This is the introductory chapter of my newest book, Estimating Construction Profitably, available here.
Over the years I’ve heard from many contractors who wanted to get better at estimating. Some were general contractors building either remodeling or new home construction, some were specialty contractors, and others were performing service or maintenance work. They all had a desire to make as much profit as they could from their work, and they knew that better estimating was key.
That’s why we wrote this book. It’s a guide to estimating; or more accurately, a guide to creating your own estimating system. When you have a system of estimating that you follow, consistently, you’ll do a better job of estimating. When you do a better job of estimating, your jobs will be more profitable.
Estimating is the process of taking what you know today to project what will happen in the future, but you aren’t in charge of the future. There are millions of variables that are outside your control. A consistent system combined with diligence and focus, and a little common sense, will get your estimating error factor down under 2%. That’s a reasonable error factor because no estimate is perfect.
When you establish a system of estimating and follow it, you’ll do the same thing, the same way, every time. When you do that it’s easier to look at every aspect of a job from top to bottom, beginning to end, and not miss anything.
Estimating is a job; it isn’t a hobby. It’s work. It takes dedication, focus and practice to get it right. It’s not about the numbers, it’s about the discipline of finding and following your system.
While I’ve been in this business a long, long time, my focus has been on residential remodeling with some new homes and commercial work thrown in for good measure. I’ve stuck to what I know best. However, this book was written to show you a system of estimating regardless of the type of work you’re estimating. The system matters, the type of work doesn’t.
This book doesn’t guarantee a profit on the jobs you estimate from this point forward, and it doesn’t guarantee perfect estimates. It’s up to you to do the work.
I’ll cover a lot of details in this book; take what works for you. If you want to get better at estimating, however, one thing isn’t optional, and that’s checking each estimate against the actual job costs of the job when complete. It’s a critical part of estimating because it’s how you improve your accuracy. You’ll learn from both the good numbers and the bad.
When your estimated costs are reasonably accurate and you’re using the correct markup for your business, you can be confident that you’re charging the right price for your work. The right price gives you enough money to cover all job costs, overhead expenses and make at least 8% net profit.
I’ve taught classes on business management, estimating and sales to contractors in 46 states and 3 Canadian provinces, with the goal of giving them the tools to build a more profitable construction-related business. I hope this book provides you another tool you can use to strengthen your business.
You can purchase Estimating Construction Profitably here.
The knowledge and experience Michael Stone gained in his 60+ years in construction has helped thousands of contractors improve their businesses and their lives. He is the author of the books Markup & Profit Revisited, Profitable Sales, and Estimating Construction Profitably, and is available for one-on-one consultations.
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