What Is A Job Estimate? (With Tips And What To Include)
Updated 30 September 2022
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Job estimates are essential for sectors that provide services, such as construction, manufacturing and media. They form the basis of a professional working relationship between a client and a service provider and are an integral part of business operations. It is important that estimators clearly understand their customers' needs, the products and services they offer and have effective communication skills. In this article, we discuss what a job estimate is, understand an estimator's responsibilities, find out how to become an estimator and review some tips on writing an effective estimate.
What is a job estimate?
Knowing the answer to "What is a job estimate?" can help you prepare proposals and understand the factors involved in preparing one. Also known as a quote or a proposal, a job estimate is a document that provides an approximate cost for a proposed project based on the materials, labour and overhead required. It is not a binding contract but serves as a helpful guide for both the customer and the contractor. While preparing the proposal, the estimators consider the scope of the project, the timeline and any special requests from the customer.
A job estimate serves as a tool to help both the customer and the contractor move forward with a project. Therefore, a good proposal is clear, accurate and detailed. The estimator considers the scope of work, materials and supplies needed, labour costs, subcontractor costs, permits and fees, equipment rental or purchase, timeline and warranty. Estimators also consider the risks involved in a project and potential problems that could occur.
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What are an estimator's responsibilities?
For work proposals and contracts, the estimator prepares timely and accurate estimates for material, labour and equipment costs. Construction estimators, for example, understand complex drawings and specifications and are thoroughly familiar with construction methods and materials. These professionals are knowledgeable about all facets of a project, so they can identify potential problems and propose solutions.
Effective communication is important, with an estimator often being the conduit of information between management or operational areas of the business and other specialist team members, such as engineers and architects. Their responsibilities also include maintaining up-to-date records of construction costs, staying informed of recent developments in their industry and attending training courses to learn more about best practices.
How can you become an estimator?
There are a few different paths that you can take to become an estimator.
Complete an apprenticeship program. Many construction companies offer formal apprenticeship programmes that combine on-the-job training with classroom instruction.
Move from a related role. Some estimators start their careers in other positions within their industry, such as project management, then move into an estimating role.
Pursue higher education in your field. While not required, some estimators in the construction sector have a bachelor's degree in engineering, construction management or architecture, for example.
It is crucial to develop strong research and analytical skills for whichever path you choose. In addition to formal education and training, estimators have strong analytical and mathematical skills. They can also effectively communicate internally with other project team members and management, external subcontractors or suppliers and their clients.
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What to include in a job estimate
The first step in preparing a job estimate is to gather information about the job from the client's perspective to ensure what you are offering fits your client's needs. Next, map this information and the project's requirements to what a business can offer. This includes the scope of work and the materials and labour required.
Once you have this information, you can begin to draft an estimate to send to the client. There are a few different ways to do this, but consider using a spreadsheet format. This format makes it explicitly clear which costs relate to which components of the work. The information and formatting included in an estimate can vary depending on the purpose of the estimate and the intended recipient. When preparing an estimate, consider including the below information:
Scope of work
This gives the client an overview of what the project entails and what the final price includes. This information would be near the top of your estimate, providing context to the other included information. Defining the scope also ensures you and the reader have the same understanding of the project. Make sure you include information about anything explicitly not included to avoid potential misinterpretation.
List of materials and supplies
List out all the materials and supplies required for the project so that the client knows what they are paying for. For example, consider materials such as lumber, nails, screws, paint. This cost includes the raw materials and the cost of sourcing and transporting them.
This is how much it costs to pay your employees or contractors for their time working on the project. If you are hiring subcontractors, you may consider including a breakdown of costs. If the job estimate is for a third party company, you may combine these costs with other expenses like operational overheads or your profit margin.
Permits and fees
There may be permits or other fees required to complete the project. For example, if you are making repairs to an older home, the city may require you to obtain a permit. Include these costs in your estimate if you propose to manage the applicable payments rather than the client.
Equipment rental or purchase
If equipment rental or purchase is part of completing the project, you may include those costs in the estimate. For example, this might comprise speciality equipment for excavation work or scaffolding for painting a tall building. Depending on your circumstances, you may choose to combine equipment-related costs with other operational or management expenses.
It is important to include a timeline in your estimate so that the client knows what to expect. This gives them an understanding of how long the project is likely to take, including any progress milestones. Depending on the project's scope, a client may make progress payments at certain milestones to support the contractor's cash flow.
Many contractors offer a warranty on their work. This is generally included in the estimate so that the client understands what happens if something goes wrong. It is a good practice to ask your client about warranties before you prepare an estimate since they may have specific requirements.
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Tips for writing a good estimate
Any business owner knows that providing accurate estimates is essential for maintaining a good working relationship with clients. Here are a few tips you can follow to give an accurate estimate to the client.
Do your research
Know what materials are necessary and estimate the duration of the project. Ensure that your client has a clear understanding of what they can expect in terms of costs and deliverables. It is also important to know if the client has a specific budget for the project. This is because the client may have unrealistic expectations concerning the cost of their project, preventing them from accepting your quotation due to budget constraints.
Be sure to budget for unexpected expenses. You might set it at ten percent of the cost of the project, but the amount depends on the scope of the project, whether you have worked with the client before and have completed similar projects in the past. Including this contingency in your estimate or incorporating it into your overall costs may be a good idea. In addition, clients can receive a refund if the contingency is not required or if there are special conditions or pre-approval requirements attached.
Be prepared for questions
Clients may have questions regarding the estimate, so it is a good idea to have all the costs documented along with other relevant information. They may also want to negotiate on price or schedule, so it is helpful to know how flexible your budget and schedule are to accommodate their needs. Estimates are not binding, but they give you a clear starting point for negotiations.
Allow time for your client to respond
Provide your client with some time to review your estimate and ask questions or express concerns. Your estimate may take a client longer to evaluate if the project is large and has several parameters to consider. In addition, they may need more time to compare your estimate with those of your competitors before making a final decision.
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