Inside Real-World Electrical Estimating
In the world of competitive electrical bidding, the successful electrical contractor must estimate and submit bids in order to win construction projects and stay in business. This means providing a bid price low enough to win against many competing electrical contractors, while bidding high enough to cover business overhead and make a profit. To be successful, you need to first determine your break even cost to complete the agreed upon electrical scope of work determined by the electrical bid package.
For this to happen, you need to estimate all the direct labor cost, material cost, equipment, and subcontractors while taking into consideration any unusual job conditions or scheduling requirements and any indirect overhead costs required to run your business. This can be challenging if you do not first have an electrical estimating process in place. One that ensures speed, accuracy, and the ability to do so in a repeatable, systematic manner that is consistent from one electrical estimator to the next within your organization.
If you do not have an electrical estimating system in place, putting together an electrical estimate can become very time consuming, resource intensive, and complex. And, this complexity can bring about errors and omissions that lead to lost projects, or worse—winning a bad project where you’re in the red before you even start the process. Therefore, as an electrical contractor, it is important to have an all-encompassing estimating system in place. With an organized and detailed system, you ensure your team of electrical estimators can quickly build an accurate estimate with checks and balances. In result, you minimize risk and maximize your chances of success during the electrical estimating process.
The estimating process is just the beginning, once the project is awarded, it requires effective project management to ensure work is completed at or below the budgeted construction costs. The estimated construction costs will serve as a project budget that the project management team will use as a guide during the planning and scheduling phases and during project execution. It’s important that the electrical estimate is built in the way that your project management team can easily perform a work breakdown structure in order to build labor and material budgets and schedule resources effectively. Always remember, that while effective project management can improve profitability on a well estimated construction project, it cannot overcome an underbid job where the costs were poorly estimated, so make sure you start with a good estimate.