The Detailed Estimating Method

The correct method of estimating the cost of a job is the “Detailed Method” and generally includes the following steps:

Step 1: Understanding the Scope of the Bid

The estimator must understand the work to be completed according to the drawings and specifications. Read all of the specifications and make notes of the items that affect the cost. Complete a checklist so you will know when the estimate is done. No guesses here!

Step 2: The Take-Off

A “take-off” is the process of counting and measuring to determine the material needed for the project. When you perform a take-off, you are mentally visualizing the installation of the proposed electrical system and you are counting and measuring the symbols on the drawings. Using a systematic, repetitive system for this step will help keep errors to a minimum. For the person who has the specific electrical experience related to the job, performing the take-off is an easy step and actually very enjoyable, if estimating can be enjoyable.

Step 3: Determining the Bill-of-Material

Information gathered from the take-off is used to create the bill-of-material required for the project. This step is very labor-intensive and lends itself to likely errors. Using a systematic, repetitive system for this step will help keep errors to a minimum.

Author’s Comment: If you are using estimating software, most of this will be completed automatically.

Step 4: Pricing and Laboring

Once you have the required bill-of-material list (Step 3), you will need to send it to your supplier(s) for pricing. The labor units for each item must also be looked up in a catalog. This step is fairly easy for experienced electricians because they are familiar with the material; however, most persons can be taught how to perform this process. This is a very labor-intensive step and lends itself to likely errors if done by hand.

Author’s Comment: Estimating software will do most of this automatically although labor units for specialty items will still need to be looked up or you will need to request a quotation from suppliers.

Step 5: Extending and Totaling

Once you have the price and labor unit for each item (Step 4), it is time to determine the total material cost and labor. Extending means that the price and labor unit of an item is multiplied by the number of those items taken off. Extending and totaling can be performed by anyone who has reasonable math skills and a calculator. This step is very labor-intensive and lends itself to likely errors if done by hand.

Author’s Comment: If you are using estimating software, this will be done automatically.

Step 6: Estimate Summary

Once you have determined the total cost for material and the total labor hours needed, you need to make the necessary adjustment(s) to reflect the job conditions, plus the cost of miscellaneous material and small tools (such as drill bits, screwdrivers, and extension cords), as well as the application of sales tax, subcontractor expenses, direct job costs, and so forth.

Step 7: Overhead and Profit

This is where we separate the true estimators from the amateurs. Most electrical contractors can do the take-off and determine the cost of material and labor (if they use labor units), but applying the correct values for overhead, profit, and other final costs is where many contractors fail.

Step 8: Bid Analysis

When the bid is complete, you must verify that you did not make any common estimating errors, so you ensure your price is valid and accurate.

Step 9: Proposal

When you have completed the bid, a written proposal must be submitted so there will not be any misunderstandings between you and your customer. The proposal must clearly state what your bid price includes and what it does not include.

The above content is extracted from Mike Holt's Electrical Estimating Program.

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Mike Holt is an author, businessman, educator, speaker, publisher and National Electrical Code? expert. He has written hundreds of electrical training books and articles, founded three successful businesses, and has taught thousands of electrical code seminars across the US and internationally. His company, Mike Holt Enterprises, has been serving the electrical industry for over 40 years, creating and publishing books, DVDs, online training and curriculum support for electrical trainers, students, organizations, and electrical professionals. 

Mike has devoted his career to studying and understanding the National Electrical Code and finding the easiest, most direct way to share that knowledge with others. He has taught over 1,000 classes on over 40 different electrical-related subjects to tens of thousands of students. His knowledge of the subject matter, coupled with his dynamic and animated teaching style, has made him sought after from companies like Generac, IAEI, IBEW, ICBO, NECA, and Fortune 500 companies such as IBM, Boeing, Motorola, and AT&T. He is a contributing Editor for Electrical Construction and Maintenance Magazine (EC&M) and formerly Construction Editor to Electrical Design and Installation Magazine (EDI). His articles have been seen in CEE News, Electrical Contractor (EC) International Association of Electrical Inspectors (IAEI News), The Electrical Distributor (TED) and Power Quality Magazine (PQ).