The key to becoming a successful estimator is choosing the method you're most comfortable with.
There's no question that material is the most predictable part of an estimate. If you use a computer, you can generally calculate material cost to within a few percentage points of the actual cost for new work and within 10% of the actual cost for remodel work. However, if you prepare your estimate manually, errors in determining the bill of material, pricing, extending, and totaling can be significant. Although you can't anticipate changes in the wiring by the electrician or unusual waste by workers, you can reduce material overruns with proper project management.
Although labor is more difficult to predict than material, you can calculate labor to within 10% for new work and 20% for remodeling. So how do you stay on top of your game and avoid blowing your next estimate? A review of the three primary methods of estimating is a good place to start.
Manual method. Electrical contractors have used the manual method for decades. The advantage here is you don't need a computer or computer skills. Because it takes so much time to estimate a job manually, you must learn to use your time and resources effectively. Quite often, you only have time to get the bottom line price and not much more with this method. In addition, manual estimating demands so much time to complete that estimates often become backlogged.
There are several disadvantages to manual estimating, including:
• Cost to complete each estimate. It costs about $800 and takes about 32 hr for every job. This assumes it takes you an average 8 hr for each bid at $25 per hr, and you win one out of every four bids you submit.
• Errors in math. When estimates get backlogged, you may feel pressured to get the estimate done more quickly. This pressure can result in increased errors, especially when you take into account last minute changes.
• Lack of project management information. Because of the time it takes to manually extract project management information, most contractors just don't do it.
• Inability to respond to changes. When you're manually estimating a job, it's very frustrating to receive last minute changes to the blueprints or specifications.
• Time to complete the estimate. If it takes an average of 8 hr to estimate one job, you'll average 32 hr of estimating time for every job you actually get.
Computer-assisted method. The computer-assisted method follows the same principles as the manual process, except you use the computer to perform the thousands of mathematical calculations.
There are many advantages to using a computer for crunching numbers, including:
• Accommodating changes. With a computer, you can deal with last minute changes and update the bid immediately as material costs change.
• Improved project management. Quality computer estimating software programs provide you with information for job management, job tracking, and bid analysis.
• Improved bid accuracy. By using a computer, you reduce the margin for error; no transposing of numbers, no mistakes on the totals, and no errors when transferring numbers to the estimate summary.
• Reduced estimating time. You can reduce your estimating time by as much as 75%, depending on the type of job, software, and your experience.
• Reduced overhead. You reduce overhead since you can complete an estimate in a quarter of the time at a quarter of the cost.
Estimating service. In certain situations, an estimating service may be your best bet. This is an agency you pay for only when you need it. You might use an estimating service to double-check a bid, or when you don't have time to do it yourself.
When you use an estimating service, your up-front cost is comparatively low. You can enjoy the benefits of computer-generated estimates without investing in your own hardware or software. You'll also know what it costs to estimate a job in advance. The company typically charges you based on the total electrical bid dollar amount. The table (available in print version) shows a typical estimating service fee schedule.
No matter if you prepare estimates by pencil and paper or with a computer, the bottom line is your clients expect fast, accurate, and professional estimates. If you have the time and expertise to make presentations, customize your estimates, make last minute changes, manage projects, track labor, and plan future estimates by hand, keep up the good work. If not, turning to estimating software or an estimating service may give you the extra advantage you've been looking for to improve overall project management.