This newsletter is #11 in the series in which I share with you my methodology for electrical estimating. I explain how to determine the material cost, labor cost, and the calculation of direct job costs, overhead and profit. Estimating is a skill that can make or break a career, and make or break a company, and I want to help you understand the estimating and bidding processes so that your business can be profitable. You need to know going into a job how you can avoid failure - which in some cases might mean not taking the job!

The following content is extracted from Mike Holt's Guide to Electrical Estimating.

To estimate labor requirements, you start with standard labor-unit guides that tell you how many labor hours it should take to do a certain task under “typical” job conditions (for example, run 100 ft of trade size 1 EMT). Many factors can increase job difficulty, so you must examine the actual conditions of the job you are estimating and adjust the labor hours accordingly. Some labor variables are specific to the site (location, security access, customer procedures, and so forth), whereas some are specific to the crew selection (Harry works at a faster pace than average, Tim works at a slower pace than average).

Experience can help you adjust labor units more accurately, but do not let experience give you a false sense of confidence; do not use it “instead of” the labor-units method.

To drive home that point, consider the following labor variables: working height, the location of stairs, the distance from the parking area, temperature considerations (extreme heat or cold), crowding factors (how many other trades there are), shift work, repetitive task issues, the extent of ladder and scaffold use, the distance from your home base, the availability of adequate labor and material, as well as electric power.

Experience can be personal (belonging to you or people you know) or organizational (belonging to the company). Both can help, but only if you do not rely too heavily on them. Let’s look briefly at each one:

• Personal experience provides a “feel” for what it takes to do a job. Keep in mind that one’s memory has a way of changing “the facts” over time. It follows from this that you should use personal experience as a way to check your estimated labor requirements, not as a way to determine them.
  
• Organizational experience, for a contracting company, exists in the records of past jobs. If they are similar to the one you are estimating, you can carry over much of the information to the new job.
  

The approach of using labor units takes more time than trying to guess how long it will take to do the job, but doing so reduces the likelihood of errors and oversights. Just one error can turn a profit-promising job into a money-losing job.

Over the next few newsletters, we'll explore Labor Units in more depth: how they are expressed, what to include or not to include, how to develop your own Labor Units, and what's important to know about your competitors.

We'd love to hear from you about this series, and the ways you're using it. Send us your comments and feedback by clicking on Post a Comment below. Look out for the next part in this series a month from now, and please share with your colleagues.

This content is extracted from Mike Holt's Guide to Electrical Estimating textbook. If you have enjoyed this newsletter, you can get the full content in Mike's Electrical Estimating DVD Library here.