Business Toolbox Tip #2: Improve Your Project Estimates
The Problem – Projects are not profitable. Estimates for projects are off.
The Zone – Zone 4: Project Cost Estimating
Every project starts with an estimate. Estimates are really just budgets for projects. They are your budget for what you think it will cost you as the contractor to complete the project for the homeowner or building owner.
Are your projects really just a guess at what you think will happen? Or are there facts and figures that you use to support your project estimates?
Here are 3 Important Steps to Improve Your Project Estimates.
- Pay attention to details. Don’t assume that a detail does not matter. We all know what assume stands for. Make sure that you have a really good reason for disregarding a detail. Know why the detail doesn’t matter.
- Gather a boat load of information while you are at the project site. Take photos. A lot of photos. Make drawings of the site and note your measurements. Take notes on the site as well as about your discussion with your customer. It is better to have it and not need it than to need it and not have it.
- Complete your estimate as quickly as you can after visiting the site. If you can, complete the estimate while you are at the project site. The longer you wait to complete the estimate, the more you will forget about the site. Complete the estimate while the project is still fresh in your memory.
Last word – make sure that you are not bidding to a best case scenario. A best case scenario means that you set your estimate based on everything going absolutely right on the project. In construction and remodeling, there are very few times if ever that a project goes exactly as planned. You don’t have to estimate for worst case scenario either. Instead, figure out what is most likely. Look at your past history with similar projects and factor that into your estimate.
Remember Murphy’s Law when estimating your projects. Anything that can go wrong, will go wrong. Give yourself that extra cushion to absorb those what-if scenarios.