I found three apparently unrelated facts in my email last week : Nationwide, 1 in 9 homes (11%) with a mortgage is under water, worth less than the balance due. The Las Vegas area is the poster child of the debacle. Lend Lease on Oahu is in the process of starting its $ 2.3 Billion worth of work on Oahu’s military bases. A bridge in North Carolina was awarded in the beginning of the month to the lowest responsive bidder for 50% of the Engineer's Estimate. The sum of these elements seem to typify our current marketplace, and speaks volumes about the economy. Clearly the residential market's predicament is much deeper than anyone saw at the onset of the crash. It appears headed for years of uncertainty on the whole. Some regions are already regaining strength, but it's hard to envision a broad, smooth nationwide upswing anytime soon. Despite the rocky situation of the commercial market as a whole, military spending remains strong, and buoys the economy in select markets where the armed forces have a strong presence. Likewise some stimulus projects are still creating jobs and sustaining the companies working on them. But overall, both public and private construction [...]
We've been fortunate to be very busy throughout the last quarter, with the advantages and disadvantages inherent in a packed work schedule. On the one hand, it's our favorite problem to have, although it's been very difficult to keep up and produce the volume of work we've landed. On the other side, perspective is tough to achieve when you're giving it all you've got in the trenches, just trying to get the work done. Having solid strategic partnerships is critical in these situations, and we're fortunate to be able to count on some truly talented resources. Stenstrom Group Inc., N-Visions LLC, and PCATT are among those who have provided us with crucial support in these trying times. Stenstrom Group Inc is the authorized Oracle | Primavera Business Partner for the Pacific Northwest and Pacific Rim. Through SGI we represent Oracle | Primavera in one of our core markets, supporting NAVFAC and US Army Corps of Engineers contractors. We work together to meet the demand for software, training, and scheduling services as NAVFAC and the Corps are adopting P6 to replace the now-obsolete SureTrak and P3 for their projects. Why Projects Fail is a link to a useful white paper I [...]
Here we are in mid-December 2010, hard to believe another year has come and (nearly) gone. For good measure, we're in the second year of the second decade of the Twenty-First Century, A.D. Time flies when you're having fun- or are we? To say the year's been difficult for construction is obvious. Nonetheless we know companies doing very well in spite of the general economy and the sad state of lending that's holding back private construction. Department of Defense and Economic Stimulus work are still propping up most of the work that we're involved with. Small business set-asides and 8-A contractors are enjoying advantaged positions on highly-profitable work. We're still seeing public construction going at deep discounts, as good companies are taking turns "winning" jobs seemingly at cost or 1-2% margins. It's clearly an unsustainable pattern that can't continue. It can't continue, right? (Please tell us it can't continue). We are grateful in our small niche that business is up considerably from last year. Those companies with the wherewithal to be profitable through the recession are tweaking their systems, improving productivity and process to stay a step ahead, which has helped us. The SAME conference in Seattle back in October revealed the [...]
Job Costing is the third crucial element in the "Golden Triangle" of Construction Operations: (Estimating / Project Management & Execution / Job Cost Accounting). We need to do all three extremely well in order to justify the risk we routinely take in the contracting business. For this article, I'm going to focus on the heart of that risk, self-performed labor. How well does your company account for what happens onsite? The answer is inexorably tied to our old friend and nemesis, level of detail. If cost codes are too high-level, (i.e., "concrete formwork" for a company that does a lot of it), you're mixing oranges, apples, and likely squashes and rutabagas into a mix that becomes so bland that the individual important flavors are unrecognizable. In plain english, that information is useless because it covers too many different types of work, all with different productivity factors. If cost codes are too detailed, (i.e., "staking slab forms", separate from "placing slab forms", separate from "stripping slab forms"), you're gathering minutiae, and even worse, placing the guys in the jobshack doing timesheets in the position of having to lie to you. Why's that, you ask? Because they can't possibly cost code to [...]
An age-old issue in construction estimating is determining the "right" level of detail in the estimate. In my 30 years of estimating construction projects, it's a question I still deal with, and am not convinced I've found the answer yet. I've spent years on both sides on this chicken-and-egg question. One side subrcribes to the the idea that a well-designed estimating system can and should develop a full materials list right from the initial estimate. Full-featured estimating database systems such as Timberline, WinEst, and US Cost have detail databases with assemblies fully capable of doing so. But is it efficient on bid day to have that low-level material information in the bid day spreadsheet, when all you're doing is pricing subs and vendor quotes, and verifying scope with the bid clock ticking and the pressure on? The other camp wants to know why you would clutter up your estimate with that extraneous detail, when we're only successful on one in ten anyway. Less is more on bid day, and cut length framing lumber and steel studs, sheets of plywood and drywall are only in the way, distracting crucial focus at the critical moment an important sub price comes in with [...]
We're keeping busy working on Timberline Estimating database projects and Oracle | Primavera P6 project schedules and training. But it's an uneasy busy at best. Talking with our clients, the bid market is still brutal, with a few bright spots, most of those Federal Stimulus-funded projects. Missing from the current construction economy is momentum of any kind. A few companies we know do have a solid backlog, one even with more work than ever: a large US Military contract plus strong private healthcare projects adds up to a rare success formula in these times. For every company like that, we see ten with less backlog than they're used to. I'm attending the SAME conference (Society of American Military Engineers) in Seattle 10/14 - 10/15. It's a good time for some professional training and networking opportunities. Seminars include Integrated Project Delivery, sustainable energy engineering, business development in these difficult times, the direction of BIM, and numerous others. If you're in the area and have an opening in your schedule, it offers a great opportunity. For more information: Basic conference info & Registration Technical Training Session Schedule Hope to see you there!
We got a call yesterday from a company working on an Army Corps of Engineers design-build project with a tight schedule. The Corps' project manager expressed concern that the project would finish late. With the most recent (fourth) pay app, negative float was appearing, primarily due to delays in receiving approvals for the mechanical design. We were already working with this Contractor on another USACE design-build project schedule, so Bob called me to request a couple reports for analysis of the schedule. He requested a critical path Gannt chart report, and asked me if I had any ideas for another report that would help their team review the schedule. I chose a multiple float path report. When I first noticed the multiple float path option in P6, it seemed like a complex software feature that would be difficult to understnad and work with. That couldn't be farther from the truth. The P6 multiple float path feature simply starts with the Critical Path (FP1), then calculates additional float paths in descending order of importance, based on calculations derived from the project's logical network. So FP2 and FP3 are not as crucial as FP1, but more than those assigned larger float path [...]
We posted this week the first in a series of tips for producing USACE-compliant project schedules in P6. Select our new P6 support tip and get crucial schedule settings right the first time. The series will cover a wide variety of P6 topics for both USACE and NAVFAC project schedules. Check back for weekly updates to our P6 Support Page.
We recently completed indexing an Island GC's Hawaii and Guam databases to CSI Masterformat '04 using WBS codes. This allows estimates to be viewed and sorted in either the traditional 16-division Masterformat (MF) '95 sequence, or the new MF '04 48-division system. We also designed accompanying Item Sort Sequences, so Takeoff can be done in either format as well. We've done this for several clients over the last few years, and find most US Government projects and even a fair share of private AE firms using the new numbering sequence. The primary decision is whether to re-index the entire phase code scheme, (Timberline Estimating's primary database index), or to simply use WBS codes for MF '04 sorting. Either way you get the best of both worlds in your estimate sort sequences and reports. It typically requires one to three days' effort depending on the method selected and the complexity of the phase coding structure. Please email or call us for more information on getting your company's database MF-04 compliant.
We know the current market is challenging, but 2010 first half construction volume is even worse than we could have foreseen back in January. According to ENR, total construction volume is down 11% from 2009, with private construction down 14%. The commercial Office sector is down nearly 40% from 2009's abysmal first half, and commercial Hospitality down a whopping 60% from 2009. Ouch. Only slightly less dismal are Manufacturing -22%, Schools -20%, and private Health Care -19%. To make matters worse, we're still seeing inflated bid lists, jammed with contractors competing out of their traditional strengths and geographic areas. These fish out of water are offering work at a deep discount to experienced firms bidding at home. We can only wonder how long this can last, and how many firms will go under? The single bright spot for first half 2010 is residential, up 4%. Forgive us if our enthusiasm seems subdued.