Industry eye catches estimating errors

The problem: 

When one of Maine’s largest specialty subcontractors faced a turning point in the company, they suspected that revamping their estimating process would improve their ability to price jobs more competitively. While they benefited by having a talented in-house estimating group, the company came to a crossroads where they needed an outside, expert opinion to evaluate their accounting and estimating processes before they could move forward with confidence.

Our solution: 

ARB’s Construction Group worked with the client’s estimating group to evaluate their estimating process and overhead rates. With a keen eye for industry-specific red flags, we quickly uncovered a few critical issues: numerous direct costs weren’t being accounted for, sales taxes had frequently been forgotten, and their overhead rate looked unusually high for a construction company of their type. After a very detailed overhead analysis calculation, we found that their overhead rates were actually lower – an immediate fix that allowed their estimating group to change the way they applied and allocated overhead costs to jobs. It also provided a better measure of profitability on a job-by-job basis.

Using data from our analysis, coupled with knowledge of industry costs and best practices, our construction team designed a highly-customized, intuitive model for the client’s estimating group to implement and utilize in their day-to-day work.

The result: 

Not only did our construction team’s analysis and custom-built model help the client improve its estimating process and provide a better picture of job profitability, our work was extremely useful soon after when the client was involved in a government contract appeal related to a delay claim. We represented the client, a subcontractor involved in the $20 million project, and their interests throughout the dispute by supporting their claim for labor price increases and lost profit and overhead. Our preceding work with the client’s estimating group made documentation and data easier to gather to meet the government’s rigid appeal requirements. Our work contributed to the client being one of the few subcontractors that was awarded a delay claim in excess of $50,000.

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