What is the real economy?


Steel detailing is the craft of transforming the information found in the contract documents into drawings that the steel fabrication shop can build to. In addition to the shop detail drawings, the steel detailer will create the erection drawings that show where all the parts and pieces go for the steel erector who puts it all together in the field. Every steel framed project requires the work of the steel detailer. The knowledge required for the steel detailer to perform this task correctly takes years of working practice to achieve.

As the computer age has progressed, the introduction and advancement of what are called steel modeling programs has made the work of drawing the pictures easier for the steel detailer. These programs allow the user to set up a computer model of the building with dimensions, elevations, steel member sizes and locations. The modeling program then does the rest of the work. This process of detailing steel using a modeling program saves the detailer a lot of labor in drawing the individual pictures, though the steel detailer will still need to format and edit the pictures of the parts according to industry standards.

When the modeling program is utilized correctly by the user, the result will be accurate shop detail and erection drawings. If the information given by the model is incorrectly shown on the drawings, the result will be virtual garbage – even if the dimensions are correct.

An experienced steel detailer understands how these drawings will be used by the steel fabricator, the steel erector, the general contractor and the designers. They have learned the requirements for specific presentation of the steel according to industry standards that make the drawings usable. Drawings that are not industry standard will cause difficulty for the designers, slowing down the approval review, creating scheduling issues with the general contractor and their subcontractors. If the details are not shown as expected by the fabricator and erector, the steel will be fabricated incorrectly, causing it not to fit correctly in the field.

To avoid such difficulties, reputable steel detailing firms will have a detailing checker review the completed drawings for compliance with the contract documents and for workability on behalf of the fabricator and field erector prior to releasing the drawings for approval to the designers. Some lesser experienced detailing firms do not perform the additional check, as they feel checking the drawings is not necessary if they have used a modeling program in the performance of their work. By not including a final check of the drawings, the time and money saved could then be passed on to their customers. Offering lower prices would then mean they could get more work.

This ‘economy’ in purchasing steel detail drawings that have been produced in this way translates into extra work for all the other trades down the line, an expense that is impossible to quantify. But it is an expense that would be avoided if the drawings were checked for industry standards during the approval process.

The topic of steel fabrication economics was recently discussed with colleges regarding a project that was subcontracted to an offshore steel detailing firm. Steel fabricators were very busy at the time that this project was built, and most steel detailing firms were unable to take on a project without overtime premium costs. The steel fabricator was approached by an offshore steel detailing company who was interested in taking on the job immediately at 10% of that current market value.

This offer was very attractive so the steel fabricator elected to subcontract their steel detailing to this company with whom they had no prior working experience. The steel fabricator believed that the work would be completed accurately and in a timely manner because the steel drawings were to be created using a computer modeling program.

The ramifications of what the steel fabricator thought was a good buy in steel detailing quickly resulted in a train wreck of a project. The steel fabricator had many years experience fabrication, but wasn’t very business savvy with regard to the steel detailing.

Not only had the steel fabricator decided that an offshore detailer using a modeling program was the answer to their budget and scheduling woes, the steel fabricator did not feel the need to review their own shop drawings for quality and accuracy. The fabricator believed that the shop drawings, once approved by the general contractor and the designers, would perfect and ready for fabrication.

Since the fabricator neglected to review their own drawings prior to sending them off for approval, they did not notice that the shop detail drawings actually created were incomplete and inaccurate.

It became clear upon reviewing the shop detail drawings that the steel detailing employees who edited these shop drawings had little knowledge about how the pertinent information should be shown for the steel fabricator and the steel erector. The steel detailing firm was clearly trying to utilize the computer modeling program to replace the need for experienced steel detailers who know how to show the correct information. The shop detail and erection drawings created were amateurish and almost impossible to follow.

Problems began immediately during the approval process and continued with the subsequent revised drawing submittals. The steel detailer had drawn the steel backwards to normal reading standards—from right to left instead of left to right. Beams were detailed at the wrong length and columns at the wrong height. The roof placement plan in this single story building bore no dimensions; no column marks, no shear tab marks on the columns and beams, and the piece marks were not located correctly for the erector to be able to use them. Holes had to be slotted, new connections were fabricated. Beams were shortened or lengthened. The erection schedule fell months behind.

Fabrication errors and the resulting problematic steel erection created scheduling delays which forced the general contactor to release the original steel fabricator from their contract and to find a different steel fabricator to finish the work. The new fabricator had to have the steel detailed by a different detailer, for it was quickly determined that the model created by the original fabricator’s steel detailer was not usable.

The original steel fabricator was headed for trouble when they subcontracted to an unknown steel detailer because of the low price, and without verifying work experience and quality. This poorly made decision affected the outcome of the entire project. Every trade on this job after the steel was installed was affected by the scheduling delays.

What is the best solution to prevent problem projects like this one? To find the answer, we need to first find the root cause of the problem. Let’s go back to the beginning.

Figure A Figure B
Review these two pictures. Figure A is the structural drawing foundation plan and Figure B is the architectural drawing foundation plan, same location and elevation for a building.

The first order of business for the steel detailer is to locate the building column centerlines in order to provide an accurate anchor bolt plan. To be able to complete this task, the steel detailer requires dimensions to the center line of the columns. The steel detailer would need to complete a review of the architectural drawings and the structural drawings together to obtain an understanding of the building they are about to draw.

In Figures A and B between the grids 19H and 20H, not only are key dimensions missing, what is shown is difficult to interpret. An experienced steel detailer would have sent an RFI to the steel fabricator to establish the correct dimensions to be used to locate the centerline of the columns in this area, and then waited for the answer before continuing.

The original steel detailer for this project made their own assumption about the dimensions, completed their anchor bolt plan and sent it out for approval. The steel detailer believed that if their assumption was not correct, the drawings would then be marked up by the approvers with the correct information. But the drawings came back from approval without the expected verification.

This was a fast track project (what project is not), so the steel detailer continued on with their shop drawings, circled the dimensions in question and asked for verification again, but the return approval drawings did not provide them. Why was this request for verification on the shop drawings not addressed?

What the steel detailer did not understand was that it is not the job of the designers to verify the dimensions that are on the steel shop drawings. The designers are required to provide dimensions for the presentation of the building they have designed. The dimensions shown on the steel shop drawings by the steel detailer are for trade specific needs. The designers understand that the dimensions that are shown on the steel shop drawings are there for different reasons than is covered in their area of expertise. Therefore, the designers can not assume that the dimensions the steel detailer is using are accurate with what the contract drawings show. This is why we use RFIs – Requests for Information – to get the correct answers.

If the steel detailer suspects a bust in the dimensions for gridline locations, then the steel detailer must submit an RFI asking for the correct information. Failing that, the steel detailer has not done their job correctly and should then be held responsible for the steel not fitting.

Had an RFI been sent for verification of dimensions shown relative to the information on Figures A and B prior to developing the anchor bolt plans it would have created the opportunity for a whole different outcome on this project.

As it was, the general contractor finally told the steel fabricator that the drawings were approved as drawn, and in doing so, made themselves liable for the shortcomings of the steel fabricator and their steel detailer. Now we have a bust in the design drawing dimensions left unchecked so far into the project that the resulting problems are all the burden of the general contractor.

In essence, the real problem is that everyone involved was trying to do the work too fast. The steel fabricator, who probably never knew what their shop drawings looked like until they were in fabrication, had allowed the steel detailer to ask questions on the approval submittal drawings. The architect and engineer approved steel shop drawings that were of questionable quality. The general contractor, working hard to keep their project on schedule, probably did not even realize just how bad the steel drawings were until they and the steel erector tried to use them. Everyone was at fault here, working hard to get the job done and rushing it through, but no one was working to make sure it was, in all ways, correct.

The best solution to problems like these is in the prevention of them. The path to that prevention is to have the contract drawings reviewed by someone with a working knowledge of them prior to their release for bid. What do we mean by ‘working knowledge’? Working knowledge of the drawings is the ability to read the design drawings and to interpret that information into what the steel detailers and steel fabricators need to know to be able to do their job adequately.

When a review is performed by someone who has a working knowledge of the design drawings and the capacity of interpretation required to create the shop detail drawings, the gap between the designer’s intent and the steel shop drawings would then be bridged at the design level. Most projects can be reviewed for issues in a short period of time, and would prevent many problems from developing. The need for addendums, requests for information and change orders would be minimized. In some cases they may be eliminated. The savings in cost and time on behalf of the architects and engineers would be unquantifiable.

For projects in process, an independent check of the shop detail drawings by someone with this working knowledge of the drawings during the approval, on behalf of the designers or the general contractor. These types of reviews may take more time given the quantity of shop drawings to review together with the contract drawings, but will save much in scheduling due to errors.

Had this been done on the project we are writing about here, much, if not all, of what happened could have been avoided. Workability reviews prevent projects from turning into cost accounting and scheduling nightmares, at least as far as the steel fabrication and erection is concerned.

It is the quality of the work we all do for the project that determines the productivity and efficiency of getting the building built. Low price should not be the only deciding factor in choosing our contractors and subcontractors. Saving money and time in the building schedule by way of accuracy and efficiency should be.

Kerri Olsen – What is the Real Economy? 2-20-2011

Kerri Olsen is a steel professional, a technical writer, and an author who recently released The Art and Science of Steel Estimating – Beginning Fundamentals, a comprehensive guide for the steel novice. See the website at http://www.steeladvice.com.

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Hot Topic – Bidding Wars


During recessions we see steel fabrication prices drop to rock bottom at a time when we need all the money we can get from our jobs.  Business owners make decisions like drastic drops in pricing  based on an effort to keep people working and the company running.  This strategy, while it sounds like a great idea, is much like shooting one’s self in the foot.  (It’s ok, I’ve got another one… )

The hope is that using this strategy might sell enough work to keep the cash flow always moving forward, then pricing for future jobs may be raised and projects sold at higher dollars to keep the company from getting into financial trouble. 

Prices go down a whole lot faster than they go up in the fabrication world.

Businesses exercise this strategy (designers and general contractors too), while keeping fingers crossed that not even so much as a hiccup occurs during the course of the job.  Any upset in this forward moving plan could send funds seeping down a hole instead of creating funds to propel the company forward into the next cash positive project.

The immediate gratification received by the flurry of activity is all too soon followed by mounting debt, swelling payrolls and slow cash flow, exchanging one headache for a whole stack of new ones that may send companies into the world of Chapter 13 or Chapter 7.

How do we tell our fellow competitors that to choose this strategic plan is just bad business and keep them from going there?  We can’t blame the business owners for making every effort to hold on to their livelihood, can we?  So many companies do it – and the low bid goes to the one with the most to lose.  Then we all start taking turns.

Companies utilizing this low bid mentality get sharp attention from potential customers, their own competition, as well as the material vendors and subcontractors.  All wonder about the credibility of the business due to this behavior. 

Material vendors and subcontractors have a broad customer base and few competitors.  Price cutting from them to support a low bid mentality is seldom found.  We still have to buy what they are selling and those prices are going up, matching the rise in fuel cost.  Good luck in finding any kind of deals. 

The more savvy businesses choose to wait out the storm, pricing projects the same way as they do in the good times, diligently and consistently.  This practice, while honorable, results in what seems like wasted estimating time and dollars as one bid after another is beat by 25 to 50 percent.  With the length of time this recession has lasted, even the most conservative fabricators are suffering the impact.  Soon even these fellows may follow suit, and this will make every bid a virtual bloodbath.  

Is there anything that could be done about this?  Do we have to accept this as the status quo?  Will any among us be able to keep from diving into the cellar with everyone else and survive this tornado of a recession?

Company owners ask themselves these same questions daily, while shaking their heads upon reviewing the competitive bid results.  How do we stop the downward spiral?  How do we survive till these guys quit doing this or go out of business?

We find that the root cause of this low bid mentality is desperation.  Despair is an emotion, and most of us understand that emotions usually don’t serve business well.  But what is the root cause of this despair?   Peel back another layer and you might find that it is blatant ignorance and a total lack of commitment that is actually behind this kind of desperation. 

How so, you ask? 

Most fabricators get into the business because they thrive in the trade.  A commitment is made to do quality work and to deliver the finished product on time.  In fulfilling this commitment, a successful business is created and maintained, supported by the industry it serves.  In other words, the foundation for any good business is strong business ethics.

Stupid low pricing doesn’t change any of that, does it?   Well, it tampers with the success part, and probably the ethics part, which in turn bumps aside commitment, quality and thoroughly stomps on fairness. 

Do we honor ourselves or our trade industry when we beat up our vendors and subcontractors for lower pricing to support our price slashing plan?  Just how long is the line of people you have to screw to make budget?  Maybe making budget isn’t the intent.  Maybe robbing Peter to pay Paul is really the intended solution.  Who knows?  Maybe the plan is to worry about all of that later, because it’s a bigger worry that there is no work right now.  Makes sense if you don’t think about it.

We commit to do quality work to honor our business and the industry we serve that supports us.  For the company, that honor is based on doing a fair job for a fair price, on behalf of the employees, the vendors and the subcontractors.  

If a contractor is purposefully bidding and taking projects too cheap, they then threaten the opportunity for their own success by destroying fairness, trust and honor, not only for their own company, this destruction by association includes the business employees, vendors and subcontractors.

If running the company by emotion, the owner has decided that fairness, trust and honor have no value, that it is alright to ignore any commitment to themselves, the industry and its fellows.  Just for one job.  We can be smarter later on.  After we score a job and get some work.  

Those that follow suit on bid day have made the same decision.  And so the downward spiral is maintained. 

This is why the root of this type of despair is blatant ignorance and lack of commitment .  This level of desperation is achievable only when someone is willing to totally disregard the commitment made to those who support the company, as well as to the trade industry that has been supporting them.

Servicing emotion and ignoring these commitments may win the bid, but it will also renders the industry unable to support your business.  It starts the negative cash flow trend, not only for your company, but for everyone else even remotely associated.  It’s a practice that builds a ship that will sink. 

In closing the only answer to this problem is not to create it.  Don’t go down that path of desperation.  Choose downsizing or diversification, find different opportunities – anything else. 

Don’t be the one that decides to cut the throat of an industry that has supported so many for so long.  You will be the leader of a line of lemmings, and if you survive the migration (recession), you will be following in that same line again, set for that same destructive opportunity.  

You can choose to stop the cycle and set a standard, others will notice and follow.  The result will be almost immediate.  Those emotional quotes will be singular and untouchable, forcing market trends back where they belong. 

______________________________________________________

Sometimes, the best way to win a fight is not to go there.

k

Is steel estimating dead?


With all of the steel estimating programs available for steel fabricators, is there no longer the need to learn the trade as we did?  Do we not need to learn how to read and interpert contract drawings and specifications?  Do we not need to know how to list materials, labor the steel, add in costs?  Have we moved on to a world where no knowledge or thinking is required? 

People who think that computer programs are the answer to steel estimating are mistaken.  It takes years of experience to be good at this trade, and even more years to to be able to do the job right.

Steel related Questions?


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