Estimating is a vital process in a construction business as it can increase the profit margin of an owner to a great extent. So the estimating system in an organization should be authentic, uncomplicated, well-organized and speedy in order that owner can concentrate his focus on constructing his business.
Proper estimate can reveal the true cost of executing the service in a construction company that contains materials, labor, equipment, subcontractors and overhead as well as preferred profit margin. The estimate can also includes the viable nature of the market one is involved.
Speed is the most crucial factor in an estimating process. Estimating and bidding costs money. One should accomplish his estimating and bidding activities in a quickest possible way maintaining complete accuracy. As much as one can keep the costs lower, the more money can be included directly to the bottom line and more time will be available to sell more work.
An easy to use software program like Microsoft Excel can provide great assistance for proper and quick estimating. Several successful contractors have produced “estimating calculators” through Excel. It facilitates the contractors to make a reliable, easy and competent estimating procedure that is less costly in comparison with other forms of estimating.
In order to make a constant and trustworthy estimating system, one should give emphasis on the following factors:
- Material costs
- Labor rates with labor burden (payroll taxes, insurance, etc.)
- The prices required for running all pieces of equipments per hour
- The required times for the employees to accomplish particular tasks
- Overhead (by division if relevant)
- Desired profit margin (by division if relevant)
- A sound understanding of the job for which the bidding will be carried on to properly assign the above costs to an estimate
The advantages of applying Excel from both the management and estimating view points:
- Preserve all information concerning a definite property in one computerized location
- Simply incorporates into sales and administrative procedures
- Negotiation becomes easier as all the information are accumulated in the Excel document, and it can be modified on the fly through various formulas.
- One can make the formulas protected in order that they can’t be modified and it results in reducing costly manual errors which are mostly occurred in estimating.
- Employees can easily grab this estimating process through a unique template program having preset calculators.
- The primary thing is that the contractors must recognize their numbers and learn their application to their estimates and bids.