Articles

Computer-aided Estimating - Things to consider
when choosing the right software tool for your business.
by Jim Warren, President of ShopWerks Software

Any estimator worth their salt knows that tools-no matter how sophisticated, automated and capable-cannot perform the work at hand by themselves. It takes experienced, knowledgeable and capable human beings to get the work done in a timely and profitable way. In successful businesses today, work has to be understood as the sum of processes, equipment and people that are employed in order to produce products in a profitable manner. Simply said, it takes good management practice. Tools perform tasks under the direction and control of operators who manage the work as a whole. A large part of the formula for business success depends upon being able to select the tools appropriate for the performance of work with the unique processes and personnel in any given company.

Estimating is one of the work processes that every company must manage profitably. Tools must be selected for this work in the same way that tools are selected for production processes. Companies wishing to carefully choose a software package that is appropriate for the accurate, timely and profitable management of the estimating process should ask themselves these important questions about software tools:

Will this software tool easily compliment and facilitate the application of knowledge and experience of company processes that the estimator possesses?
Will this tool allow the estimator to get the work done in an efficient manner without intensive training time or expense?
Will the computer-aided estimating process produce accurate, reliable results?
Will the estimates be generated in a timely fashion?
Will the cost of the tool yield an acceptable return on investment (ROI) in a justifiable timeframe?

The answers to these questions are not obvious or uniform in nature. A thorough analysis of your company's particular situation is required in order to make the appropriate software choice. The final, successful and profitable selection of a software estimating tool will reflect the uniqueness in the makeup and structure of your company.

It's important to remember the fundamental purpose of estimating software: to get you from the request for a quote (RFQ) to the generation and delivery of an accurate finished quote. It's that simple-like getting from point A to point B-and you have to ask yourself what considerations really matter in the effort to traverse the two points. It's not unlike driving a car. You can choose to drive either a Chevy or a Cadillac. Each vehicle will get you where you want to go, but there are substantial differences between the two in terms of the features, performance and complexity of the integrated systems. It is important to understand the consequences of choosing one over the other as a transportation investment, since the Cadillac is likely to be somewhere near double the cost-per-mile to drive of the Chevy.

As far as transportation goes, getting from one place to another involves the same principals and conditions for either car: there must be a powerplant and drive train, a means of steering the vehicle, roadways suited to auto traffic, and-most importantly-an experienced driver applying good driving practices. Drivers, as managers of their transportation, must balance the cost of the respective vehicles against both the requirements of the critical mission (getting to point B) and their pocketbook (the ROI). Not every driver needs or can afford the features of a Cadillac. Understanding this distinction is fundamental to selection of cost-effective transportation-as well as estimating software. When you consider your company's capture rate-the number of orders placed in relationship to the number of estimates issued in a given period of time-you may find that the cost per estimate turned to an order is substantially different from one software program to another.

The key to accurate estimating lies not in the software but in the estimator. The estimator's degree of knowledge of shop process efficiencies dictates the degree of quoting accuracy you will obtain applying any method of estimating-be it by hand or assisted by a computer. The estimator drives the estimating process with highly refined knowledge and professional judgement-it's not guesswork. Computer estimating software is a tool that assists estimators in their task by organizing and calculating a series of processes necessary to arrive at a projected cost in terms of time and money. If the completed estimate derives essentially from good estimating practice, that cost will directly reflect your particular company's capabilities to profitably produce a specific item or assembly. To be cost-effective, the level of complexity and depth of feature of the software tool must be appropriate to your company's manufacturing processes and capabilities, and to the proven skills of your professional estimators.

In recent years many powerful software packages have been brought to market, combining an impressive array of features to help you get from start to finish-RFQ (point A) to finished quote (point B). How you determine what is right for your company is dependent on the unique management philosophy and practices of your organization. Successful estimating must be driven by lean manufacturing practices, with an emphasis on simplicity and efficiency, and a clear understanding of the complexity of the items or assemblies produced. The focus on efficient shop processes must be complimented by clean, effective estimating practices that minimize time and cost per estimate. The degree of detail your shop will require at the back end of the estimating process must also be taken into account, as should the delivery time and quality of the presentation to the customer. All of the above considerations should inform the criteria driving software tool choice, but what should those criteria look like in a real manufacturing operation?

In order to illustrate the software tool choice process, lets take a quick look at a comparative example. You need to clearly understand your company's manufacturing characteristics and estimating needs-and be able to distinguish them from other business models-in order to assure your choice of software will be neither a costly overkill nor a tool inadequate to your purposes. Review the following list and circle the factors that best describe your company.


Questions	Company A	Company B
1. The size of our production runs are . . .?	Small/Medium	High volume
2. How many complex assemblies are produced?	Very Few	Extensive
3. Do you have a full time estimating Department?	No/Part Time	Yes
4. Is ease of use without extensive training important?	Yes	No
5. Is the time to generate an estimate critical?	Yes	No
6. How would you compare your bidding in relationship to your customers projects?	Bid a few parts	Bid the whole project
7. How much of an investment is budgeted?	$100.00/$3,000.00	$3,000.00/Plus

Analyzed in this way, it is easy to see that the factors influencing estimating software decision-making differ greatly depending upon the makeup of each unique company. It is likely that most small to medium-sized companies fall under a "Company A" categorization, where simplicity of software design, efficiency of estimating processes, low cost per estimate, and a moderate initial software investment will be the determining criteria. Large manufacturing operations, typical of the "Company B" description, will make choices based on a distinctly different set of criteria that may support a larger investment in hardware, software and training expenses over the long term. The wide range of available software solutions reflects these essential categorical distinctions. It is definitely not "One-tool-fits-all" in the estimating software industry, and the differences in cost are-to say the least-substantial.

Let's face it-choosing the appropriate tools for your company's estimating functions is a difficult business challenge. With careful analysis of your manufacturing processes and practices, management style and bottom-line expectations, you can develop a better sense for the particular needs and circumstances of your estimating processes, making the challenge of choosing the right software more manageable. Whatever you do, be sure to request a trial version of any software you seriously consider. An uninformed choice can prove to be a very costly lesson in appropriate tool procurement.