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Every day you make assumptions. You take in data, you process and then react with somewhat of an informed response. There is a saying about assumptions that you all have heard that I won’t publish here, but it is incredibly true. I think I just made two assumptions.
Our current construction industry is built on assumptions and our own projects have been doing this since the first client wanted a conceptual budget. Your clients need to know how much money their projects are going to cost, so they ask for a conceptual budget. Which seems reasonable, right?
If you were spending millions of dollars on something, you would like to know periodically how much it costs. The world is driven by money and the more you’re informed about how you’re spending your money, the better you feel about those purchases. I’ve seen people in the store using scanners on the wall of the supermarket to see how much something like a loaf of bread costs. Just imagine if that person had to write a narrative describing that bag of bread to an estimator from another company in order to get that price.
Where would you start? How big is the loaf of bread? What type of bread is it? Gluten Free? Brand? Expiration Date?
A senior engineer is asked to do this on almost every project in the conceptual stages and I believe it has the potential to set up the project for success or can cause some serious issues further down the road.
Consider the following scenario, your client has a brand-new project and they want to know how much this is going to cost. Typically, they’ve engaged with an architect, maybe an engineer and possibly a construction manager. They ask you to develop a conceptual budget for the project. The construction managers have some detailed historical data on pricing. They use very sophisticated pricing tools, experience, owner inputs and several assumptions to create this conceptual budget.
During Schematic Design, often the CM would like engineers to develop a narrative on the MEP systems we foresee being used on the project. They’re going to take that along with some high-level floor plans and maybe a site plan to validate their budget pricing for the Owner. I asked several plumbing contractors in the Wisconsin market what they thought about past narratives they’ve seen and the overall idea of pricing a design from the written word. Let’s just say it’s a lot more complicated than describing a loaf of bread. Their anonymous responses follow.
What makes a good SD narrative?
The engineer needs to be sure to include a brief paragraph on all the systems that are expected to be included in the project. We sometimes see the engineer, or the architect only hit “the big ticket” systems or equipment.
A detailed description of each plumbing system including type of material to be used. Pipe joining methods that will be allowed. Existing utility locations, if known, with pressures and sizes. Head end equipment requirements and sizes including pumps, heaters and water treatment requirements, etc. Room description and quantity of each room type with fixture requirements for each type of room.
Plumbing/mechanical scope aligning with the GC scope, rough materials allowed, fixture/equipment clearly identified, alternate manufacturer/material in case of a budget issue. These items should be identified upfront as sometimes the Engineer is not involved in the initial VE. Without these items you will have contractors taking liberties with the scope and pricing inferior items that will impact Owner/building down the road.
The best, most accurate information available that has been coordinated with the OPR and planners’ intent for the project. Good SD narratives are created when MEP engineers work outside of a bubble of their wants, and coordinate with the Owner’s expectations.
Why is it so hard to predict a construction budget from an early narrative?
There are many factors to an estimate beyond the quantities and types of materials or equipment. Factors such as schedule, commodity pricing fluctuations, availability of manpower, risk, quality of project, owner, cm, etc. We do not know how the plumbing system will interact with other systems and physically fit in to the structure.
• Material cost increases
• Labor availability
• Company back log
Without a good and clear narrative, numbers will be all over the board. Particularly if there is a contractor that is currently doing a lot of work with the owner there is an increased expectation that they “should have known.”
It’s not difficult, it’s time consuming. There are always a lot of assumptions that need to be made to fill in the blanks and to coordinate with the narratives of other trades. For example, what water or drain requirements may there be for other trades?
Are there any telltale signs of trouble when reading someone’s narrative?
Not necessarily, but you can tell when they are light on the details, that the engineer or architect didn’t spend any time on it. Sometimes it’s better not to have any narrative.
Lack of detail as requested in item #1 and the inability of the design narrative author to produce this information once we request the information.
Yes, when there is no information.
Yes, contradicting information is the biggest, this usually shows that details were just copied from other projects.
Are there any rules of thumb your company uses to “fill in the gaps” when you don’t know everything about the job?
Historical data on past similar projects is usually what we do, sometimes we will spend some of our engineering and CAD time to create drawings for clients.
We try to include a complete system, such as roof drains and over flow drains when there is a flat roof. We add hose bibs, floor drains and HVAC connections to the best of our ability. We produce a scope letter with a detailed list of what we are providing with quantities as well as items we are not including. This helps the team to determine if we are producing a budget that meets their expectations.
Our unwritten rule is to fill in the gaps, so we have a complete number for submittal on bid day. I know other contractors who utilize the holes to their advantage and change the pricing once they are under contract.
There are always gaps to fill with a SD narrative. We will use our experience on similar projects to ensure we can give a complete price for a scope of work. This is greatly simplified when the narrative has been coordinated with the Owner’s expectations and the early CM budget.
Do you have more confidence when you’ve worked with the engineer on past projects?
Yes, this is always a factor if the customer, GC/CM, engineer, architect are a known entity.
Definitely. There is a comfort level which allows dialog up front. This creates a team feeling right from the start and as long as there is collaboration the issues can be worked out. Yes, this helps us to know what unwritten expectations may be.
Have you ever had to tell the CM that the narrative/information was unbiddable?
No, but we have qualified our budgets by listing our clarifications and exclusions in detail.
When we have questions, we submit a detailed list of questions and typically we receive answers that clarify the requirements of the project.
No, if there is a narrative that comes in that is so vague that it is unbuildable we will utilize our design build narrative to provide a price and scope to the GC.
I’ve heard of instances where the trade partner has bid the engineering narrative and been told by the CM that their number is too high, and they need to bring their number down, only to find out later that their number was right. Has this happened to you?
We’ve never been deliberately misled by a client, but we have had situations where a high-level budget was given to the Owner by an architect or GC without any input from a contractor or engineer. That number becomes the “target” budget, and it was never a good number to begin with. Once the project is completed, the budget that we provided is much closer to final/actual costs than the first budget provided with no consultation.
When this happens we typically will review the engineering narrative and our budget with the CM to find pluses and minuses of our budget and narrative to produce a final budget that works for all. This process can be a conference call or weeks of meeting based on the size and complexity of the issue and project.
You’ve heard right but good luck getting any of that on record, especially if the CM has already given the Owner a GMP and is contractually locked into a number.
This happens often. A CM project budget is often set based on industry standard square footage costs and is not aligned to the OPR, or the narrative is not aligned to the budget. When this happens there is a lot of time and painful decisions that need to be made to get the cost to align with the budget.
The biggest takeaway I see from these responses is that clearer and more thought out information, the better. When information is missing, the construction teams are forced to make their own assumptions. Who’s assuming the risk for these assumptions? Essentially everyone on the team will now be dealing with the consequences of missed scope, incorrect assumptions and errors from a poorly written narrative.
In college our group of friends dreaded the English and Humanities classes. I can still hear my roommate screaming in our dorm room, “Why the he!! are we required to take this technical writing class!? I’m good at Calc and Physics, not writing and grammar.”
He wasn’t that great at Calc or Physics, but I saw his point at the time. Reflecting back on the class (I think I received a B or C) maybe we both should have valued those technical writing skills more. It is proving to be a skill that may keep you and your plumbing trade partners from making bad assumptions and taking on undue risk.