Reviewing The Estimating Procedure

Published in: American Printer, February 1993

The causes of performance results companies experience are systemic. It's the rare management, regardless of a company's size, that is tracking and internally promoting what it does right. Too often the emphasis is on reviewing what is wrong. A company's success, particularly in a competitive environment, is dependent on having ongoing and detailed organizational feedback and direction, sometimes in great detail.The request for estimates is one systemic process that impacts a graphic arts firm's cross-departmental performance and future. It is used in most companies in the printing and graphics industry, and impacts practically every department's performance, regardless of company size or locale. Yet, if personnel in any company were asked, "On what historical record, direction or documented standards are estimates produced?," the response most likely would be a nervous shuffle and blank stare.

Recently, a supervisor of estimating questioned a "hit ratio" tabulation for her company's sales reps for the last three months. She asked, "Can you believe the low productivity from a couple of our reps? How am I supposed to get our estimators enthused about their work with this level of results? Can't you get someone to shape them up?"

She was asked to provide a detailed, written description of what types of work the company was most competitive producing, what they try to avoid and what they will produce under special conditions. Similar to most firms, she was unable to do so.

This company was expending significant resources soliciting prospects' and customers' work and attempting to generate cost estimates that, in effect, commit the entire company's resources. However, not a shred of accountability regarding standards or desired company direction was written. In this company, as well as most businesses, there's little or no feedback on an estimator's performance unless he or she makes an error on the negative side.

The following questions may strike a nerve in estimating department personnel:

1. What percentage of your requests for estimates probably should never be produced?
2. If this percentage were eliminated, would you have adequate time to improve the quality of appropriate estimate requests?
3. What percentage of estimates are conspicuously incomplete?
4. On what percentage of estimates that turn into live jobs do you receive structured feedback, including feedback from production personnel?
5. How often do you do departmental reviews for purposes of improving communication?
6. For what percentage of estimates that become live jobs are you required to conduct a post-production estimate to actual cost comparison and follow-up analysis?
7. What is the source of standards that you use in producing an estimate?
8. Has your supervisor or management ever offered direction regarding the types of work the firm wants to build toward in the future?
9. What is your primary job responsibility?

These questions attempt to strike at the heart of an organizational training issue that too often is either taken for granted or totally overlooked: the future of a company's performance and direction often lies in coordinated training for winning profitable work. A company's future, department by department performance, working relationships and expectations of prosperity all are results of this process.

The following are suggested solutions for eliminating inefficiencies in the request for estimate process:

Written policy. Ownership and management should review the written standards and operating assumptions estimating is using. If there aren't any, standards should be developed that include consideration of the direction ownership wants for the firm.

Layout and design. A comprehensive review of the actual request for estimate document should be completed. Many are sorely lacking in layout design. The document should have a format and design that promote the gathering of complete information. Too many request-for-estimate forms are laid out in a pattern that facilitates data processing. However, the form's primary purpose should be the gathering of complete information regarding what the customer expects.

Performance. Companies should institute regular monthly performance reviews by all estimators. The review should include positive variance data and similar information should be shared with the entire sales team and production supervisors.

There are meaningful learning and performance-enhancing opportunities buried in the river of estimating information produced in every company. Unfortunately, few organizations analyze what they are doing right or track the frequency of success.