Chapter Corner

Retail Center Provides Lessons for Estimators

Posted in: Features, January/February 2016

RetailCenter_Insights.gifThe grand opening for the retail complex took place in late September 2015.

K2 Electric, based in Phoenix, Arizona, won the bid for the shell build-out and associated site work with a 12-month build time. “It’s noteworthy because it’s the largest project on which we have estimated, and the largest I’ve done,” explained John Jordan, K2’s chief estimator.

At $4.5 million electrical, the Premium Outlets’ approach is something new for most of Southern Arizona: It provides outdoor mall space where people can relax, hang out, and participate in events. The indoor space is estimated to be 320,000 sq. ft.

Swallowing hard, Jordan related the problems, twists, and turns that made this job stand out among others he’s worked on.

Rental Space in Bid

Included in the bid’s costs was the need to rent a house near the Center construction site. What drove the need for a house rental is K2’s company policy, which is to avoid creating the need for workers to commute more than 50 miles each way each day. And Tucson and Phoenix happen to be 115 miles apart. Due to the long distance between Phoenix and the construction site, manning the job for K2 Electric was a mixed crew. There were as many as eight of its regular electrical workers, plus another 35 to 40 people recruited in the Tucson/Marana area. Thus, the job peaked with a crew of roughly 45.

So in this case, the Phoenix-based electrical workers were able to avoid a longer commute by sleeping locally during the week.

But that wasn’t what made this project stand out.

More Than 20 Electrical Bidders

arial_Insights.gifJordan estimated the job in tandem with Casey Kotzenmacher – an estimator who, at the time, was relatively new to the company (began June 2014). “We decided to bid on this job because it was slow out here in the Phoenix area,” Jordan said. “Obviously, having the two of us work on one project was not a problem, as the WIN 6000 software we used allows multiple estimators to work at the same time on the same job.”

Bidding the job was an adventure of sorts for K2. Normally, the company does not like to pursue jobs on which there are more than 20 other electrical contractors submitting bids.

But with things being slow, the company elected to make an exception. But not, however, before doing its due diligence. “We actually interview the general contractors involved in most jobs, and we did for this one, too,” Jordan said. “They’re very important, of course – they’ll run the project.

“We decided that these generals were people we wanted to work with, so we bid to them.”

Sharpen Your (Electronic?) Pencil

mall_Insights.gifObviously, with so much competition, it was really important to get the bid just right. To get it done in a timely manner, Jordan got help.

“We split it up so that I ended up doing the estimating for one piece and Casey the other,” he said. “He took the buildings. I finished my end up earlier, so I took three of the buildings and did them, too.”

So what made the project stand out? Fate had played a hand.

One piece of the project involved work that K2 normally subcontracts out. Without naming the company or the business it is in, the piece here was fairly significant (work-wise and dollar-wise).

Jordan took the normally reliable subcontractor’s bid and incorporated it in his estimate...except, in this case, there was a disconnect.

After winning with what seemed like a very low bid (relative to the other electrical contractors), the people at K2 began to question themselves. “When you’re low against 20 other contractors, you have to wonder how that happened,” Jordan stated. “Well, we wondered.”

What happened, of course, was that everything was reviewed. The electrical pieces looked right, but the subcontractor piece was...too cheap. Jordan asked the subcontractor to go back and review its bid.

Shortly thereafter, a sinking feeling hit Jordan – and others at his company – right in the gut. The subcontractor had missed an entire page of requirements in the documents. The subcontractor’s bid was way too low… by many tens of thousands of dollars.

Finding Savings

“I knew I had a hole,” explained Jordan. “Now I had to somehow fill it.”

To do so, Jordan immediately went to work on revising his estimate. Originally, he and Kotzenmacher had done their work using standard electrical estimating software. By the time it became clear that a detailed review was needed, K2 had acquired a new estimating product – On-Screen Estimating Pro (OSE Pro) – from the same software provider as their WIN 6000 software.

“I went through the project with OSE Pro and spent more time, in this pass, on how the job would actually be built,” Jordan remembered. “Of course, I had an eye to cutting back as much as was reasonable, and possible, in the electrical part of our bid. I was able to note, right on the drawings (the PDFs), how I was envisioning each section would be built. I have had field experience – I was a foreman for 12 years – so I put my ideas right on there, where the field foreman would see them.”

Jordan believed that he had found enough build-it-this-way ideas and other savings to ensure that the Premium Outlets project would not be a disaster for K2.

And then Fate decided to get back into the game.

Rules Vary With the Place

What emerged was that a code requirement for retail stores had been overlooked in the designs and specifications. It was a huge change order, involving installation of more than 600 electrical outlets.

Jordan said his company didn’t initially see this as a “lottery ticket.” The fact that it wasn’t in the bid documents was learned after the bid was submitted.

The value of the electrical work that had to be installed (after the walls were finished, of course) was significantly more than the cost of the subcontractor’s bid error – by many times the aforementioned tens of thousands of dollars.

“As it turned out, even with all of that competition and that mistake made on the bid, the project was a profitable success.”

OSE Pro: Handy for Changes

The 600 added electrical outlets were just one of several major change orders in this huge project. In fact, Jordan noted, there were an even dozen. “And there were 150 pages of detail to review with each of these major changes,” he said.

Here’s where the new OSE Pro came in really, really handy, he noted. To make sure K2 caught every single difference in every single change order, he was able to use OSE Pro’s capabilities to overlay the “new” changed drawings over the “old” PDF of a given part of the project.

Voila! Alterations made in the new change order popped right off the PDF on the screen.

Bottom line: On these additional items throughout the project, K2 missed nothing.

While it is great when projects run smoothly, it is important to know how to work with your budget when fate throws a wrench into your best laid plans. Through the utilization of new technology and their own ingenuity, K2 Electric has developed an effective blueprint on what to do when things go wrong in the future.

Salimando is a Virginia-based writer/editor for McCormick Systems and other electrical construction industry clients.