Return to NH's Business Tips Index
Estimating for Contractors: Routine task?
Estimating is a management function that contractors must rely on to maintain
a successful business. However, it's not always as easy as it seems. According
to a recent report in an industry magazine, paint contractors have the highest
business failure rate in the construction industry. In fact, for every ten
contractors that start a business this year, only three will still be in
business two years from now.
Estimating requires as much planning as the actual work. Any successful
contractor will tell you how important it is to have a structured estimating
program. When estimating, try thinking in terms of a “cost analysis.” This
allows you to evaluate a job based on cost, not on how low the estimate needs to
be in order to get the job.
“We often try to steer contractors away from 'guesstimating,'” Jerry
Howell, director of education and certification for PDCA says. “Precision is
such an important part of estimating – and it can be the difference between a
successful business and one that fails.”
Another strategy is to view the job as an investment. As a contractor, you
invest money and time into performing a service for which you expect a return.
Be sure to weigh the risks, the potential profits and the financial impact, as
well as your ability to undertake additional projects.
A well-structured estimate can be used several different ways: as a tool when
discussing or making a presentation with a client, a basis for ordering
materials, billing and monitoring job schedules.
“When you finally find the most effective estimate approach for your
business,” says Howell, “it provides a huge comfort zone for you and your
Estimating is a powerful tool. When done correctly, it can help your business
profit. However, an inaccurate estimate can leave you scrambling to break even
on a job. Estimating is not just another routine task—it can be the deciding
factor between a business that fails and a business that thrives.
For more information on estimating, please call Jerry Howell at 309.691.2244,
or e-mail firstname.lastname@example.org.
According to Jerry Howell, director of education & certification for PDCA,
you should keep three things in mind when estimating:
- Know what your overhead costs are. The biggest reason for businesses going
under, says Howell, is contractors not understanding their costs.
- Know how much surface area you are going to be working on. Be sure to
measure the area you're going to be working on. Don't just guess.
- Use your estimate as a budget. If estimating is done properly, contractors
will find that it's an outline for their budget.
This article provided courtesy of THE FLOOD
COMPANY, serving the painting
industry for over 150 years.
They are manufacturers of high
quality wood finishing products, preservatives, paint additives and
For more information on their products and
informative articles, visit
their website at http://www.flood.com.
to NH's Business Tips Index