Improve Job Estimates for Better Accuracy

As a general contracting business owner in Illinois, you know that nailing down an accurate estimate is essential to success. If your estimates are too low, you’ll lose money on jobs. If your estimates are too high, you’ll have difficulty winning bids. So how can you ensure your job estimates are as accurate as possible? Here’s some tips to improve your estimates from Hometown Bookkeeping.

New Business Estimates

Estimates are always a best educated guess and that includes estimates you make internally, such as sales for a new business. When you’re just starting out, making plans for your business will depend on your ability to accurately estimate your revenue. In the absence of historical data, seek out available information about your industry and market. This information can help you get a general idea of what to expect as a new business.

One piece of data that can be useful as a general contractor is the quantity and value of homes for sale in your area. This can provide you with some contextual information about the housing market that you can use to forecast business.

Understand Labor Costs

In any business, understanding your costs is essential to profitability. This is especially true when it comes to labor costs. All too often, companies underestimate the cost of labor when estimating job costs, resulting in losses once the job is complete. Several factors contribute to labor costs, including wages, benefits, and overheads.

Review Subcontractor Estimates

One way to improve the accuracy of job estimates is to review subcontractor estimates. By comparing the subcontractor’s estimate to the actual cost of the job, it’s possible to identify areas where discrepancies may exist. You can use this information to improve the accuracy of future estimates.

Factor in Risks

You’re almost done with your estimate for the painting job, and it’s coming in well under the client’s budget. But before you finalize the number, you need to take a step back and consider the potential risks involved. What if the weather doesn’t cooperate? What if the client decides to add an extra room to the project? These are just a few variables that can impact a job and must be factored into your estimate.

Use Stick Estimating

One way to improve your estimates is using a stick estimating technique. This involves creating a rough sketch of the job site and measuring the dimensions with a tape measure. You can then use these dimensions to calculate the material you need. Stick estimating isn’t always accurate, but it can help to give you a general idea of the size and scope of the job.

Hire Experts and Connect With Other Professionals

Experts you can hire include:

Accountants. They can help you keep track of your expenses and income to get a better idea of how much to charge for your services.
Lawyers. They can help you understand your business’ legal aspects.
Estimators. They can help you understand the process of evaluating the price of a project and give you tips on how to be more accurate with your estimates.

As a business owner, it’s crucial to network with other professionals in your field and learn how other contractors conduct estimates and forecast revenues. Contractors operating outside your geographic area may be willing to share this information with you.

Incorporate Estimating Software

Consider using a roof estimator app to calculate complex measurements and roof areas for materials and labor estimates. Software lets you save and create templates to simplify future calculations. Using estimating software in your business can reduce your error margin, increase efficiency, and streamline your workflow.

Accuracy Is Key

Now that you know some ways to improve your estimates, put them into practice and see how it affects your business. You may find that you can win more bids and increase profits. Remember, accuracy is key when it comes to estimating job costs. And if you need accounting help with your contracting business, reach out to Hometown Bookkeeping today!