Well, there is no doubt that we are living in a world where disruptions are the norm: supply chain for raw goods, freight costs are volatile… all commodities are volatile. On the flipside, customers are looking for best delivery dates, lowest price and of course quality.
Estimating teams across all industries are in a no win situation, and they are not able to get material pricing in a timely fashion. When they do, the disclaimer automatically states that the price is only valid if you order in the next ten minutes… like an infomercial. This means the projected delivery of the commodity is also essentially useless because what was there today is likely gone tomorrow. Did we mentioned that because they had to wait for pricing for so long that the typical time to turn around an estimate is no longer what it used to be.
So after all the time and effort to try and pull together an accurate estimate which only comes at a direct cost to the company, the client is left with what? They have a ball park price, a delivery date that has a high probability of changing and likely had to wait longer than expected to receive the estimate, meaning the delivery date automatically is moved out further.
Is there a better way that benefits clients and organizations with estimating teams? Clients are afraid of cost plus models but are they really that bad? Delivery dates would be sooner as projects could begin immediately. Estimators can support purchasing and expediting to help reduce supply chain issues. Actual delivery dates can be determined far sooner as material lead times will be real. If a company is going to take advantage of the customers willingness to do a cost plus model, it isn’t a company you would want to partner with long term anyway.
Maybe there is room for a hybrid model where orders are placed and timelines and actual estimates are calculated at that point? Would love to hear some healthy comments!