PEOPLE
ESTIMATING TIPS

1. Get a form and use it; excel or estimating program. You must have a place to record your thoughts in an organized manner. Always use this form, no matter how large or small the estimate. Keep developing this form with every estimate; make it better.

2. Keep it simple; use common sense—rely on history and experience if you can, if not, rely on common sense. Estimates can be complex or they can be simple—think simplicity.

3. Think about the variables; think about the task; think about the number of times you have to do that task. Accessibility to the site; to the work place; policies and procedures of the owner that make cause you to incur more time; hauling materials to the floor on overtime or early or late hours? Play out all the variables in your head.

4. Get as accurate an estimate as you can on materials to be incorporated into the project—always use real live numbers from vendors if you can. If you have to rent equipment to do the work, put a vendor name next to the equipment costs and get a quote from that vendor.

5. Develop an hourly rate and use that rate for all trades and workmen you will employ. That rate should include base, health and welfare, insurance, taxes, fringes, small tools and some amount of overhead. The rate used may well be in excess of double the base union or prevailing wage rate.

6. Develop and accumulate units as best you can…if it takes you three hours to install one widget, record that somewhere and know that and use it. If you can develop sq. ft. numbers, that is great but just understand that not all of your workers will work at the same pace and sq. foot prices may differ wildly from one job to another based on the variables.

7. Do some thinking about what can go wrong and what can go right. Once you have thought about everything, think again.

8. Always estimate to get the job but at the price you know it will take you to do the job and adjust the numbers at the end to decrease or increase depending on if you really really want to beat the competition or if you are fine with letting someone beat you at a lower number. Think it through a bit and give yourself time to think it through. Never rush an estimate which is easier said than done.

9. Try thinking about the job in a couple different ways…material, units, square footage, time…think it through, you only have this one chance to get it right. If you estimate that you can install 30,000 Sq. foot of something for a particular unit price think about how that relates to man hours and your man hour rates. This is not that difficult.

10. Know the market; know the marketplace; know your competition. Always know who you are bidding against; how many bidders; how many generals are competing; just who you will be sending your bid to.

11. Before submitting the proposal based on your estimate, ask yourself if you would be upset if someone beat you by 3% 5% 10%—maybe you want to make a further adjustment but only do so if the profit and overhead and contingency covers you and you feel very good and confident about the numbers you put together.

12. If you are unsure about any of your units, time, material prices, add a contingency amount. Maybe that number is 10% of your bid. At least you will have something to fall back on if things do not go as planned. I always like to add a rough 10% contingency when starting to estimate a job and then if everything falls into place and I am comfortable, I reduce or eliminate that contingency. If not, I may keep it or increase it.

13. Consider cost of permits, bonds, insurance and any other general condition costs such as water for the men; safety equipment you will have to buy; uniforms; boots; special tools that may not be covered in your rate—over time, develop a list of such items and include them in your estimating form as a check list.

14. Determine an amount of profit and overhead that you feel you need to succeed. As a sub, aim for 15 to 20% level. I think most subs think along those lines. As a general, you will not get that high a percentage. Adjust this percentage depending on the owner, the general, the job conditions, the contract provisions, and whatever else you may want to consider.

15. Be comfortable with your estimate at the end. If you feel queasy about it or feel in your gut that you may be way too low, you probably are. Some jobs you simply have to walk away from at the end of the day; the numbers simply did not come together. Or possibly you add a contingency number, double the hours, increase the profit and overhead and get yourself to where you do not feel that sinking feeling in your stomach.

16. Try to get feed-back on your bids so you can sharpen your skills and be more competitive all while making your margins. Get better with each estimate. Most owners and GC’s will give you feed-back but give them some time to develop their own estimates and proposals. Wait a week before asking for information relative to your bid. No one likes to be bugged to death the next day.

17. Write up a professional proposal to transmit your estimate and include wording on that proposal as to how you expect to be paid. Give yourself a way out if you cannot reach the type of contract conditions that work for you.