Accurate estimating is about what-if scenarios.
What if the customer wants the of the edges display routed? What if the brackets need to hold 20 lbs.?
Estimating involves bringing lots
of little things together to create an accurate bid that covers manufacturing
costs while building in a profit margin.
"To do a true estimate or
ratio analysis is a process that involves time," says Alan Fenstermacher,
president of Modesto, CA-based Keytrix Data Systems, maker of Woodwork/2001, a
parametric costing and estimating program.
It requires an internal review first and then a lot of permutations
before presenting a final proposal to customers, he says.
"Some people have been in the
business for 40 years and can [create estimates] with complete accuracy. Others look at it and say, 'it's $100 ' 'For
a lot of people, it's an “I think number, not based on fact,"
Fenstermacher says.
Axel Wagner, vice president of
development and training services for People Logic Software Corp., developer of
takeoff™ estimating software, says store fixture manufacturers must, at a
minimum, know their bottom-line pricing.
"You have to be able to bargain and justify your costs
quickly. If you don’t do that, you're
either guessing or not in the game."
After nearly five years on the
market, estimating software is slowly taking the place of guesstimates and
changing store fixture pricing methods.
In terms of speed and precision, estimating software has the potential
to escalate the pace from glacial to warp, but knowledgeable observers view
industry acceptance as a leisurely work in progress.
"Right now, there is not enough demand for quality
estimating because times are too good," Fenstermacher explains.
"[But] these are the times
when you need to prepare for the bad by building your systems. A successful estimate is how you are going
to build a product.'
In large part, he observes, the
store fixture business is one of relationships, which allows store fixture
manufacturers a chance to put more time into the estimating process for its
clients.
C&E Seminar Addresses Industry Challenges
Those relationships are typified by
the camaraderie found in NASFM. In
preparation for the associations annual Costing & Estimating Seminar
recently held in Las Vegas, James Terranova, chair of the C&E Seminar
Committee and NASFM board member, sent a questionnaire to members asking them
to fist costing and estimating challenges currently facing the industry.
In order, the top 10 responses were:
·
quote return lead-time;
·
insufficient customer information and
accuracy;
·
estimator training and education
costs;;
·
specialty item, product, and material
sourcing;
·
job costs and follow-up;
·
labor estimating;
·
development of history for estimate;
· direct labor standards on new products;
· material cost capture;
· and timely information from vendors.
Seminar planners used these responses to develop
programming that included estimator training and panel discussions on material,
labor, data collection, and job costing.
The conference also examined how the Internet impacts outsourcing.
Estimating software is changing industry pricing methods as
manufacturers look beyond spreadsheets and guesstimates to bids based on
historical data and indirect costs.
Referring to the No. I challenge,
Terranova, president of Accel Group Inc. (formerly Ohio Cabinet Works) in
Wadsworth, OH, says, "Fast turnaround requires the estimating department
to have great organization.' That means having standard pricing, particularly
for labor and material costs.
"This is an area where software will help," he says.
Terranova
added, however, that even though myriad estimating programs are available and
useful, he hasn’t run across anything specific to the industry. "Existing programs don’t address all
the aspects [store fixture] manufacturers need," he says. "As a consequence, even those
estimators who do use software occasionally find themselves jumping between
programs to complete detailed estimates."
Software a Key
According to Russ Wheelock,
president of Marietta, GA based TradeSoft Inc., most manufacturers-about 70% -
use spreadsheets to create estimates, although a number of firms, including
large shops, still use pen and paper.
With the advent of more advanced estimating software in 1996, the
industry has begun an inexorable crawl toward modernity. When manufacturers finally make the leap and
the estimating function improves, software vendors say the ultimate result will
be quotes closer to reality.
With software, "you can
increase an estimator's productivity two or three times," Wheelock
says. "Quote-driven, custom
manufacturers need to know their true direct and indirect costs in order to
compete with confidence and maintain profit margins.'
An important trend is estimating at
a detailed level, breaking down jobs into material and labor operations. Shops that used to rely on lineal-foot
pricing are now embracing more accurate estimating techniques such as component
breakdown and parametric formulas.
Estimating at the micro level
doesn't have to lengthen the time needed to get a bid out the door, Wheelock
says. Rather, the use of an estimating
package enables manufacturers to produce accurate bids in a shorter period of
time. "Even highly custom
'one-off' shops are discovering they can take advantage of the reusability
built into a database-oriented estimating package," he says.
Estimating software that can be
shared across a network is an important technological development, Wheelock
notes. "We see more and more
companies standardizing their bidding process and sharing information
throughout their organization by networking computers together," he
says. A shop's ability to keep up with
bidding opportunities, while generating detailed costing data, is a critical
success factor.
One
such example is People Logic Software Corp. in Victoria, British Columbia,
which does business with the government.
"Frequent budget cuts require re-pricing very quickly," says
Wagner. Software makes that process
easier.
Intangible Creates Tough Sale
The main obstacles to increased use
of estimating software are comfort, time, and cost. "It's a challenging
sale," says Wagner. "People
in woodworking are very reluctant to spend money for software, and I think it's
because it is not tangible. They
haven’t grasped its value. It's not a
machine. They'll spend $100,000 on a
woodworking machine and think nothing of it,but balk at spending $5,000 for a software
program."
Wheelock
says 95 percent of his companys prospects admit the estimating software would
help them. "Ifs getting them to
take the time to evaluate it,"
he says.
Says Wagner, "What the
industry needs is more education in technology." In urging companies to
take the final step in connecting the front office to the manufacturing system,
he recommends training employees.
"People always think they can
train themselves. If you don't do it
right the first time, you have to go back in ... and it always costs more. The real trick is to ascertain how to use
the new software profitably," Wagner says.
Fenstermacher cautions, however,
that going from manual to automated estimating systems takes time. "Management needs to understand there
is setup time and training involved.
There is a learning curve of one to six months that will cost more in
implementation time and commitment than the original purchase price," he
says.
Once in place, though, the benefits
of using estimating software are
numerous, including the ability to build a repository of knowledge so that if
an estimator walks out the door, the company has a historical database on which
to train a new estimator.
English essayist C.S. Lewis once
observed that human beings can't just go on being good eggs, they have to
either hatch or go bad. So it is with
the store fixture industry. The good
news, says Wheelock, is that "the companies that take the time to review
the material and software are the ones that will grow and thrive, but it's hard
to get the message across because estimators are so doggone busy."
He candidly reports that when he
began selling TradeSoft's ProjectPAK software in 1996, people didn't understand
it or recognize that they needed it.
"We did a lot of missionary work then and still do now," Wheelock
says. But ProjectPAK sales at IWF 2000
were better than ever.
"Consciousness has been raised and people know who we are
now." More competitors in the marketplace will make it easier to sell
software in the days ahead, he notes.
And in an industry with machinery
and a mentality geared toward just-in-time manufacturing, faster and more
precise estimating tools will be a welcome addition to any firm's bottom line.
Michael
J. Stott is a contributing writer
