One takeoff mistake ate the job's profit
Add a second quantity check before bigger bids go out.
The estimator missed a sheet, or counted one wall of conduit and not the other, or used the wrong scale. The bid went out low, you won it, and the first month of cost already looked wrong. It's too late to change the price, so you eat the difference out of the profit. One missed quantity on a big item can wipe out everything the job was supposed to earn.
Three moves, in order
What CFOS does about it
CFOS keeps a bid pipeline with the value, bid date, chance of winning, and lost bids. When you win a bid, it becomes a job with its contract value, and the estimate imports as the job budget by cost code. The job cost then updates every hour against that budget, so a quantity miss shows in the first weeks and not at the end. Contracts, bid invites, and spec books are read and the terms pulled out, which helps your estimator catch what's in the documents.
Who owns this: Owner.
At $3M, one missed quantity on a single job can take most of a year's profit from that kind of work. A second check takes an hour. The mistake takes months to pay back.
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Step 04: Estimating system
The estimate maps one to one onto the job cost codes, so variance means something the day it appears.
Other problems step 04 solves
Other things that go wrong
What owners ask
Takeoff mistakes cost contractors?
Add a second quantity check before bigger bids go out. The estimator missed a sheet, or counted one wall of conduit and not the other, or used the wrong scale. The bid went out low, you won it, and the first month of cost already looked wrong. It's too late to change the price, so you eat the difference out of the profit. One missed quantity on a big item can wipe out everything the job was supposed to earn.
Which part of the system fixes this?
The step is number 04, estimating system. The estimate maps one to one onto the job cost codes, so variance means something the day it appears. It's drawn from chapter 4 of CONTROL: C.F.O.S. Construction Financial Operating System.
Is this normal for my trade?
Across the 48 trades that publish a figure, net profit at $1M to $5M averages 7% before taxes. If you're well under that and this page describes your month, the two are usually the same story. The published average tells you where the pack is, and your own job costing tells you where you are, which is the number that pays payroll.
Where do I start?
Have a second person check the quantities on every bid above an amount you set, and not just the total, before it goes out.
How do I catch a takeoff mistake after I've won the job?
Watch the job cost by cost code in the first few weeks against the budget. If one code is far ahead of the percent of work done, check the quantity before you buy more. If you find it early, you may still be able to ask for a change order.
Who should check a takeoff?
Someone who didn't build it, ideally another estimator or a senior PM. They don't need to redo it. They need to check the big items, the sheets covered, and whether the addenda were picked up.
Can I fix this without touching anything else?
You can try, and it doesn't hold. Step 04 depends on step 01, job cost structure and step 03, overhead calculation. Install it ahead of those and it produces numbers the field won't trust, which is worse than the problem you started with.
Wrote CONTROL, the 8 step system behind these figures. More about the author.