How to Keep up with Material Cost for Estimating
When you're dealing with material estimation for a project, keeping up with costs is a vital part of ensuring that your business remains profitable and doesn't lose money on a project. But even though it is important, it can also be a very time-consuming task that takes you away from other issues you need to address and buried in paperwork. How do you effectively stay on top of costs without spending all your time chasing the data? Here are some options many contractors use for tracking material costs:
Common Ways to Track Your Material Costs
Spreadsheet Tracking Methods
Many contractors will keep up with costs as they complete projects by entering the information into a spreadsheet or other basic software to create a catalog that helps you track costs. Staying on top of these prices means you'll need to regularly review the prices and dates in which they were entered, and often spend significant time updating the prices regardless Unfortunately, this type of tracking can quickly become confused and difficult to navigate as your list of materials grows with each project.
Supplier Newsletters and Price Updates
Many suppliers will send out regular newsletters or update letters when their prices change. Though this is helpful for smaller or future projects, it's not as helpful when you're working on a larger project that is still underway. When prices shift mid-project, you're often faced with either eating the loss or having to push a change order through that may make the owner balk at the increased cost.
Manual Checking of Material Costs
Of course, if you want the most up-to-date costing on your materials for a project, you can manually check up on all the prices for either each item on your take-off list. This can involve long, tedious hours spent gathering specs and prices to keep everything up to date. Though some suppliers and supply houses will offer quote services to help earn your business and save time, you'll only see the information on the specific item the business quotes, not all the potential items that could be used to save money on the project overall.
How Often Should You Check Costs?
Many contractors wonder how often they should check material costs to ensure they're protecting their bottom line. Unfortunately, the frequency depends on the material in question. Copper or conduit can change price literally overnight, so it's important to try to stay up to date of major changes and check prices on at least a bi-weekly basis if you're planning on a large project. If, on the other hand, you're looking at materials that have remained fairly steady for a large period of time, you may be able to simply check quarterly to see if the price has shifted during that time.
If you're dealing with larger jobs that have a very competitive bidding process, you'll want to make sure you stay on top of costs and even contact manufacturers to see if they plan for a price increase in the near future. On larger jobs, a change of a few cents on a material you'll use large quantities of can make the difference between turning a tidy profit and dragging your business into the red. If the material costs are expected to change and are a major portion of your quote, you may want to consider adding a section in your paperwork concerning change orders if the material costs increase beyond a particular percentage.
A Better Way to Keep up with Costs
There is, however, another way to keep up with changes in your material cost. As our world grows closer together through digitization, many businesses are seeing a shift from individual software packages such as Office and Quickbooks that can be made (on occasion) to work with other software packages to whole-enterprise packages that encompass the entire build process, from pre-design to post-handoff maintenance. These packages can work with the external packages mentioned above to create a seamless automated experience across the entire business and to partners in the field.
One package that automatically pulls material costs is RS Means' online construction cost data ebooks. This series includes many assemblies to make the process go more quickly and easily and localization cost adjustments for over 900 American locations and several for Canada. Because the data is extremely accurate, it's the most commonly specified under JOC, DOC and SABRE contracts. Using a software package that incorporates this technology ensures that you're creating a completely accurate quote or bid without having to do all the legwork of costing.
The construction industry is also caught up in this type of digitization movement, including the ability to better coordinate across your teams or with outside contractors on a project. Because the software incorporates a wide range of systems, it can draw outside information automatically, making it much easier to get all the updated costs you need without even leaving your computer. This makes the estimation process go much more smoothly, giving you accurate material cost while providing fast take-off tools so you can spend more time building and less time on tedious paperwork.
Keeping up with your material cost can be an onerous task, but it doesn't have to be. Using a quality construction material calculator will help you keep up with prices of material across a broad range of suppliers, but that's only half the battle. You'll then need to import that information into your bidding and accounting systems to keep everything up to date. One option that many contractors are getting excited about is Esticom, which incorporates RS Means' data into the quote and bid system. Focused on spanning your entire business and automating your back-office processes, it will help you access everything you need, whether you're sitting at your desk or on your phone at the local builder's association meeting. Take a few minutes today to learn more about what Esticom can offer your business and see where your business goes.