The responsibility for compiling accurate estimates for a construction company normally falls onto the shoulders of the salesperson.

Some construction-related companies hire estimators to create the estimates for the salespeople who do the selling. I personally believe this is a duplication of effort and it’s higher risk. If possible, these two positions should be combined. If the salesperson also creates the estimate, they will be involved with the entire process, both the estimate and writing the contract. That will result in fewer errors not only on the estimate sheet but also during the negotiating process, on the contract, and during the job. However, regardless of who does it, they need to know how to estimate a construction project quickly and more accurately.
We are not going to “teach” construction estimating in this article, you won’t learn how to estimate a job in a short article. We have a class that teaches estimating. What we are going to do in this article is cover some estimating issues. Handling these issues properly can get you back in front of the customer quicker with more accurate construction estimates. That leads to a better presentation and more sales.
Construction Estimating Starts With Accurate Plans
Any estimator must know how to read plans. And they must have a good set of plans to work from.
Without a clear set of plans, it is virtually impossible to know if the customer’s idea of what they want done matches your understanding of what they want done. It is almost guaranteed that your concept of the job will differ from the customer’s without a good set of plans.
I was recently called as an expert witness to sort out a job gone bad. On my first visit to the jobsite, I asked to see the plans. “We don’t have any plans,” I was told by the owner, “we have conceptual drawings.” I asked if I could see them and was told the contractor had the drawings. I asked if there was another set. The owner told me the contractor had the only set.
I asked how they could possibly hope for a job to be built with only one set of sketches, and those only conceptual. “The concept was on paper,” the owner said. “There is no way he (the contractor) could not know what we wanted.”
I bit my tongue, almost in two. The term “dream world” came to mind. Conceptual drawings are rough ideas only and hardly constitute a set of plans from which accurate construction estimates can be derived. (And yes, the owner did take low bid on the job.)
You should not attempt any kind of a construction estimate without a set of accurate plans. Tell your prospective customer that unless and until they authorize you or someone else to do a set of plans that will pass the plan review at the local building department, the most you will give them is a very rough approximate for their job.
Stick Estimating
One of the biggest time-wasters is estimating by the old stick estimating method. For those new to the business, stick estimates involve a number of steps:
- List all the various parts of the job.
- List all the hours that it will take someone to complete each portion.
- List all the materials that will be used on each part of the job.
- List each sub-contractor that you will need.
- List all the other items you will have to purchase or rent to get the job completed, such as permits, rentals, port-a-potties, etc.
- Go back through your lists and put a cost on each item.
- Last, have a knowledgeable second party double-check your lists and your math (this step is the one few estimators bother to do).
These steps, properly followed, will result in an accurate job cost. Apply your markup, and you have a price. Unfortunately, because it is so time consuming, it is seldom done with care and the result is often a sales price that is inadequate to cover the cost of the job let alone the overhead and any profit required by the company.
Another major flaw with stick estimating is that it requires separate material and labor takeoffs (lists) before you can do the math. In reality, you don’t need a material takeoff until you sell the job. Compiling one before you write a contract is a waste of time.
Unit Cost Estimating
Estimating should be done by unit cost only. It is much faster (as much as two times) than stick estimating, just as accurate, and gets you back in front of the customer sooner. You can’t take three or four weeks with your quotation. You need to be back in front of your customers with a quote in 3-5 days, at most 7-10 days. Larger jobs (+$100,000) may take a day or two longer because you need to get quotes from your subs, but no longer than that.
Unit costing follows the following steps:
- Compile all the line items (assemblies) for that job.
- Attach a unit cost to each line item (assembly).
- Total your numbers and have them checked by a second party that knows what they are doing.
Apply your markup, and you have a price. Then get back to your customer with your quotation and move on with the sale.
Construction Estimating Books
There are a number of estimating books available with unit prices. Care must be taken, because many of these books are regional in nature (although they may claim they work everywhere). Their method of constructing a given project may be entirely different than the way you build your jobs. An example is the use of steel I-beams in the eastern United States. In the west we use glu-lam wood beams.
Pricing in many of the books is local, maybe regional. Several companies that publish construction estimating books will send a “modification factor” quarterly to correct their prices for your local area. Look at their book, count the number of items in the book, and multiply that by the number of towns in the United States. Tell me, how many people making phone calls to suppliers and subcontractors are needed to gather all those prices every quarter to keep everyone’s price book up to date? In my opinion, you are getting the publisher’s best guess on many of the prices. That’s not a great way to cost your construction project.
If you decide to use one of these books, here is a quick trick to keep your book accurate for your area. When a job is complete, take the invoices and time accumulations from that job and compare them to the prices in your book. If the book price is higher, keep it. If the invoice price is higher, line through the book price and write in the job or invoice price. In 90 days, your book will be as accurate as it is ever going to be, but you need to do this on a regular basis.
I have used books from Craftsman Book Company for years and have always had good results.
Computerized Estimating Systems
In my 40-plus years in construction, one of the best improvements to estimating is the development of construction estimating software programs. The individual who insists on doing estimates longhand is open to errors. Doing estimates by hand is slow, out of date, inefficient and an irresponsible use of time. If I were the company owner or sales manager, I would not hire an individual for a sales and estimating position unless they were competent on a construction estimating software program or willing to learn and use one.
Regardless of the kind of work you do, today’s customers want a quote in a timely manner. You can no longer take 10, 15 or 20 days to put an estimate together. The nice folks will go to another contractor to have the job done. Today’s culture is “No, not tomorrow, I want it today!” Like it or not, that is the culture we operate in. If you want their business, comply with their time schedule.
If you are not up to speed on some type of computerized estimating system, it is time to change.
This article is an excerpt from Michael’s book, Profitable Sales, A Contractor’s Guide.
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Thanks for some great information on estimating. Can you recommend estimating software that is user friendly and not too expensive? I am a general contractor and most of my work includes bathrooms, basements, and decks.
I am 19 years old, and I am learning to estimate but the truth does not explain to me as I would like, and I would like to learn more it would be an honor for me that you could contact me and talk about this.
Michael, with regard to employing the unit cost estimating method, can you provide some typical examples of what is meant by estimating “line items, or assemblies” for a multi-million $ commercial construction job? For example,
Example: 80 lineal feet of 8 foot high 2×6 load bearing wall. The assembly would include all material and labor required to frame one lineal foot of that wall. Once you have the assembly cost, multiply it by 80 or however long the wall is.
I need to this for my epoxy and concrete polishing business
Hello
Thanks Michael, but by doing that isn’t it going back to the old stick estimating. I am very confused how you can apply one unit rate to the same line item under so many different circumstances. For example, installing drywall ceiling for 8
I am learning to estimate but the truth does not explain to me as I would like, and I would like to learn more it would be an honor for me that you could contact me and talk about this. The stuff that gets forgotten or left off an estimate because it is “too small to worry about” are the things that remove your profit from the job.
Thanks for some great information on estimating. Can you recommend estimating software that is user friendly and not too expensive? I am a general contractor and most of my work includes bathrooms, basements, and decks. Thanks!
Our Fast Track Estimating program will do the job for you well. It is one of if not the oldest estimating software programs on the market (1/1990). I wrote the databases for the program using knowledge gained actually doing the work you describe. You can see a demonstration of the program here: https://www.markupandprofit.com/more/estimating/fast-track-estimating-software/ If you have questions beyond that, give us a call and we can discuss.
I like how you mentioned that an estimator needs good plans to work from and also must know how to read them. The company I work for is considering looking for electrical estimating companies because they’re thinking about upgrading all the lighting in the building since the current set up doesn’t provide enough light throughout the building. I think it’s a good idea to consider hiring a reputable business that can evaluate the electrical needs for a renovation.
Hi,
My name is Kadisha, I am 19 years old, and I am learning to estimate but the truth does not explain to me as I would like, and I would like to learn more it would be an honor for me that you could contact me and talk about this. I am a girl looking forward to success.
Warmest Regards thanks so much
zyanyakmont@gmail.com
The realistic estimating demands experience and attention to detail. without that, you can’t succeed in the quantity surveying field.
Michael, with regard to employing the unit cost estimating method, can you provide some typical examples of what is meant by estimating “line items, or assemblies” for a multi-million $ commercial construction job? For example, should “electrical work” or “concrete foundation” or “installed manufacturing equipment” each be considered as specific line items for estimating this type of job?
Tgalioto: If I understand your post correctly, I would say yes. However, those assemblies would be on your final estimate sheet. On your worksheet you should have a complete break down of everything that the electrician is going to do or the plumber or the materials you are going to install. The more detail the better. The stuff that gets forgotten or left off an estimate because it is “to small to worry about” are the things that remove your profit from the job. When you have everything accounted for that you are going to do in any one phase… Read more »
Thanks Michael, but by doing that isn’t it going back to the old stick estimating. I am very confused how you can apply one unit rate to the same line item under so many different circumstances. For example, installing drywall ceiling for 8′ high definitely requires different unit rate than installing drywall ceiling for 20′ high as more tools and equipment and time are involved. So how can you estimate accurately without listing out all the time and material will be used, instead just applying a general unit rate?
Ken: A good estimator will do their work using a variety of assemblies for each discipline all based on the unit costing system. The different assemblies will be based on SF, LF, height, square or whatever circumstances the estimator finds on any given job. With unit costing this only has to be done once and can be reused for future estimates as long as it is checked as I mentioned in the article above on a regular basis. With stick estimating you are reinventing the wheel every job.
I agree with everything but not starting with a material takeoff. Granted, if it is a design set I will use unit pricing. However, with knowledge of your GC and the owner, along with local building codes I am able to accurately get a material takeoff. Once I set a high budget I will adjust my takeoff as complete drawings are issued. But I rarely need to complete an entirely new takeoff. Also, spending time on a set of drawings gives you the opportunity to identify and suggest alternate design solutions that keep my name at the top of their… Read more »
Peter: Please give me a call and we can discuss. Not sure what information you are after. Michael 360-335-1100
Just did my GC exams ….learned nothin about estimating….so crucial…
what is a affordable option for start-up
pcoetzee@bellsouth.net
Im fresh out of construtuon management school. My school did a poor job of teaching us to estimate. So how do I master unit estimating? What books is good for lousiana?
Our article above should get you started in the right direction. Our estimating class: http://www.markupandprofit….will give you the basics and much more. It teaches you the principles of estimating. If you will do what I ask you to do in the class, you will be able to estimate almost anything in residential work and a lot of the commercial projects as well, in any state. For cost info, look at: http://www.markupandprofit….to find a good estimating reference book. There are a bunch of them so you have to decide which will work best for you. These books are generic and it… Read more »
Micheal – I have been a residential cor 30 years and decided that I can do way much better in the commercial part of the business ! What estimating book is very good for commercial building ?? Fred V
We have estimating books here – http://www.markupandprofit…., and probably the best for commercial estimating would be the National Construction Estimator. Remember, that book or any estimating system is only as good as the person doing the takeoff. They are not accurate in and of themselves. You must know how to apply the info in the book to the estimate you are doing and keep them current on a weekly basis. Commercial work may or may not be better for you. It all depends on what kind of systems you have in place for estimating, job costing, production, sales, etc. You… Read more »
I”ve always thought that it was cheaper to use an estimate writing service, just because no one wants to pay $150 – $250 per month for a monthly subscription to a software program like Xactimate. Plus, like you said, customers want it now, not in 3 weeks. I say keep on selling and put that monkey on someone elses back. You make more money if you”re out doing work instead of trying figure out how to put the estimate together. Unless you”ve got recent estimating experience, you”re probably slow and inefficient. I just don”t know many people that can estimate… Read more »
I use Eagle Eye Estimates. They”re good and fast.
You are so right! i just started using the internet for leads. Asap I am going to purchase a software estimating package. I’ve wasted many a night doing estimates the old way and get nothing for my efforts. I am finally catching up to the techno age. Being 56 yrs old I remember when air nailers came to be and thought ” huh, ….” well now its time to catch up in the techno world. thanks for the inspiration!
Michael and Devon,
you hit the nail on the head with this article. I am a firm believer in your software system and update it on a regular basis.
keep up the the great work.