Improving Your Estimating Ability

by WOHe

Improving Your Estimating Ability

Did you ever blow a big estimate? Make a big math error? Forgot
to add that library paneling? Miss a couple of rooms?

You’re not alone if this has happened at your shop. Estimating
projects is often done in a hurry on the fly, usually by the owner,
while overseeing production, putting out fires and generally trying
to run the business.

So, here’s the place to start only estimate when you must.
Pricing custom work is time consuming and expensive, and usually
takes experienced and well-paid people to do it. So, maybe your
first rule before you agree to estimate a job should be that you
have a really good chance of getting the work.

ASK QUESTIONS
A key point here is to ask
lots of questions before you spend that precious, pricey time doing
any kind of take-off. Questions to ask may include:

  • What are the chances of getting this work?
  • Which other shops are pricing this project?
  • Is the work the kind your shop does well?
  • Has a working budget been established?
  • How developed are the plans?
  • What is the shop drawing process?
  • Are there a lot of builders bidding the job?
  • Can your shop successfully negotiate the work?

Develop your list of questions to figure out whether there are
any red lights flashing before you spend the time figuring out a
price. Maybe you’ll be bidding against another shop that’s known
for low balling work, then making it up in change orders. Perhaps
the price will be a lot more than the owner wants to spend, and
you’ll be wasting your time especially if you’re not getting paid
for the estimate.

At our shop, we’ve found that pre-qualifying the job is more
important than estimating the actual work. Be sure it’s the right
work for your shop, that it falls at the right time and it’s priced
right!

KNOW YOUR COSTS
Costs are usually a
four-part deal materials, suppliers/subs, labor and
overhead/markup. And, if you’re new to estimating, this is probably
the easiest way to break the whole thing down. Even if you’re an
old hand, this way is basic and much more reliable than linear
footage, formulas, percentages etc.

The materials are often the easiest to figure out but always
check to see that the material specifications in the plans match
what you’re bidding. If not, highlight that discrepancy in your
proposal.

Your subs and suppliers can be brought in for the complex pieces
of the work if you don’t feel comfortable pricing their part of the
work simply fax that custom sycamore crown profile over to your
molding company, and ask your installer to look at the job site
work.

The labor hours are inevitably more difficult to figure out
although you can be accurate here, too, with a little help from
history. Job costs on previous similar work may be able to tell you
how long it takes to make 40 linear feet of paint grade base
cabinet. 

Physically timing hinge and hide door work can help you price it
on future work. You may want to take a good look at various
activities like this in your work making drawers, hanging doors,
assembling carcasses, making up face frames, whatever seems hard to
estimate.

What about all the weird, non-standard stuff? Go ask your
foreman if you’re not sure yourself two brains are better than one
here. And sometimes, a shop floor person will be more realistic
regarding how much time things really take.

Many shops average out labor hours costs, and have one shop
rate, both for estimating and for billing. Others use different
rates for different activities depending on which people are
working on the job with higher costs for complex machining and
handwork, and lower for basic assembly and the rough mill parts of
the project.

Then, of course comes the trickier part how much should you add
to your costs to cover your overhead? This varies, as it can be
affected by many things how difficult the owner is, how much other
work you have going on, and so on. You can keep track of your
financial information on a quarterly and annual basis and use the
overhead percentages to add to your costs. Don’t forget the things
that don’t really appear in statements that “leakage and slippage”
stuff sick days, holidays, waste etc.

The standard things can be simple to price, but the weird items
are easy to underestimate. Examples: center-balanced veneer work,
or curved doors with applied bolection moldings. If you don’t have
the right suppliers, you may want to exclude these parts of the
work. It may require an experienced journeyman working carefully on
specialty machines. 

Incomplete drawings can mean a rough road ahead much more shop
drawing time, long Requests For Information (RFIs), more project
management than you’re prepared for. Look for detailed sectional
details, and if they’re not there, perhaps in your proposal, you
can specify your own shop’s details.

Here’s another red light what’s the owner like? We all know how
much energy and money a difficult client can suck out of you. If
there’s a chance you can meet or find out about the owner before
you have to estimate the project, it may help your process. You may
even want to push for a shop visit arranging a face-to-face can
help you price the work!.

And the schedule, too, can affect your costs. Can you find out
whether the timing is realistic? How well is the job being run out
in the field? On the bigger jobs that are already underway, you may
want to talk to other subcontractors already doing work on the
job.

Sounds negative, huh? Well, that’s why many shop do try to
negotiate their work, even doing larger projects on a “Time and
Material” basis, where you do get paid for all that you do, and you
can concentrate on doing a good job.

Most shops that have been in business for a while tend to err on
the high side when they’re estimating fixed price work. They’ll
“pad” the hours, put in some extra materials into the take-off
somewhere, knowing that Murphy’s Law often prevails in the shop
world. Maybe that’s the real lesson behind estimating that the work
will often take longer than you may have originally thought.

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