This newsletter series will give you insights and techniques to help you build a better business no matter how large or small yours is. I always say that success comes from working on your business as opposed to in your business. I want to share with you the systems and philosophies that have been successful for me over the years.

This is newsletter #27 in the series. If you have missed prior newsletters, and are enjoying the series, we encourage you to purchase the program. More information can be found by clicking on the coupon at the bottom of this page.

Before you begin the estimate, you must understand the scope of work to be completed according to the contract. To accomplish this, you must have all of the information about the job and a current set of blueprints and specifications. Be sure to obtain a complete set of blueprints that include architecturals and site plans as these reveal information not included on the electrical floorplans such as elevations, construction specifications, and utility locations.

While the duties of estimators may vary from contractor to contractor, the basic principles remain the same. The system must be efficient, accurate and attempt to prevent common mistakes. Generally, the duties of the estimator include but are not limited to the following:

• Determining the cost of the job (estimate)
• Purchasing material
• Lead time for non-stock and special-order items
• Ensuring bid accuracy
• Project management/tracking
  

A GOOD ESTIMATOR IS IDENTIFIED BY:

• A willingness to learn.
• A good knowledge of construction and the ability to visualize specific requirements.
• An orderly mind and a tendency to be careful, accurate, and neat.
• An open mind willing to change and take advantage of new products and new technology.
• Decisiveness and the ability to make decisions and not be intimidated by details.
• Fairness, honesty, and integrity.
• Knowledge of applicable codes and the ability to read blueprints.
• Patience—you must be able to finish the estimate without losing your cool.
• Procedures and the ability to follow them.
  

THERE ARE THREE PRIMARY METHODS OF ESTIMATING A JOB:

• The manual method
• Computer-assisted method
• Estimating service
  

Each method has its own set of advantages and disadvantages. You need to be honest and select the method that works best for you. Once you understand manual estimating, you can determine which method is the most cost effective for you.

Manual Estimates—Even though manual estimates are good for very small projects (especially if you use unit pricing) and have been sufficient for electrical contractors for over a hundred years, this method is not efficient for the electrical contractor who is regularly bidding jobs. Because it takes so much time to estimate a job manually, you have only enough time to get the bottom-line price and not much more. Manual estimating requires so much time that estimates often become backlogged and project management suffers. Today, more than any other time in history, we operate in an age of instant information and rapid response. Few customers are willing to give you the time you need to prepare an accurate manual bid.

Estimating Software—The computer-assisted method of estimating is actually the same as estimating manually, except that a computer is used to perform the thousands of mathematical calculations millions of times faster and more accurately than a human. The margin for error when using a computer is reduced significantly. Your bids will become more detailed and legible, and professional in appearance. Estimating software is more efficient and can reduce your estimating time by as much as 75 percent.

Estimating Service—An estimating service is a temporary agency that you only pay for when you need it. You might use it to double-check a bid, or if you don’t have the time to do the bid yourself. It’s an excellent tool to help you gain estimating experience at a reduced risk. You also enjoy the benefits of computer-generated estimates without investing in your own computer estimating system. Estimating service fees are generally based on the total bid dollar amount.

Not all expenses can be anticipated in advance, but experienced estimators accept a satisfactory margin of error in the accuracy of the bid. If you break the job down into its smallest possible parts, then the magnitude of each mistake will be reduced and hopefully, the mistakes will cancel each other out.

An accurate estimate must include labor cost including burden (fringes), material cost including fixture and switchgear quotes, sales tax, subcontract and equipment rental expenses, direct job expenses, and overhead. To determine the bid price, always include a margin for profit.

The following is a step-by-step procedure for processing a job-cost estimate that has proven its worth on countless jobs over several years:

1. Register job (name, address, phone, etc.)
2. Study plans and review specifications.
   a. Site or Civil Plans ("C" sheets)
   b. Landscape ("L" sheets)
   c. Structural ("S" sheets)
   d. Architectural ("A" sheets)
   e. Plumbing ("P" sheets)
   f. Mechanical ("M" sheets)
   g. Electrical ("E" sheets)
   (Note: Plan sheet letter designators and discipline order per US National Cad Standards)
3. Determine approach to take-off.
   
4. Count, measure, and list all items.
5. Write up.
6. Review.
7. Price (extend and subtotal.)
8. Transfer subtotals to bid summary.
9. Apply overhead and profit.
   
10. Make necessary adjustments.
    
11. Total bid summary, and have it checked.
    

REASONS FOR ERRORS:

a. Hasty preparation—too little time allowed.
b. Improper estimating forms or exclusion of necessary forms.
c. Failure to read and analyze specifications and plans.
d. Failure to request more information to resolve uncertainties.
e. Inaccurate or incomplete determination of jobsite conditions.

RESULTS OF ERROR:

a. Omit section of job.
b. Forget to include special equipment costs.
c. Forget to include quotes.
d. Forget labor, job expense, and overhead.
e. Forget typical floor.
f. Assume all floors to be the same.
g. Assume standard grade devices are acceptable.
h. Failure to include outside or underground work equipment or connection.
i. Forget changes to original specifications, plans.
j. Incorrect extensions.
k. Errors in cost calculations.
l. Using wholesale take-offs.

YOU SHOULD:

a. Read every word of specifications.
b. Study and check all plans.
c. Clear up any doubts.
d. Don’t estimate when you are rushed or tired.
e. Refuse to enter bid not properly prepared.
f. Check all quantities, price, and extensions.
g. Estimate in an orderly sequence.
h. Use proper forms.

The above content is extracted from Mike Holt's Business Management Skills Program.

Subscribe

Post a Comment

Unsubscribe

View Comments

Stay Connected: