the grade. Common wisdom would indicate that without
work to do, there is no money to be made. However,
these supposed “wins” are tallied on bid day rather than
at the conclusion of the jobs. This is like determining the
winner of a baseball game at the end of an inning rather
than at the final out.
Billy Beane saw a similar problem in baseball. He
realized that batting average was a weak metric on
which to judge a player’s contribution to wins and
losses. A player might exhibit strong hitting prowess, but
this did not necessarily translate to runs—a much better
leading indicator of winning.
Instead of batting average, Beane
used nontraditional metrics,
such as on-base percentage and
slugging percentage. Ultimately,
runs translated to winning, not
In your world, basing the success of estimating on jobs
awarded is an equally flawed metric. In the end, jobs
must translate to bottom-line profitability. Hit ratio and
profitability are not necessarily correlated. In fact, an
organization that emphasizes the importance of a high hit
ratio will normally see its hit ratio increase, often at the
expense of profitability. Estimators are better evaluated on
their accuracy—the degree to which their bids correlate
with the ultimate realities of the job (specifically, costs
Better metrics and analyses shed light on important
strengths to be developed and deficiencies to be
addressed within an organization. For example, an
analysis of your estimating system may lead to the
• Replicable Processes. What processes
or knowledge will improve the
estimating team’s bottom-line success?
• Training. What training is
required to improve the
collective accuracy of your
• Sustainability. Is the success of the estimating process
sustainable or an anomaly brought about by a niche or
customer—or simply lucky timing?
SECOND BASE: PROJECT MANAGEMENT
Project managers are often the conduit between all
elements on a project—office to field, estimating to site,
customer to firm. The project manager is like a baseball
team’s catcher, who communicates with the pitcher,
signals to the outfield, and aligns the infield according to
the hitter and pitches to be thrown.
One measure of project
managers’ success or failure is
how well they communicate with
these different parties.
Project managers also
typically manage their work
according to a consistent standard. Scoring usually
focuses on end results rather than the behaviors
contributing to success. “Downstream” results, such as
profitability, direct cost variance and safety scores, may
provide interesting historical benchmarks, but they do
not provide a great indicator of the reasons for success
You obviously want to know whether you produced
profits or losses, but making measurable change simply
from these metrics is difficult. A better indicator may be to
measure the “best practices” that translate to winning on
the field. In the case of a contractor, an organization
must first measure “upstream” metrics:
• Did a project team effectively plan the
work and prepare the front line for the
• Did the project manager continue
the planning through to the end?
• Did the manager conclude
the project with a “post-
job review” (or “post
mortem”) to determine
winning project tactics?
In the end, jobs must translate
to bottom-line profitability.
Hit ratio and profitability are
not necessarily correlated.