Extracted from Mike Holt's Electrical Estimating Book
© Copyright 2002 Mike Holt Enterprises
CHAPTER 1 - INTRODUCTION
A great percentage of electrical work is acquired through the estimating process,
and most jobs are awarded to the contractor who has the best perceived price,
but not necessarily the lowest.
1.01 Estimating Versus Bidding
Determining the selling price for a job is actually two separate components.
The first component is the estimate, which determines the cost of the job. The
second component is the bid, which determines the job's selling price.
1.02 A Good Estimating System
A good estimate system should help you quickly and accurately determine the
cost of a job, and includes all anticipated costs. The system must be efficient,
accurate and attempt to prevent common mistakes. It should have a method to
verify that the estimate is accurate.
1.03 Objectives And Purpose Of An Electrical Contractor
The purpose of an electrical contractor is to make a profit. To be successful
as an electrical contractor, you must provide a quality service to your customers
at a competitive price that is greater than your cost.
1.04 Why Are So Many Electrical Contractors Unsuccessful?
Many electrical contractors have worked their way up through the trade from
apprentice electrician. They have plenty of hands-on experience in installing
electrical systems, but lack management skills.
1.05 The Estimate Must Provide The Information For Project
The actual cost of any project is significantly impacted by how well the job
is managed. To properly manage a job, the project manager must have a job budget
(estimate). The job budget must have information as to what material is required,
when its required, and the labor required to complete each phase of the job.
1.06 Job Management Ultimately Controls The Cost Of A Project
Proper project management is often the difference between profit or loss and
you must realize that effective job planning, labor scheduling, and material
purchasing are all factors in determining the ultimate cost of a project.
1.07 Can I Be Competitive?
In order to be competitive, the contractor must offer the customer a quality
service at a reasonable price. To accomplish this, the electrical contractor
must control the job costs so they are within the estimated budget. It is also
critical that the contractor control overhead expenses to keep them to a minimum.
Other factors that affect a contractor's competitiveness include:
- Cost of materials (buying power)
- Labor cost and productivity
- Management skills
- Selling the job at your price
- Tools and equipment
1.08 The Market
The electrical industry is in constant change, new markets are developing and
some are dying. At times you local market will be expanding or contracting depending
on technology, the economy, and customer needs. Consider every estimate request
as an opportunity to monitor the markets direction.
I hope you find this short summary helpful. If you want to know more about estimating, please attend our
seminars, order the book or the home
study video program today.
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