Are you a subcontractor struggling with estimating? Whether you’re new to the field or a seasoned pro, getting your estimates right is critical for ensuring a project’s success and profitability.
Accurate estimating can mean the difference between winning a project or missing out on valuable opportunities—and it’s not just about hitting the right numbers; it’s also about understanding the nuances of labor, materials, and time management.
In this comprehensive guide, we’ll cover the best practices for subcontractor estimating to help you avoid common mistakes, improve your efficiency, and increase your chances of winning profitable bids.
Let’s dive into the key strategies and tips that will transform the way you approach estimating for your projects.
Why Subcontractor Estimating Matters
Before we dive into the best practices for subcontractor estimating, it’s important to understand why getting estimates right is crucial.
A well-prepared estimate serves as the foundation for project planning, resource allocation, and budgeting.
Poorly calculated estimates can lead to budget overruns, missed deadlines, and ultimately, dissatisfied clients.
Accurate estimating allows subcontractors to:
- Submit competitive bids that reflect the true cost of a project.
- Control costs by accurately forecasting material, labor, and equipment needs.
- Avoid financial losses by preventing underestimating or overestimating resources.
- Build trust with general contractors and clients by delivering projects on time and within budget.
If you’re looking to take your subcontracting business to the next level, mastering the art of estimating is the first step.
Best Practices for Subcontractor Estimating
1. Thoroughly Understand the Scope of Work (SOW)
One of the most critical steps in subcontractor estimating is to fully understand the scope of the project.
Often, the general contractor may provide a high-level overview of the work, but as a subcontractor, you need to dive deeper.
- Review project drawings and specifications carefully to identify all tasks you are responsible for.
- Clarify details with the general contractor if there’s anything unclear. It’s better to ask questions upfront than to deal with misunderstandings mid-project.
- Identify exclusions or additional services you may need to offer, such as site preparation, clean-up, or overtime labor.
Pro Tip:
Create a checklist of all activities you are responsible for before starting any estimate. This will help ensure no aspect of the project is overlooked.
2. Use Historical Data to Inform Your Estimates
If you have a history of working on similar projects, leverage your past data to improve accuracy.
Historical data from previous projects can give you valuable insights into labor hours, material costs, and potential obstacles you may face.
- Analyze past performance on similar jobs to identify areas where you may have underestimated or overestimated.
- Use this data to refine your estimates, making sure you adjust for inflation, material price fluctuations, or any changes in labor costs.
Example:
If you worked on a similar construction site last year, compare the labor hours you quoted versus what was actually needed. This type of analysis can help prevent recurring mistakes.
3. Break Down the Estimate by Category
The more organized and detailed your estimate, the more accurate it will be. To achieve this, break down your estimate into categories such as materials, labor, equipment, and subcontracted work.
- Materials: Calculate the exact quantity of materials needed based on blueprints or plans. Don’t forget to account for waste or potential material price increases.
- Labor: Include all labor costs, including both skilled and unskilled workers. Remember to factor in overtime, benefits, and taxes.
- Equipment: Consider the cost of renting or operating machinery and tools required for the job.
- Subcontracted Work: If you are subcontracting parts of the project, include those costs as well.
Pro Tip:
Breaking down your estimate by categories also makes it easier to communicate with general contractors and clients, showing them a clear picture of where their money will go.
4. Use Professional Estimating Software
Gone are the days of using spreadsheets or paper-based estimating systems. Today’s estimating software tools can dramatically improve the accuracy and efficiency of your estimates.
- Choose software designed for your trade. For instance, electrical contractors will benefit from specialized tools that calculate wiring and fixture costs.
- Use templates within the software to standardize your estimating process across projects, which reduces the risk of errors.
- Track material costs in real-time to stay updated on fluctuating prices.
Popular Estimating Tools:
- ProEst
- PlanSwift
- Sage Estimating
- Buildertrend
By automating calculations, reducing human error, and streamlining the estimating process, you’ll save time and improve accuracy.
5. Collaborate with Suppliers for Accurate Material Pricing
Material costs can fluctuate, especially with large projects that take months to complete. To avoid surprises, it’s a good idea to establish relationships with suppliers early on.
Collaboration with suppliers helps ensure you receive the most accurate and up-to-date pricing information.
- Request quotes from multiple suppliers to ensure you’re getting the best prices.
- Ask for discounts or bulk pricing when ordering larger quantities of materials.
- Plan for potential material price increases by accounting for future changes in your estimate.
Pro Tip:
Build long-term relationships with suppliers for better pricing and priority service, especially when there are shortages in materials.
6. Review and Double-Check Your Estimates
Even with the most sophisticated tools and detailed processes, mistakes can happen. Before submitting any estimate, it’s essential to review your work.
- Check all your math, including unit conversions, totals, and percentages.
- Cross-reference with the project scope to ensure every element has been accounted for.
- Have a second set of eyes review the estimate. A fresh perspective may catch errors or omissions you might have missed.
7. Factor in Contingencies
Every construction project carries risks, and unexpected issues can arise at any time.
Whether it’s adverse weather conditions, delays in material delivery, or sudden changes in the project scope, it’s important to build contingencies into your estimates.
- Include a contingency buffer (typically 5-10% of total costs) to account for unforeseen expenses.
- Adjust your contingencies based on the complexity of the project. High-risk projects may require a larger buffer.
Example:
If you’re estimating for a project that will take place in the rainy season, you should increase your labor estimate to accommodate for potential delays caused by weather.
FAQs on Best Practices for Subcontractor Estimating
Q1: How can I ensure my estimates are competitive but still profitable?
A: Use historical data, accurate material pricing, and real-time cost tracking to create estimates that are both competitive and profitable. Never sacrifice profitability for the sake of underbidding.
Q2: Should I always include a contingency in my estimates?
A: Yes, including a contingency buffer (5-10% of the total cost) is a best practice to ensure that you’re covered for unforeseen circumstances or price fluctuations.
Q3: How often should I review my estimating process?
A: Regularly reviewing your estimating process helps you refine your approach. Review after every project to learn from mistakes or successes and incorporate any new industry trends or material price changes.
Q4: What’s the best way to deal with fluctuating material costs?
A: Work closely with suppliers to lock in prices early, if possible, or build flexibility into your estimates to account for potential price increases in the future.
Summary
Mastering the best practices for subcontractor estimating is key to ensuring your bids are competitive, your projects are profitable, and your clients are satisfied.
From understanding the project scope to collaborating with suppliers and using professional estimating software, these strategies will help you create more accurate, efficient estimates.
The next time you approach a project, remember to break down your estimates by category, leverage historical data, and always double-check your work. Not only will these steps improve your estimating accuracy, but they will also set you up for long-term success.Now that you know the best practices for subcontractor estimating, it’s time to put them into action. Have any more questions? Feel free to explore our other articles or contact us directly for more expert advice.
