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Estimating software is essential in today's market to master the art of estimating. Hard Hat Industry Solutions believes all contractors have a right to success and is a strong supporter of continued education and training in the Electrical Contracting Industry. We thank them for their sponsorship of this learning site.
Using software to bid projects helps you to determine the precise cost to complete a project and is a key component to accuracy.
Our systematic approach to preparing estimates goes step by step through the fundamentals of running your business and estimating jobs. Each of these fundamentals is covered in detail on separate tabs/pages on this site.
• Develop the right psychology and growth formula – Winston Churchill was quoted as saying, “Success consists of going from failure to failure without loss of enthusiasm.” You must go from one failed bid to the next, with equal enthusiasm. The fact is that you will only win a certain percentage of the bids that you submit. And, plan on bidding many jobs in order to grow. Be ready to accept that you will lose to low competitor bids that have low profit margins. Having the right mindset is the key to producing successful results.
The psychology of electrical estimating
The growth formula
• Pre-qualify the customer – Provide estimates only to those customers with a good payment history. Your goal is to develop life-long relationships with reputable customers that will pay you on time and in full. Do not provide bids to every Tom, Dick and Harry that comes down the pike asking you to bid their job! Remember, your customer is asking you to extend them credit. So, as any bank would do, check their credit history, payment history and references thoroughly.
Pre-qualifying new customers
• Pre-qualify the job – Here are two simple rules to follow when determining whether you are going to do electrical estimating or bid a project. (1) Bid only projects that are likely to add the most profit for your company. And, (2) Bid only projects that you have good chance of winning.
Pre-qualifying the job
• Ensure Profitability – How much profit should you make? The answer is as much as you possibly can while still providing value. You can do so ethically without price gauging or taking advantage of your customers. You are in business to make a profit, so make as much profit as the project will permit. Electrical estimating software allows you to set what profit percent you want to include in your bid.
• Walk the Job – It is advantageous to do a job walk to observe site conditions. Review your plans prior to doing the job walk so you are familiar with the project. Be on the lookout for job site conditions that will affect your price and ask lots of questions. Careful observation of the surroundings at the job walk will give you valuable insight about project expenses.
How to "Walk" a Job
• Do a thorough Materials Take-off – A Material Take-Off is essential to determine an accurate cost of what it takes to furnish and install all materials from start to finish. It is a detailed list of materials that must be furnished and installed to complete the job based on drawings and a job walk-though. Each item has a cost and requires a certain amount of labor to install, expressed in labor units. The Materials Taken off is entered into electrical estimating software and the software calculates how many hours it takes to install those materials. Electrical estimating software also has a report that shows how many total hours it takes to complete a project.
The Material Take-Off
How to do a material take-off
Time saving material take-off methods
• Include all Expenses – Electrical projects also have expenses besides labor and materials. (DJE) Direct Job Expenses such as trenching, forklifts, permits, testing, rental tools, etc.); Sub-contractor Quotes for concrete, fire alarm installation, data com, concrete coring, etc.and Material Quotes like lighting fixtures, switch gear, motor starters or controllers, etc. There are several pages devoted to various types of additional expenses on this site. Electrical estimating software has a report that shows (DJE) direct job expenses.
Direct Job Expense (DJE)
• Complete a Bid Review – Once you are finished in-putting everything into your electrical estimating software you must do a bid review. The bid review is when you go over every single line item of the material take-off, Direct Job Expenses, Sub Contractors Quotes, and the Material Quotes. You look at the numbers to make sure that everything is included like switchgear and lighting fixture quotes, and the right amount of profit, etc. It helps to have another person look at what you have done. They may see something that you left out. The right electrical estimating software has a summary report that shows total labor hours, total material costs and a complete cost breakdown of your estimate. A precise summary is necessary for a bid review.
How to do a bid review
• Electrical estimating software gives you the ability to create a professional proposal – Once you have come up with a price to bid the job at, you must have a "deliverable" to present your price to your customer. The deliverable you must create is what I like to call a "Bullet-proof Professional Proposal". The quality of the proposal submitted to your customer is a direct reflection of your company.
Creating a professional and bullet-proof proposal
• Inclusions, Exclusions and Qualifications – The Proposal must include exact language of what you are including, excluding and the items that you need to qualify in your bid. This is to ensure that you and your customer have a clear understanding of the work you will complete, that there are no hidden costs and who is ultimately responsible for different parts of the project.
What are inclusions?
What are exclusions?
What are qualifications?
• Use all available tools and leverage technology – I am not referring to basic tools like pencils, paper and rulers, but rather the tools of the 21st century. Tools that are time saving devices to measure conduit runs, standard material take-off forms to maintain consistency and electrical estimating software to improve accuracy, speed and profitability. Use current technology to improve your business.
Show me estimating software
Click on any of the links above or the buttons to your left to get detailed information on each fundamental required to create the best electrical estimates for your customers. Better manage and growing your business now.