This is the third in our series of estimating issues. A month ago, I talked about distractions and getting quotes; two weeks ago, I talked about inspectors. This won’t be our last article on estimating because I could talk for months on the topic.
Estimating Labor
Probably the largest error on most estimate sheets is missing labor. This is expensive. It can happen because of distractions, but in my opinion, this error also comes from estimators who forget to take off the blue leotard with the big S on their chest. They underestimate the amount of time that’s needed for the phase of the job they’re estimating. I understand that mentality, it’s part of being a business owner, but it’ll cost you good money when the job is complete.
When you’re estimating labor, it doesn’t matter how fast you can do a particular job, it matters whether you estimated it correctly. You might be superman and can get jobs built faster than anyone else. But unless you’re the only one working on the job, remember that others might not be as fast or efficient as you are.
I suggest one method of calculating labor time on a project in this article on estimating labor. This method works for many. You also need to find someone who knows the work who can review your time estimates for the job. Provide them with photos of the work area in question and listen to their opinion. If you’re open to input, the two of you will come up with an estimate that should be very close if not dead on.
When you think the job through from start to finish, you can come up with an accurate estimate of time for each phase of that job. Thinking is work and it’s not fun, but it must be done if you want an accurate estimate.
If you’re working on jobs, do you include your time on the estimate sheet? You should. When you swing by to check the job, as you should on a regular basis, that’s an overhead expense and you’re compensated for that in your monthly salary. But if you’re performing any work, even if it’s just delivering materials, and your time isn’t on the estimate sheet, you’re working for free. You might think that’s okay but what if you need to hire someone to deliver those materials? They won’t work for free. If the time isn’t included on the estimate sheet, your price isn’t enough to cover the work and you’ll lose money. All time spent on the job, no matter who does the work, needs to be included in the estimated cost.
Accounting for Trash
If you have a messy or trashy jobsite, your clients will think you have a messy or trashy work ethic. Having a clean jobsite also improves construction jobsite safety.
The time needed to clean up the jobsite needs to be in your job estimate. This also applies to your subs; make sure they include cleanup in their quotes. It should be standard practice that after any drill-out, you stop and sweep up. Your crews should also pick up trash just before lunch and just before quitting time in the evening. Preferably it should be put in a drop box. If you have a pile, keep that pile behind the building or behind a barrier so those passing by can’t see it.
If you’re framing a large job, scraps should be piled out of sight twice a day. When your clients see a lot of scraps hanging around, they’ll assume you’re not just messy, you’re wasting material. That isn’t a good way to maintain a good reputation, or to get jobs with those who pass by or visit your job sites.
If you have a job that’s generating a lot of trash, hire someone to haul it off to the dump on a regular basis. It’s not that expensive and should also be on the estimate. I hated hauling away the trash when I was working as a mechanic. I’d trained for years to do my job and the last thing I wanted to spend time on was cleaning up. Yes, I had a bad attitude, but I still cleaned up.
Don’t forget hazardous waste. This is where you need to deal with all the OSHA and RRP rules and regs, and it can get expensive. Guess who pays for it if you forget or underestimate the cost on your estimate sheet?
The estimating process is all about working through the little details. The better you track and cover those little details, the more accurate your estimate.
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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