A good estimate will do more to ensuring a profitable outcome than anything else you can do.
An old man who had owned his own remodeling business for decades and decades told me when I was first starting out that a good estimate took care of most of the problems on a project. That almost sounds like: “Duh! No kidding! Who doesn’t know that?”
Far too many of us!
If you are not consistently “hitting your numbers” the problem is most likely in your estimate.
You can blame subcontractors, labor, difficult customers and “acts of God” but I would be willing to bet that you are not preparing good, sound estimates.
I will be dealing with this in much more detail in an upcoming newsletter but, in short, here is what we do.
- First, we look hard at the total scope of the project and detail it out in writing.
- Second, we look for “exceptions”…items that need special thought and consideration.
- Third, we detail all the critical measurements right down to how many feet of baseboard, etc. (We price everything by unit measure.)
- Fourth, we then proceed to enter all of these items into our computer program’s estimate database for this project and come up with a preliminary number.
- Fifth, we let it “marinate” for a day then go back in and test every assumption and make our adjustments.
- Sixth, we put it into multiple printable forms so that we have a hard copy for the job file and copies in other forms for subcontractors, foremen and project managers.
We never show estimates with details to the customer. Our program will allow us to show it in many different ways but we tried it for a while and found it created too many problems.
We prefer to do a detailed scope of work with specifications and one total price at the bottom. We spell out allowances and are very specific in how we present them so we cannot lose our markup no matter what the customer decides during the project.
We have been doing this for a long time and this system of estimating works for us day in and day out. It seems like it is quite involved and it is; but as all of us in the remodeling business know: “the devil is in the details.” Learn to do them right and you will prosper.
{ 2 comments… read them below or add one }
Hi,
What estimating program do you use? and how do you proove your price to your customer if all they see is 1 number, most of my customers wanted to see a breakdown of how I came up with the price.
Thank you,
Greg
Hi Greg;
When I say that we do not give a breakdown I mean it. We do not itemize a grocery list of what each little things costs. It can lead to endless “nickel and diming.”
We give a detailed scope of work with clear and extensive specifications for the proposed project with certain items set out if there are individual decisions to be made on those items; but we do not break it all down to “prove our numbers.”
We tried it the other way and it became much more of a problem for us than an aide to the prospective customer.
We use the HomeTech Advantage estimating system and have since 1979.
.
Good Luck!
Paul