Handbook of Construction Contracting - Volume 2
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Introduction | Table of Contents | Back Cover

Introduction to Estimating

The best builder in town won't make a dime if his estimates are bad. This chapter will suggest an estimating system that can help you compile estimates that are consistently reliable - and keep your business growing and profitable.

Your skill as an estimator is the key to business success. No construction company is better than its estimates. And in most small construction companies the owner is the chief estimator. No one else can be trusted to make important decisions about selling prices. That's why every successful builder needs good estimating skills: knowledge of construction, an organized approach to compiling costs, the care required to produce valid estimates, and an instinct for situations that can make a job more or less expensive than other similar jobs.

There are four ways to estimate any job:

The Guess Estimate, which is just that, a guess, based on rules of thumb and vague recollections of past experience. Bidding by "guesstimate" is a fine idea if you intend to get into some other line of work in couple of months.

The Area Estimate is based on a cost factor for area alone, applied to the proposed area without consideration for any variables. This method of estimating can provide you with some big surprises, including fabulous profits on some jobs and disastrous losses on others.

The Piece Estimate is by far the most accurate method of determining job cost. You list each and every piece of material as well as the labor necessary to do each step of the job. If you start out with proper plans and a detailed job survey, then take each step systematically and comprehensively, you're pretty certain to come out with an accurate estimate. You also have a material list to use in ordering and coordinating the required materials. This estimating system takes time and will be accurate if you remember to include every cost item in the job.

The Unit Cost Estimate combines the principles of the area estimate and the piece estimate. You use the unit cost for each material, installed, for a given area. If your unit costs are correct, you can prepare an estimate that’s nearly as accurate as the piece estimate, but in a lot less time. It’s absolutely essential, however, to keep up-to-date unit costs based on current material and labor costs.

If you don't have a unit cost guide based on your own records and experience, I recommend the National Construction Estimator and the Building Cost Manual, published by Craftsman Book Company.  These books are revised every year and are, for the price, probably the best sources available on the subject.

Establish Your Own Construction Estimate File (CEF)

No matter which estimating method you use, there's no substitute for your own manhour and productivity figures based on your own crew and work methods. You can't have accurate estimates without accurate guidelines for labor. Throughout this volume you'll find examples of labor data and guidelines for filing in your Construction Estimate File. I call these CEF forms.

To make a basic CEF, you'll need good estimating references. One that I can recommend is Construction Estimating Reference Data published by Craftsman Book Company. The address is on the order form in the back of this book. Photocopy the charts that are pertinent to your work and tape them to standard 5" x 8" index cards. Set up a file box for the cards, and you've got a Construction Estimate File with labor guidelines at your fingertips.

Start with the information you'll find in this volume and in your other references, but don't stop there. Change the data if it's not accurate for your conditions. Add cards with information that reflects your experience. Continually update the cards to keep up with the changes in your operation. Your file has to change with the times, just like your business. Of course, it'll take time to keep the file accurate and up-to-date, but it will save you lots more time when you use it to compile fast, accurate estimates. And believe me, it'll save money, too.

Your CEF will not, except in a few instances, show price or cost. Material prices and labor pay rates are constantly changing and vary from location to location. You must use current local prices and pay rates or your estimate won't be valid. Since material prices change on a daily basis, my practice is to obtain current prices after completing the take-off. Pay rates for your tradesmen and laborers are easier to keep up with since they're not subject to daily change.

How many manhours will it take to lay the foundation block? Refer to your CEF for a quick answer. Figure 1-1 shows what your CEF may look like.

How many manhours will it take to frame the floor? Refer to your CEF. (Look at ours, Figure 1-How many bricks will you need to veneer this house? Your CEF will tell you. (See Figure 1-3.)

How many manhours will it take to lay the brick on this job? Go to your CEF. (See Figure 1-4.)

The CEF will help you lower future costs and make it easier to compare jobs being estimated. If your CEF, for example, shows that it takes 7.5 manhours to brush one coat of paint on 1,000 SF of exterior wood siding, and it actually took 10 hours, you can check on the conditions the workmen faced. You might also want to check on the workmen. Why did it take so long? You've learned something for future use.

In figuring unit costs, bear in mind the season of the year when the work is to be done. A carpenter, for instance, will be more productive on a warm, sunny day than when the cold is stiffening his hands and interfering with his movements. Keep a close record on the average output of tradesmen for all seasons of the year and include these results in preparing estimates. Record rainy seasons too.

Using the Manhour Guides

Experienced construction estimators recognize that no two jobs are exactly alike. Labor productivity varies widely from job to job, even if the crew re- mains the same. Job progress in hot summer months will be different from the progress made in cold winter months. Thus, judgment is an essential element in estimating any construction project. And judgment will be required when using the labor guidelines in this book.

The manhour guides in this volume are not based on "ideal" conditions. They assume the kind of conditions most contractors encounter on better planned and managed jobs. The labor productivity indicated in the guides will be accurate to the extent that these conditions apply to the job you're figuring.

The guidelines apply only to new construction. Repair, replacement and remodeling usually involve different problems, like difficult access, trying to match materials, working with nonstandard sizes, patching, and control of the construction environment. Your CEF will, however, be a useful guide for repair or remodeling work that's similar to new construction.

The guidelines and estimating data presented in this manual are the result of actual observations compiled, interpreted, and verified by professional estimators. But there's no guarantee that the figures used here will apply to the job you're estimating. As a rule, though, the manhour estimates presented in the CEF samples will be accurate within about 20% on most jobs where conditions are similar to the conditions outlined. On most of the remaining jobs the figures will be too high by 20% or more, resulting in more manhours than are actually required. This is intentional, as an estimate slightly too high is better than one too low.

Introduction | Table of Contents | Back Cover

Paperback, 320 pages

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