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Creating Effective Estimates to Boost Profit

Learn some great tips and tricks to estimating construction costs in this article by our partners at Buildxact.
June 21, 2024
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Working with BlueTape is critical to the right cash flow management, but so is getting your construction bid right. However, bidding is notoriously one of the most challenging and time-consuming parts of the job – and all too often, you can end up spending time on bids outside of work hours to stay ahead. Working those long hours opens you up to potential errors, which you may have to cover out of your own pocket.

Bidding Challenges

We’ve all been there, right? It’s easy to miscount materials, underestimate their cost, or fail to account for enough time. And it’s not only manual errors that can catch you. There are other factors at play that are out of your direct control, like widespread material shortages, spiraling material costs and labor shortages – all of which can cause unwanted delays and increased expenses. That’s a lot to think about. Here’s how you can set up for success:

How to plan the right way

First things first, consider the nature and scope of the job. The complexity and size of the project will dictate the level of skilled labor needed and the size of the team. Make sure the project is within your experience. Homeowners will want to see that you’ve done similar work. You should also look at what materials and equipment you’ll need, as well as timeframes. Make sure your estimate shows the significance of material choices in the total cost of the build. Negotiating material choices should be made before a final contract is signed; otherwise, you’ll be faced with change orders down the road that will complicate the project and your relationship with the customer.

Simplify your project plans

To avoid change orders, use a checklist of what needs to be included in your construction bid, so you are consistently covering all essential points, and you forget nothing. What to include in a construction bid
  • Project details: Make sure you include your customer’s contact details, a bid number and date, and a project description or title.
  • Scope of Work: Provide a breakdown of the tasks, phases and activities, as well as a description of the work that will be performed.
  • Timeline: Outline the projected start and finish date of the project, making sure you’re being realistic so you can manage expectations.
  • Materials: List the materials needed and quantities, outlining unit prices as well as the total material cost.
  • Labor: Provide a breakdown of labor tasks and projected hours, and give a cost based on hourly/daily labor rates. Also include any subcontractor costs.
  • Overheads: Don’t forget any indirect costs you may incur like equipment rental, administrative expenses, insurance, and clean-up costs.
  • Margins: Make sure you’re including markup not only to cover indirect overhead costs but also to ensure a fair profit for your business.
  • Add ons/exclusions: List any additional services or options available, but also clearly state anything that’s not included in the bid. Don’t overcommit just to win the job.
  • Terms and conditions: Include payment terms, a validity period for the bid, as well as any other relevant terms and conditions.

Accurately scope a project with the construction bid

  • Include every element: It’s very easy to forget something when bidding, so make sure every task, material and cost are accounted for as thoroughly as possible.
  • Know your material prices: Stay up to date on any price changes and ensure you’re adjusting your bids accordingly.
  • Know the labor market: Know what availability there is of skilled workers, as well as any changing labor rates.
  • Consider all parts of the project: It can be easy to get caught up with one part of a project and then neglect another. Take time to review every part, so nothing gets left out and always consider any potential challenges that could impact time and cost.
  • Use the right technology: Invest in bidding software, like Buildxact, to eliminate any costly errors, bid competitively in a fraction of the time, save time, and become more profitable.

What’s overlooked when creating a construction bid?

Changing material prices is commonly overlooked, and it can be challenging to keep a tab on something that’s so volatile. The key is to try and stay abreast of changes by talking with your dealer so that you can update your bids regularly; otherwise, they’ll quickly be out of date. Supply chain issues and labor shortages are other hurdles that builders must deal with on a regular basis. Factor any potential delays and consider what back-up plans you might need in place to keep things moving. Also, just as important as the labor itself, make sure you’re checking equipment availability. As discussed already, change orders during the project also throw off costs and timings along the way. It’s key that you document any changes and requests made so you can avoid any discrepancies down the line. Travel time is another factor that can be easily missed, so depending on where the job is, it’s worth factoring this in, along with associated costs for your team and materials. Don’t forget to think about the weather and changing seasons either. This can be hard to predict. Severe weather significantly affects timelines; so, plan ahead.

Stay ahead with construction bidding software

Creating precise bids is such a crucial part of staying profitable, which is why you should invest in construction bidding software to do the job rather than manual methods. Using the right construction quoting software means you can bid up to five times faster than before, saving you valuable time that could be used to generate more business. It also means you can bid with more confidence, knowing bids are accurate and error-free. Easy-to-use takeoff tools provide precise measurements and cost calculations in a matter of clicks, and you can even link to real-time prices with your preferred suppliers. The software then converts this information into professional-looking, personalized bids that will impress customers. See firsthand how quick and stress-free accurate quoting can be, try a free demo or no obligation 14-day trial with Buildxact. Plus, as a BlueTape customer, you can get 5% off Buildxact subscriptions.
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