The Ethics of Construction Estimating

Acquiring work is arguably one of the most important functions in a construction business. Without a consistent source of revenue, there is no company. If the Estimating Department is not set up to succeed, it can’t perform its vital role of creating new revenue.

There are many Processes, Skills and Best Practices that a successful construction company employs to win profitable work. However, one characteristic that is the hallmark of a best in class company is Ethical business practices.

A contractor’s reputation in the marketplace can mean the difference between staying in business or not. Many General Contractors rely on Subcontractors to perform the majority of the scopes of work on their projects. So, it stands to reason that those same subcontractors that they partner with, and the pricing they provide, have a direct impact on the ultimate success and profitability of the General Contractor. Creating an environment where Subcontractors feel they have a fair opportunity to earn the work in the marketplace is critical.

What do we mean by Ethical Estimating practices?

A dictionary definition of Ethics: “The principles of conduct governing an individual or a group.” In a very simple sense, conduct your business and treat your vendors and trade partners the same as you would like to be treated. Trade Contractors and General Contractors often find themselves in the middle between the Owner and the Vendors. Protecting the end user as well as the supply chain is equally important.

Read more: Relationship Based Estimating

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A Few Do Nots

  • Do not shop your subcontractor’s bids. Respect the work that your vendor or trade contractor put into his bid and how he prices his work.
  • Do not exercise a Sub or Vendor just for a check number. If you ask for a number expect a professional, thorough effort and return that expectation by providing a thorough review and fair assessment.
  • Do not let the Owner influence how you conduct business. End users have been known to introduce new bidders late in a process or demand more bidders after multiple qualified bids are already received.

 

A Couple of Do’s

  • Do provide bidder appropriate feedback if they are not the successful bidder. Let them know they were not successful this time. Give them some insight about the decision process. Oftentimes, Subcontractors find out they didn’t get a project because their vendor finds out before they do. Building a reputation with relationships gets better cooperation in the long run.
  • Do follow the American Society of Professional Estimators (ASPE) Ethical Standards for Professional Estimators. It states that Estimators shall:
    • Perform services in areas of their discipline and competence.
    • Continue to expand their professional capabilities through continuing education programs to better enable them to serve clients, employers and the industry.
    • Conduct themselves in a manner that will promote cooperation and good relations among members of our profession and those directly related to our profession.
    • Safeguard and keep in confidence all knowledge of the business affairs and technical procedures of an employer or client.
    • Conduct themselves with integrity at all times and not knowingly or willingly enter into agreements that violate the laws of the United States of America or of the states in which they practice. They shall establish guidelines for setting forth prices and receiving quotations that are fair and equitable to all parties.
    • Utilize their education, years of experience, and acquired skills in the preparation of each estimate or assignment with full commitment to make each estimate or assignment as detailed and accurate as their talents and abilities allow.
    • Not engage in the practice of bid peddling…
    • Not enter into any agreement that may be considered acts of collusion or conspiracy (bid rigging) with the implied or express purpose of defrauding clients.
    • Not participate in acts such as the giving or receiving of gifts, which are intended to be or may be construed as being acts of bribery.

Ethical business practices are the foundation of any good pre-construction effort. Whether you are a General Contractor or Specialty Trade Contractor, Estimators and Project Managers alike are duty bound as professionals to behave in ways that make our industry stronger and provide a consistent quality product and value to our Clients and stakeholders.

 

If you’re ready to get started, but aren’t sure where to start, the team as Ascent Consulting is here to help. Book your FREE performance consultation now.

 


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