This article is the first of three parts. It will first introduce the reasoning behind take-offs and describe the first of four core groupings of work papers. In addition, organizational structure of how take-offs are performed for each of the respective groupings is explained; in this article, how to organize work papers for materials is explored and explained. Finally, there are some insights to assist estimators with conducting take-offs; little tricks to keep you organized and completing the task at hand. Furthermore, there is a series of articles on this site addressing estimating. It is a 14 part series covering the in-depth issues, processes, formulas and final reports with generating an estimate.
Introduction to Take-Offs
Estimating has three tenets and many different principles. Tenets are universal, whereas principles are not 100% applicable to all estimates. The three tenets are 1) all estimates are unique; this makes sense, you can’t possibly compare one hospital project to another or even against something as simple as a shed; 2) all estimates must be accurate; accuracy with the estimate is the foundation of a good proposal to the client; and 3) estimates must be timely prepared. Take-offs support two of these tenets – uniqueness and accuracy. Take-offs force the estimate’s formula to account for all elements involved with the estimate. In addition, properly prepared take-offs allow the estimate to create an accurate financial cost of the project. This in turn allows the management team to prepare a proposal that ensures the organization does not lose money and can substantiate their proposal.
A good example of this relates to the construction of a hospital. What if the electrical take-off fails to properly take into consideration adequate materials and the associated labor for essential multi outlets in each recovery room? A simple miscalculation of one additional circuit could cost the contractor $400 to $600 per room multiplied by 160 rooms and you end up with additional costs not included totaling no less than $64,000. Once the contractor includes their markup, this error will exceed $85,000 on the bottom line for the contractor. Proper take-offs prevent costly errors such as this.
Contrary to popular belief, take-offs are not just for materials. Take-offs should be conducted for the other elements of a contract including labor, subcontracting, equipment utility, and other costs. These other groupings of costs are explained in more detail in Parts Two and Three of this series. There is a distinct process for each one of the four major groups of take-offs. The following section covers the take-off process associated with materials.
Of all the take-offs, this one is the most complicated and cumbersome due to the wide variety of materials used in construction. Take-offs with materials are time consuming but well worth the effort when done. To further convolute the process, materials have different measurement basis. Lumber is often in linear feet, refrigeration is in tons and concrete is measured by yards. Thus, the estimator performing a materials take-off must be familiar with the various measurement systems associated with the respective material.
In addition, materials follow a spectrum of status from raw such as fill or sand to highly technical such as computer systems to run elevators. Therefore, the estimator’s experience within the profession greatly reduces risk of incorrectly quantifying the required materials. With trades, take-offs with materials are more restrictive; thus, estimators can be less experienced in quantifying the required units of measurement. However, field experience is still a must to not only understand the terms used but to envision the final outcome from actual experience. Actual field experience is the number one tool with creating an accurate take-off for materials.
When performing take-offs, there are several considerations that must be followed in order to generate an accurate take-off.
The first consideration related to take-offs with materials is to determine the complexity of the particular take-off. The more involved the task, the more experience required of the estimator to determine quantities. The respective estimator must have some form of understanding of each of the layers or respective areas of construction in order to not only comprehend terminology but the formulas customarily used to determine quantities. Most estimators have the respective field experience to understand the connection between the material needed and the outcome of the materials once installed. It is essential to success that only those individuals with backgrounds for the respective phases, functions or stages of construction quantify the materials needed. It is rare to find somebody without actual field experience that can accurately determine quantities of materials needed for an estimate.
A second consideration tied to take-offs is to break the task down into phases of construction. Whether something as simple as a remodeling or complex such as a bridge, every project must be broken down into phases of construction. By breaking down the project into phases, the estimator can then create separate lists for each phase of construction. The phase method helps to eliminate confusion, redundancy and ensures all aspects of construction are addressed.
Every form of construction uses phases (stages, milestones, jobs or sets) of construction for several purposes. The most common is to identify cost or procedural issues by organizing the information into groups thus discovering discrepancies and rendering remediation quickly. For example, with new home construction, there are nine phases. Below is a list of those nine phases and some common materials found with their respective take-offs:
- Documentation and Management – here, materials include environmental fencing, traditional fencing and some temporary items (utility poles, markers and signage);
- Site Development – fill, gravel, culverts, landscaping, trees, bushes, mulch, pavers, concrete (driveway, sidewalks) and seed;
- Footer/Foundation – lumber, gravel, rebar, mesh, concrete, block, sand, mortar mix, water, stone, bolts, brick, tar, sealants, insulation boards and sump pumps;
- Frame – lumber, steel joists, nails, plywood, roofing materials, windows, doors, insulation, siding, brick, sand, mortar mix, stone, concrete, forged steel, glass, engineered trusses, cornice, drip edge, flashing, etc.;
- Walls – insulation, plastic, sheetrock, joint compound, tape, corner beads, screws, nails, paint, lumber, trim, moldings, supports, brackets, rods, etc.;
- Trades – electrical, HVAC, plumbing including the respective fixtures and trim out materials;
- Cabinets/Tile – fine cabinetry, countertops, tile, grout, separators, appliances, escutcheon plates, trim, paint, screws, nails, glue, caulk, silicone, shims, lumber;
- Flooring – hardwood, stain, polyurethane, carpet, padding, transition strips, tile, marble, glue, leveling materials, underlayment, screws, tile, grout, shims, spacers, silicone, stone, nails, etc.;
- Exteriors – gutters, stamped concrete, brick, stone, mortar mix, sand, decking materials, screws, pavers, poles, posts, French drains, stones, metal fencing, quickset, hardware, and a mailbox.
Notice some bleed over between the phases of construction. Estimators take this into consideration when creating the quantities needed for the project.
A third consideration with take-offs is utilizing the plans to generate notes and comments related to calculating material quantities. Plans serve as the guiding force and technical worksheets to facilitate construction within certain parameters. Some plans come indicating exact models/sizes/quantities of certain components of construction. Furthermore, plans inform the estimator of unusual or certain minimum requirements tied to construction. Reviewing the plans assists the estimator with the capture of all necessary elements of construction. In some cases, plans relate directly to the phases of construction thus facilitating the process or mimicking the contractor’s process.
Finally, generate a set of work papers.
Work papers should consist of actual list of materials, quantities, specifications and any notes related to materials. Most estimators start out by making hand notes on a copied set of plans strictly set aside for take-off calculations. They review each page and corresponding subsections to ascertain what exactly is the respective page designed to achieve. For example, with solar photovoltaic arrays, plans will cover the actual layout of the array, then delve into the respective sub sections such as the photovoltaic modules themselves, the corresponding racking system, interlocking wiring harnesses, home runs along with conduit to combiner boxes. In addition, the plans lay out how exactly all the combiner boxes feed the inverter. Thus, there are pages for each section as illustrated below:
- Rooftop layout
- Mounting system to the rooftop
- Module and rack
- Wiring harness
- Combiner boxes
- Home runs, conduit plans
- Building feeds to the inverter
- Feed into the local grid
Estimators start out by making notes for each page, specifically looking for unusual or unique requirements. Other notes include hardware requirements, supporting or temporary materials to complete the task and even supplies required. Once all the pages are marked up with notes, the next step with work papers is to create a list of different materials needed for each page along with description and specification. The last work paper is the count for that respective material for that page. Once all the pages are completed, a master list of materials is customarily created in a spreadsheet and those common line items are combined into a total value.
Good estimating procedures include submissions to suppliers for pricing and availability. Any availability issues are then discussed with the supplier for substitution and of course submission back to the project customer for confirmation that substitution is allowed for the respective part(s).
It is a good idea to review all work papers for validation back to the plans and of course any addendums released for the project are also reviewed and noted. The goal is to gain a high level of confidence that the list of materials, quantities and specs comply with the plans.
The most common mistake made with take-offs is not learning from mistakes. It is normal to be inaccurate with estimates. What is unacceptable is to refuse to be responsible and learn from one’s errors. The goal of every estimator is to continuously improve their respective work. Go back to the concepts above; the number one tenet of estimating is that EVERY project is unique. Thus, every estimate is an opportunity to broaden the estimator’s skills and in turn, increase accuracy.
Create a feedback loop of information. The accounting department should create a reporting system whereby the project is broken down into the phases of construction as described above. Within each of these phases are recorded the respective actual costs of construction – the details. Upon completion of each phase, a detailed report is presented to management for comparison to the estimator’s respective amounts. Remember, it is normal to be inaccurate. The management team should discuss and determine the inaccuracies as a team with the estimator. The end goal, learn from the details what may have been missed and what drives the respective cost. An actual example is presented to illustrate learning from mistakes.
There are multitude of insights related to materials to consider when creating take-offs. Here is a short list of the more common nuances:
- Temporary Materials – every project requires use of temporary materials. The most common examples include creation of jigs, staging, barriers, safety systems and ramps. These temporary systems require materials and these must be considered when creating a take-off.
- Weather Protection – often certain sections or customized materials require weather protection during installation or staging. Materials are necessary to provide weather protection. Examples include tarps, wrap, plywood and even canopies. Take into consideration weights to secure the weather protection systems.
- Supplies – include tape, sealants, sprays, rags, and blades in the materials take-off. Even though much of this is not a function of the building, they are are necessary to perform the respective work.
- Hardware – a common error is to neglect the inclusion of hardware. This is driven by the low price associated with hardware. However, in the aggregate, hardware can be a significant cost associated with construction. Examples of hardware include fasteners (nails and screws); nuts and bolts; connectors and straps. A perfect example are hurricane clips which are a required fastener for trusses along the eastern coast of the US.
- Markers/Signage – include tags, signage, indicators, and safety materials (fire extinguishers, exit lamps, temporary/emergency lighting and ‘Danger’ markers). Ensure, OSHA requirements are met.
Utilize a separate set of work papers just for the above issues. Go through each phase of construction and each page of the plans to address the respective insights above. With larger projects, a separate work paper is generated for each of the five items identified to ensure nothing is missed related to materials.
Summary: Take-Off With Construction (Materials)
If an estimator adheres to all of the considerations as noted above, the materials take-off will be accurate. Use your own experience and judgement to create a process that captures all needed materials. Below is a summary of the above:
- Determine the complexity of the project at hand;
- Break the project down into phases of construction;
- Utilize plans to assist with identifying unusual or highly specialized materials;
- Use spreadsheets to capture all material lists and combine similar material requirements to generate a master list of materials;
- Validate availability and price with suppliers, note any issues and communicate with the customer about discrepancies and substitutions; AND
- Include a feedback loop information exchange system to learn from errors and increase accuracy over time.
Materials are not the only form of take-offs. The estimator must consider labor too. Part Two of this series addresses labor take-off. Act on Knowledge.