Establishing Proposal Metrics in a Factory Construction Company

[just67horns]

We are a small company that builds factories for our customers. I am (new) in the proposals department and trying to establish metrics for evaluating our performance, while trying to learn the many details involved in what we do. Alot of spreadsheets are currently used to estimate costs...

Proposals vary in complexity, but our cost estimates vary based upon exchange rates, price changes, and our inability to have detailed design complete in the proposal stages. If we are low on our estimate, we may take a beating in completing the contract. if we are high, we may not get the contract. One minor error can cost us (or our customers) millions... ouch.

We recognize our weaknesses and our senior (extremely talented) management has alot of the knowledge in their heads.

Any ideas on metrics that can help us evaluate our proposal performance without adding significant overhead to do it?

 

[Jim Wynne]

Re: Establishing metrics

We are a small company that builds factories for our customers. I am (new) in the proposals department and trying to establish metrics for evaluating our performance, while trying to learn the many details involved in what we do. Alot of spreadsheets are currently used to estimate costs...

Proposals vary in complexity, but our cost estimates vary based upon exchange rates, price changes, and our inability to have detailed design complete in the proposal stages. If we are low on our estimate, we may take a beating in completing the contract. if we are high, we may not get the contract. One minor error can cost us (or our customers) millions... ouch.

We recognize our weaknesses and our senior (extremely talented) management has alot of the knowledge in their heads.

Any ideas on metrics that can help us evaluate our proposal performance without adding significant overhead to do it?

Welcome to the Cove.

I suggest that you proceed in learning the many details before you think about measuring them. Once you're comfortable in your knowledge of the workings of the company things to measure will become more evident. As I usually advise when this question is asked, if you're not sure what to measure it means that the expectations and requirements aren't clear. When you know the requirements, you'll also know what to measure. Don't put the cart before the horse.

 

[Marc]

Re: Establishing metrics

It's kinda slow during the holidays here, but there are some people who visit here who are in the construction business. Maybe they will help out with some specifics, if not now after the holidays.

 

[just67horns]

Just so you'all know. I am a repeat offender here at with the Cove. I was just66horns in a previous life, but that company fired me for asking for a raise after we got our TS certification. So much for promises...

I'm not in the quality department, but am a true believer in the methodology and am already preaching. This time, The choir is listening!

Welcome me back, harumph and happy new years!

 

[BradM]

Hello there!

In my opinion, the bidding/estimation is one of the key components in running a construction job.

Now, you mentioned you have a lot of spreadsheets. How good are they? Did the upper management quantify their estimations, or did they "wing it"? If they quantified things, you can probably go through and develop some baseline numbers on estimation accuracy. Even though you don't have detailed design, surely all those spreadsheets have common activity indicators. In my experience, detailed designs are the exception, and not the rule. So developing a decent tool can give you a real benefit.

Do you have a formal change control system in place? If you don't, get one. It's so important to document when there are deviations. Mainly in that most of deviations can be billable, if they're documented. But even if they are not billable, if you have them documented, you can make adjustments to your estimation model.

As you well know, your variables will get more complex if you have union vs./non-union construction, contract labor, appropriate laws/customs, and the like. Thus, multipliers may be necessary.

In my experience, the most important component to evaluating performance will come at the end of the job. Historically, that is so difficult, as everyone is ready to get to the new job. Construction people like to build things; not do paperwork and meetings. But reviewing the job can yield labor deviation, scope deviation (as measured by # of change control), material cost deviation, and timeline deviation. As with any other deviation, this is not a finger pointing exercise, but a valuable opportunity to avoid making the mistakes in future bidding.

The evaluation is so important whether the job made/lost money, or broke even.

Also, there should be incentive program for estimation accuracy (for jobs awarded). That way your estimation process is accurate. Thus, when you are high on a bid, chances are it will be that the others did not bid properly, and they will lose money; not you.

 

[Stijloor]

Just so you'all know. I am a repeat offender here at with the Cove. I was just66horns in a previous life, but that company fired me for asking for a raise after we got our TS certification. So much for promises...

I'm not in the quality department, but am a true believer in the methodology and am already preaching. This time, The choir is listening!

Welcome me back, harumph and happy new years!

Glad you're back after adding one more horn! Sorry to hear that you parted with that organization after ISO/TS implementation. ISO/TS folks, beware!

Please come back soon. Happy New Year!

Stijloor.

 

[BradM]

Just so you'all know. I am a repeat offender here at with the Cove. I was just66horns in a previous life, but that company fired me for asking for a raise after we got our TS certification. So much for promises...

I'm not in the quality department, but am a true believer in the methodology and am already preaching. This time, The choir is listening!

Welcome me back, harumph and happy new years!

Well, you know... thank you for mentioning that! I kept looking at your name, thinking that I recognized that name! (Although I play online 42 sometimes, so I did not know if it was there )

Oh, one small correction, you are in the quality department!