put the bolts in, the hydraulic torque wrench for your structural steel bolts.
Ask them to pick that up. When they try, tell them, “That’s why when you’re bidding this and it’s over somebody’s head, that’s a major problem.” Strive to build in imagination. Imagination is critical for an estimator because they have nothing else. They have nothing but imagination to understand how this works. That was something that my mentor did fantastically well. This gentleman who got the pipe in. Everything was imagination.
He would challenge me on that every single bid every single day. How do you see this? We were digging up the nuclear-contaminated pipe at Chalk River. How do you see this? How does this go? I was like, “I’ve never done that and I don’t want to be around when it happens.” It’s so funny but you still have to figure that out. That’s huge for the junior people to build in that imagination, and build in that esprit de corps through mentorship because estimating is awesome.
People tend to underappreciate it. They want to get into project management. They want to get into something else. Execution-wise, there seems to be a lot of glam and glory there. Perhaps but the reality is the estimator is a different person. The estimators, when you’re hiring that junior person, don’t necessarily try to hire them from the perspective of a PM. Try to hire an actual junior estimator that you can bring up to be the backbone of your estimating team. On the other side of that, the people coming out of the field.
That can be very challenging. What you have to instill in them is an understanding of the financials because what they’ve been doing is building very well. They will know how to assemble things, but what they’re used to is understanding every single nut and bolt that goes into the flange. They need to know that because that’s what they have to buy for the next day’s work. When you’re putting together a bid, that doesn’t matter.
You can make a blanket allowance for those bolts at the end of the day. What matters is that you get the pump that it’s attaching to and that you get the columns that it’s attaching to. That’s what you have to understand at the estimating. It’s a much higher level. That can be very challenging for somebody out of the field to identify and run with. The very best estimators I have ever seen in my life are tradesmen who have owned their own companies. It doesn’t matter the fact that the company succeeded or failed. It literally doesn’t matter. They fully appreciate and understand every aspect of the business side and the technical side. They are unicorns.
That’s very interesting. That would lead me then in my recruiting efforts to be thinking about companies that have been around for a while. Maybe the guy is done with the drama and signing away his life every time he does a project. Maybe he can come in and not only give us some great contribution from his own estimating but then also do some of that mentorship that you were talking about earlier.
You want to find that person who has been the tradesperson for ten years, went and started their own company, and ran that for maybe another 5 or 10 years. As you said, the stress of that. It’s incredibly stressful. Especially if they’re still locked in and capped out at five employees kind of thing. Offer to buy their company. Straight up, they are worth that. Walk in and say, “We want you. You have what it takes.”
Maybe that company imploded. If you find out that this company has gone into receivership, walk in. Especially if you’re a larger company, that can be fairly low-key if you’re buying out an owner-operator and say, “I will absorb your debts there. You come to work for me and you be the intelligence,” because now you know better than anyone else in the world what it takes to do this. That could be a very percentage-wise and low-cost way of getting incredibly good talent into the front end of your business.
That’s beautiful. I love that. Melvin, you’ve been tremendously generous with your insights here. Tell us a little bit more about PataBid and what the company is all about.
We are a construction tech company. We are all about automating that very front end of your construction process. We want to find all of the opportunities across North America to bid on and then use our NLPAI to read and categorize those and bring the relevant ones to you. My teams are spending upwards of eighteen hours a week searching for opportunities across multiple people.
Using this NLP-based approach to it, we were able to bring that down to twenty minutes. Our clients, the double-edged swords of what we do. We walked into one GC that decided they were going to give us a shot. They had three people dedicated only to finding opportunities to bid on. They didn’t even run the risk analysis. All they did all day was check to see what they could potentially bid on.
They came in and they’re like, “Show us your stuff.” We showed them our tenders platform. They went through it. They’re like, “This is awesome. We’ll buy one license now, and then we’ll give it a shot. In a couple of weeks, we’ll come back to you.” Three weeks later, I called them back and I’m like, “Let’s talk about these other licenses.”
The guy is like, “This is a little awkward. We moved those other people into estimating because now one person can do the job with your platform.” I’m like, “That’s awesome but at the same time, it sucks for me. I get it but it’s working.” On the actual core estimating front, the quantity surveying, a lot of what we’re doing on that is we’re bringing in the AI there, so image segmentation. We’re ripping apart the drawings for you autonomously, and all of that.
One thing that we’re running into, especially here in North America. We’ve dealt with some people overseas in Australia and New Zealand in the last few weeks. Construction here has fallen off a cliff when it comes to the quality of those documents. You mentioned it earlier. I saw the drawings and stuff that are coming out of New Zealand and what they’re mandating at the government levels for quality of documentation versus what we have here.
I had to tell the companies out of New Zealand and Australia, “Do not come to North America. You will not survive here. There’s so much risk here because our documents come so severely incomplete.” The AI can only take you so far on that. What we’ve built into our platform are full drafting capabilities. As you’re drafting, it’s building out the estimate so that the contractor can go in and quickly draw some lines. It pulls in all the assemblies for them and builds out a full labor material costed estimate for them in minutes. They export that drawing and deliver it with their bid. Now that’s a huge risk mitigator.
Why is your company called PataBid?
That’s a throwback too. I was born in Kenya. Pata is Swahili for search, find or get married to. That basically covers everything to do with construction. My mom used to yell at my brother and me a lot in the schoolyard in Swahili, which was always hilarious to see who would put their head up when looking for the person yelling. Here comes my brother and I like, “It’s us. We’re being yelled at in Swahili.”
That’s awesome. How can people get in touch with you? How can they learn more about PataBid?
PataBid.com is our website. That’s a good place to start. Our YouTube channel has a tremendous number of tutorial videos on our various platforms. Take a look at that and see if that’ll help you. [email protected] is my email address. Feel free to reach out at any time. A core tenet of our business is if we can’t help you, we want to find somebody who can. We feel strongly that construction is at a point of change now, and we want to help spearhead that.
That’s great. Melvin, I appreciate you coming on. Your insights have been tremendously helpful. I know I learned a ton. I know my audience learned a ton. Thanks for joining us here.
I’ll climb off my box now. Thank you so much.
You’re good. Stay on that box. It’s a good box to be on.
Thank you so much, Eric. This has been an absolute pleasure.
That was an awesome conversation. I enjoyed that and learned a lot. Feel free to reach out to Melvin at PataBid.com if you’d like to learn more about his company. A quick thing that I thought about was this. You know how we were talking earlier about the divisions between estimating and operations, the conflicts that can occur, and how that’s often an indication of a broken relationship between your VP of Ops and your VP of Estimating.
If you are sensing that difficulty in your company and you’re experiencing that, you may benefit from bringing an outside executive coach in to work with your senior executives. That’s what I do all day, every day with my clients. It’s to help them understand those people conflicts that they have, and build better relationships within the organization for the benefit of everyone involved in the company.
If you’d like to explore some of the executive coachings that I provide for my clients and see if it’s a fit for your company, reach out to me at my website, ConstructionGenius.com/contact. Put your details into the form there. You can reach out to me, and we’ll have a quick chat about the executive coaching I offer and see if it’s a fit for your company. Thanks again for tuning in to Construction Genius. Feel free to share the episode with other people who you think would benefit from it. I will catch you on the next episode.
- The Mechanical Contractor Association of America
- YouTube – PataBid
- [email protected]
About Melvin Newman
Melvin is the President/CTO of PataBid. Prior to co-founding PataBid in 2018, Melvin worked in the construction industry for 15+ years as an estimator and project manager.
Melvin has experience in many of the key aspects of construction and pre-fabrication in the mechanical, electrical, and general contracting industries. He has worked for a variety of companies in his career, developing several key process advances and technological innovations.
Key areas that Melvin has deployed technology are Virtual Design Construction (VDC) and end to end digital estimation. In addition, Melvin is well experienced in software development, business analytics, and systems development for estimating and project execution. He is passionate about bringing digital technology tools to construction and making these tools accessible to all industry professionals.
As an entrepreneur, Melvin co-founded PataBid and is the full stack developer on the platform, specializing in the development of internal ML/AI systems. In addition to developing the platform, Melvin is responsible for building the deployment systems and developing key business partnerships.