Q: Where do I look for hands-on estimating training? I started a carpentry business and I clearly realized that my weakest point is that I don’t know how to do takeoffs and estimate material and labor costs. This prevents me from bidding on jobs and creates work-flow issues. Thank you for your time. –H. Jackolev
A: There are a number of places to learn the basics of estimating, but it will take experience in the field and tracking of actual costs vs. estimates (job costing) to gain the skills and confidence to generate accurate estimates. In addition to the science of counting all the materials (takeoffs) and the associated labor hours, there is the art of massaging the numbers to reflect intangibles such as difficult site access, challenges with new materials, and design problems.
A related issue is understanding your real costs of running your business (your overhead) and marking up your estimates accordingly. Bidding too low may be hazardous to your business. You may win a lot of jobs as the low bidder, but may not earn you enough money to stay in business very long. Estimating and bidding are often the biggest challenges for contractors starting out, so you are smart to seek out help.
If you have the time, you might consider taking a course on construction estimating at a nearby community college. This is often offered as part of a program in construction management or engineering. These programs tend to focus on large commercial projects, but the principles are largely the same. Some programs offer courses tailored to residential construction.
Another great source of information on estimating and bidding are educational conferences run by building and remodeling trade associations. Both NAHB (National Assoc. of Home Builders) and NAHB Remodelers, as well as NARI (National Assoc. of the Remodeling Industry), provide face-to-face and online training courses on a wide variety of topics including estimating. These organizations also hold annual conventions, which include a trade show and large educational conference – something I highly recommending attending at least once.
Another option is attending a JLC-Live Conference, which are held 3 or 4 times a year and usually includes one or more seminars on estimating. The great thing about these conferences is that you learn just as much – sometimes more – from the other attendees as from the expert presenters.
Finally, there are many books on the topic, although I can’t say that I’ve found one that goes much beyond the basics. Until you have built your own cost book based on your own job tracking, you might find it helpful to buy a unit-pricing guide. These are especially useful for the time estimates – for example, the labor hours required to install a square of roofing or a linear foot of 2×6 wall. Then you can plug in your own labor and material costs, since the ones in the cost guide may not match your local conditions.
Once you know the basics of estimating, you will need experience in the field to hone your skills. Especially important is tracking your actual labor and material costs on each job and comparing these to your estimate to find which items were high or low – called “job costing”.
This allows you to develop an accurate cost book for your own company and to fine-tune future estimates. Job costing is really the key to accurate estimating. Experience will also teach you how much to modify your standard costs for special conditions — bad weather, difficult access, building height, complex or innovative building details, scheduling conflicts, and similar issues.
Once you have mastered the basics, you can speed up your estimating process by creating shortcuts in the form of “assemblies.” Assemblies combine more than one component in a unit price. For example, a builder may have a single price, per linear foot, for a 2×6 wall complete with materials and labor for framing, insulation, and exterior sheathing.
If you’ve done your homework and get this number right, assemblies can save a lot of steps and still produce a highly accurate estimate. Most estimating software allows you to build your own assemblies for the way you do work.
Another important pointer is to always use an estimating checklist to make sure that you include every signifcant material, labor, and overhead cost (general conditions) in your estimate. Download a copy of our Estimating Checklist here.
Once you know your actual building costs, adding enough mark-up to cover your overhead and profit is the next big challenge — one you can master with time and experience. — Steve Bliss, Editor, BuildingAdvisor.com
You can read more at these links:
How Contractors Estimate
Estimating Errors
General Conditions vs. Overhead
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