When you’re so busy you can’t see straight, but you need to get a lot of estimates done in a short time, you know it’s easy to miss something and end up in trouble. Here are a couple of tips that can help get you closer to the right number every time:
When an extremely technical project, one with a lot of labor hours, is looking you in the face, it’s time to think about performing a bottom-up estimate.
Top-down estimates are great in the early stages of a complex build because there are a lot of unknown factors, and top-down can give you a ballpark idea with fewer data points than bottom-up. It relies on past performance and histories by drawing that comparison. If a similar construction cost this amount, and this project is 20 percent larger overall, then the top-down estimate will come out at 20 percent more than the first build. It’s a great place to start.
Bottom-up estimating uses the same historical set of data but drives down to the detail level by looking at what’s different. Just, for example, say in the current estimate, you’re going to need a custom electrical enclosure that wasn’t required in the past, similar build. Accounting for the added time for its creation, the cost of the enclosure, transportation time and labor to install it provides a much more accurate estimate than the more generalized, percentage-based, top-down assumption.
Practically speaking, elements of both approaches help you create the most accurate estimates. Starting with top-down and then pushing the detail into it from the bottom-up estimate gives you the assurance you’re giving your customer the best possible product–and making them a customer for life when the job comes in on time and on budget.
“Chunk” Your Estimates
Putting together “chunks” of your information can do amazing things for the speed of your estimates. With only so much time to put your estimates together, you’ve got to be fast on your feet. But it’s worth taking time to out to look at your last dozen jobs.
If you’re in residential new construction, put together a master house that’s specific to your area, your suppliers, and your labor. For new construction, put together an estimate template that’s already filled in for a half bath, master bath, laundry room, kitchen and so on–each one with all the bells and whistles. It’s much easier to delete than to have to go get all the information again each time.
If you do a lot of reno, look at those last dozen jobs, too. What has it cost in the past to rip a specific room right down to the studs and put it back together again? Again, put it together as a template with everything added in, from demo to finished product. Then, when you’re putting the estimate together with the customer’s input, you can delete as necessary, and come up with an accurate estimate in record time. Being able to put your hands on a template will make your estimates come together easily.
Don’t Forget to Factor in Risk
While you’re looking at those past jobs, what were the pieces of the process that went astray? Where can you accommodate those cost overruns that have blindsided you in the past, and make sure they’re part of your estimate?
Always Use a Master Checklist
The easiest way to blow an estimate is to simply forget one thing, whether it’s landscaping or necessary permits, or even adding in shipping costs for items that aren’t available in your area. There are a number of master checklists for estimating that can be modified so they’re right for your business and your area.