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estimating techniques

TimFinn | Posted in Business on August 1, 2004 04:01am

Finally got some calls from my newspaper ad.  Now I’ve got to figure out how to estimate.  I have an old (’97) remodeling cost book, but it can be confusing.  I like the idea of pricing by units ( sq, lf, sf).  Have 2 different guys that say it’s easier to just “guess” how long it will take you, fig. how much you want to make per hour & figure it from their.  What methods do you prefer?  I’m not sure if I like the “guessing method”, but I want to find an easy to use cost book.  Appreciate any info.


Edited 7/31/2004 9:01 pm ET by carpenter in progress

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  1. xMikeSmith | Aug 01, 2004 04:07am | #1

    come to RhodeFest and we'll show you twenty different ways of estimating

    Mike Smith   Rhode Island : Design / Build / Repair / Restore

  2. OrchidGuy | Aug 01, 2004 04:10am | #2

    Hi Carpenter,

     There is a book called the National Repair & Remodeling Estimator. It does come with a CD that has all of the prices listed in the book. The website is:

    http://www.craftsman-book.com

    The pricing is listed in units just like you want! Just cut and paste what you need.

    Those daring young men in their flying machines!

    1. xMikeSmith | Aug 01, 2004 05:10am | #3

      carps... look.. the estimating books are fine.. problem is.. they don't use YOUR numbers.. so ... if you bid using them ... you will probably NOT be able to duplicate their  production units..

       result.. you lose

      best way is to develop your OWN numbers.. sit down with a long yellow pad or a computer spreadsheet and mentally build the project...

      AND.... don't be an optimist... be a pesimist..

       then you  have to learn how to apply labor rates with burden.. your rates .. your burden.. my burden used to be 50%... now it's 62%..

       if your's isn't... ask yourself why it isn't

      then you have to add Overhead   to cover  your costs of STAYING in business..

       and since it is a business... you  have to add Profit..

       long story short.. start hanging out with C.O.N.T.R.A.C.T.O.R.S... guys who write and execute contracts... and build for a profit.. so they can support their families

      Mike Smith   Rhode Island : Design / Build / Repair / Restore

      1. User avater
        JeffBuck | Aug 01, 2004 05:19am | #4

        plus ... a little common sense goes a long way.

        If you can build it ... take the time to sit down and build it in your head ...

        now ... add up how how ya thought it would take.

        JeffBuck Construction, llc   Pittsburgh,PA

             Artistry in Carpentry                

        1. User avater
          RichColumbus | Aug 01, 2004 06:24am | #5

          A big excel spreadsheet is a good thing.

          Work through the project in your head... then on paper (or spreadsheet).  By doing this, you do two things.  You plan the job... and you also have a template for your quotation. 

          Apply the materials... apply the hours... apply the hourly rate (then add at least 15% on your first quotes.  You will underestimate by at least that much at first)... apply any markups... apply a contingency (worst case scenario factor)... apply your overhead ... apply your profit...

          Apply your wife's shopping spree... apply the trip to the vet for your dog... apply the cost of those new tools you will need... apply the cost for the Ibuprofen and Ben-Gay that you will consume... apply your psychiatric bill...

          Did I forget anything?

  3. YesMaam27577 | Aug 01, 2004 01:41pm | #6

    Try to determine how much money you need to make to pay your bills. The rent, the truck payment, groceries, haircuts and the like. Divide that my the number of days in a month that you'll be working on jobs. Note that you will not be working on jobs every available day  -- bids, estimates, look-see appointments, and paperwork will take about a day each week.

    Now you know what your daily rate needs to be -- or at least you have a guess.

    Next, as you look at a job, try to decide how many days it will take you. Will yo be working alone? Are there job steps that require drying or setting-up time? If you are working alone, how much material handling will this job require?

    And you need to have in mind the total time this job will occupy you. How many days, or partial days, will this job prevent you from making money on another job?

    How much time will this job require for you to be at the yard, or the supply house? How many trips? How far is the job from the yard, and how far from your house? Drive-time must be included in your bid. If you don't include both the hours and the gas, then you'll lose money.

    And don't forget the cost of tools you'll need to rent. Around here the small ones are $50 a day, and the big ones are $150 and up. (Don't forget to add the time needed to get them and return them.

    Then tabulate the materials. If you think that your market will bear it, add a markup -- 10 to 15% to cover the risk of being the money man and the handler. (And if your market won't bear it, consider a different market.)

    And finally, keep records. Meticulous records. That is the only way that you will really learn from estimating mistakes.

    Unless you're the lead dog, the view just never changes.

    1. TimFinn | Aug 01, 2004 03:09pm | #7

      Thanks for your thoughts guys.  It's funny, my wife and I have had a small (no employess, just us) cleaning business for about 10 years.  I've only been doing carpentry on the side for 4 or 5 years.  I have no problem averaging $30/ per hour cleaning, but I get nervous bidding home repair / remodeling projects.  I'm afraid of people thinking I'm charging too much.  I want to bid jobs so I get them, but I don't want to work for free.  I want this business to work so I can get out of the cleaning business for good (cleaning same places every night is like Chinese water torture, it's just enough to drive you insane).

        Would your bidding processes change if you were only doing smaller projects, ones that are too small for large contractors w/ crews to bother w/?  plus, do these costs books take into account all the "suprises" you discover as you start tearing into old houses?  Always look forward to your thoughts. 

      1. User avater
        NickNukeEm | Aug 01, 2004 04:11pm | #8

        There is a huge market for smaller jobs, stuff the guys with crews turn down.  I sprinkle my schedule with them and find them more profitable (on a per hour basis) then the larger projects.  Door installs, deck stair rebuilds, storm doors, rotted trim replacement, all stuff that can be knocked out in a few hours.  Sometimes I'm working 3-4 a day; sometimes, if there are enough at one particular site, I dedicate a week to it.  Gotten a lot of referals from those, also.  I have more work, a lot of small stuff, then I have time to do it in.  Which means the price goes up.  Supply and demand; the demand for your services is high, but the supply of good, quality contractors willing to work at the smaller stuff, is low.  When the word gets out you can do what they need, do it well, and do it in a timely fashion, you'll have to beat them back with your new Panasonic Multi-driver : )

        I never met a tool I didn't like!

      2. User avater
        RichColumbus | Aug 01, 2004 05:15pm | #9

        I have found that the key to small jobs is having a lot of them; in a reasonably small radius.  Drive-time is always forgotten... and will kill you.

        I also agree, however, that "small jobs" is a HUGE market.  It is just plain easier to do big jobs... less scheduling, less people to deal with, fewer quotes.... etc.  If you are willing... it can be very profitable.

        A suggestion, however.  Try hard to develop a maintenance contract, a relationship with a real estate investor or another source of steady work.  Constant business development takes time.  Having a steady source of income is essential to stability, IMHO, when going after the small jobs.

      3. YesMaam27577 | Aug 02, 2004 02:58am | #11

        Would your bidding processes change if you were only doing smaller projects

        Depends on what you consider small. If a job that takes one person three or four days is small, then no, my estimating process isn't different than normal.

        But if it's installing mini blinds in a redocorated room, then yes. My bid would reflect the higher costs per hour of doing that small of a job. (All of that driving, all of the paperwork, for 20 minutes of actual labor.)

        If the kind of work that you will be doing is handyman work (like me), then you'll eventually be thinking of a "minimum" charge. A number of the large handyman services have a stated hourly rate, with a four hour minimum. So the decorator who only wants two mini blinds hung will end up paying a half-day's rate.

        That might be a bit excessive, buy maybe that isn't such a bad idea. Note that there will be some days when the scheduling works out to where you will have one of those tiny jobs, and nothing else. Hopefully, those will be balanced by days in which you have three or four of them.

        Unless you're the lead dog, the view just never changes.

  4. BobKovacs | Aug 01, 2004 09:36pm | #10

    Carp-

    Check out an article I wrote in JLC a few months back on using cost book data.  Essentially, you'll be cutting your own throat by buying a cost book and using the figures as listed (even with the little area modification factor they throw in the back of the book).

    As Mike said, the books aren't based on "your" numbers- they're national averages.  I've found some of them to be pretty close, some to be extremely high, and most to be bankruptcy low.  The best thing to do is to utilize the productivity rates as a starting point for items that you can't figure the hours on, apply your own hourly rate (based on your costs of doing business), add for materials, and add for OH & P if that's not in your hourly rate.

    The guys have already given you a long list of other items to consider, which can either be rolled into your labor rate, or added as line items in your estimates.

    Let me know if I can be of any help,

    Bob

  5. finishcarp | Aug 02, 2004 05:43am | #12

    Good luck in your new business.  'There is a LOT of good ideas here but I find the MOST IMPORTANT tip is this 1 thing to do.  On your estimate sheet (or Excel spreadsheet) create a column that records your ACTUAL costs.  THis will allow you to see where you made your $ and where it went out the window.(provided there are windows on the project- <G>)  As far as cost books go I don't have much faith in them as there is too many variables that they cannot react to that you can in your environment.  I don't recommend "guessing' as you put it, but you should be able to come up with some "educated" estimates. 

    Then go out and try to get the job and then do the paperwork to find out how you did..... Adjust your estimate the next time and then the next time etc.

    Good luck... 

    First we get good- then we get fast !

  6. davidmeiland | Aug 02, 2004 07:08am | #13

    I personally could never use an estimating book for anything. My MO is to work slow, be thorough, and make it absolutely right. Estimating guides are based on production. If your jobs are trimming out apartment complexes, OK, but if you're the typical one-man artisan contractor, forget it. Nothing is production on small jobs.

    Estimating is a good measure of your ability to actually do the job. As others have said, build it in your head. My approach is to completely plan the production of a job, day by day, on a legal pad, and then count the days. Write the whole thing down, step by excruciating step. Example: Day 1, load tools, mobilize to job site, unload and set up, set up a dust barrier in the living room, protect the floor with masonite, demo the sheetrock, remove and bag the insulation, quit. Day 2, lumber yard on the way to the job, cut out the existing studs, install the new header and studs, by then it's beer-thirty. Day 3, remove exterior siding, cut back the tyvek, patch the plywood, install the window, patch the trim....  And so on until the window is installed and the job is done. You need to do that level of planning anyway to work efficiently, so do it while estimating and kill two birds. A lot of guys including me say there's no such thing as less than a day. I never go splitting things into an hour here, an hour there, and wow, all it takes is half a day. Time gets eaten up on jobs every time you turn around. Give yourself enough time or work for free.

    If you can't plan a job in great detail then it's not a job you can estimate or one you can do. You have to stick with stuff that's familiar to you, easy enough so that you can be sure how long it will take. If you can't then it's not the right job for you and you're not the right contractor for that owner. When I'm not sure I can do something blindfolded, I tell the owner they need to keep looking. I only try new stuff on my own house first.

    There are some good estimating templates over on the JLC forum. Download those and see how they're set up. I'll send you a few of mine if you like.

    1. TimFinn | Aug 03, 2004 05:19am | #14

      Thanks for the advice. I've determined to start recording how long things take me to set up my own costbooks.  I just got a confirmation on a job , and I could tell by the homeowners voice I underbid. Oh well, at least it's a start.  My worry is being overpriced, but I think I just haven't been around people who can spend so much money.  Just got done figuring out  - 4' w X 14'L closet, lined w/ cedar  (floors, walls, ceilings) is in basement, must put in furring strips to build up floor for cedar - at least $500 just in labor; do really spend that much on a closet?  This could be a $1,000 closet by the time you add up materials!  Tell me your thoughts.

      1. User avater
        dieselpig | Aug 03, 2004 06:02am | #15

        It is what it is, regarding cost.

        My calculator doesn't lie, does yours?  Sometimes you start adding things up and just let out a low whistle.  Doesn't matter.  If your math is right, then that's the price.  Don't change it just because it's not what you could afford to have done to your home.  With that attitude you won't ever even own a home long enough to consider working on it!

        Not trying to sound harsh, but those "tuition payments" can be very expensive.  I've learned the hard way to trust my calculator and never be afraid to lose a job.  What good does it do you to do a job and lose money?  You can rationalize it and say, "well at least I'm working and my name's getting out there"  but that's a load of BS.  You know what's really getting out there?  "hey, hire this guy, he works cheap!".  Try breaking out of that mold.

        "just got a confirmation on a job , and I could tell by the homeowners voice I underbid. Oh well, at least it's a start."

        You better lose that attitude real quick, or you'll be out of business before your first Worker's Comp audit.

        Welcome to the club.  I just went into business myself a year and half ago.  Took a six month crash course in working hard, losing money, and feeling like sh1t.  Then I took a good look at my numbers after taxes and audits were over with.  Changed my evil ways and I'm one happy camper.  I've upped my prices by close to 50% in the last 18 months and haven't even changed my wages or profit goal!  I just learned what it actually costs to run a legitimate business. 

        Best thing I've done for myself is get in the habit of pulling out the notebook as soon as I hit my driveway at night.  I write down everything we did that day, who worked, how many hours, what we used for materials, how much got done etc.  It has cut my estimating time down by probably 25% and greatly improved my accuracy.

        You can't and won't do good work for people if you are constantly trying to figure out how much money you're making....and it's getting to be less and less the more days/hours you're spending on that job cuz you underestimated it.  Your attitude will suffer first, then your work ethic.  That's no way to live.

        It ain't a hobby.  You don't need the practice.  Make money or stay home.  The only house that should cost me money to work on is mine!

        EDIT: FWIW, I also haven't noticed any difference in the percentage of jobs I've done or lost since changing my prices.  The only thing holding me back is/was me!

        Edited 8/2/2004 11:31 pm ET by dieselpig

        1. Schelling | Aug 03, 2004 06:09am | #16

          Good advice but I'm afraid that, like you and me, this guy will have to learn the lesson the hard way.

          One other thing that I've learned is that once you give a price, don't worry about it again. Do the work as well as you can, be pleasant to the customer and let the money take care of itself for that job. Learn what you need to set a high enough price but never shortchange anyone. The customer should not have to pay for your mistakes.

        2. User avater
          jonblakemore | Aug 03, 2004 06:09am | #17

          "What good does it do you to do a job and lose money?"

          Brian, you're forgetting the time-honored principle of selling at a loss, but making up for it in volume. <g> 

          Jon Blakemore

          1. User avater
            dieselpig | Aug 03, 2004 06:28am | #18

            I used to work for that guy!

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