Construction Estimation Playbook

construction estimating you're in the  right place I'm going to be showing with you how to create fast accurate  and surprise free estimates for your [Music] clients all right jumping in so I'm going  be going through the four different uh phases of building out an estimate and you know building  your system for estimating all about systems and processes so in order to do things quickly and  accurately we need to have some setup in place that's going to be where we're going to start  and then al

l the way at the end is going to be the proposal for the actual like what it looks  like giving it to the client and everything in between so stay tuned give this video a big  thumbs up if you got value out of it if you you know it's going to come up in the video  where it's like oh that makes sense or wow I wish you know I knew that sooner give this video  a thumbs up appreciate it helps me make more great content for you so the setup the first thing  that we're going to be talking about gettin

g your software in place hopefully you already have  some software if you don't um search around figure out what works best a lot of guys start out just  using their accounting software like QuickBooks you could have something more specific um like a  project management software some you know Builder Trend or construction uh forend something like  that get your software in place though that's really important you're going to need something  uh spreadsheets do work I don't really suggest it but y

ou can build out an estimating software  from just a simple spreadsheet like Google Sheets or what have you once you got that set up you're  going to want to build templates and you can do think about when you're whenever you're doing work  in a business how can you do something one time and continue to pay you and continue to work for  you uh for as long as you you know you run your business uh and well into the future so templates  is one of those ways if you're doing like a kitchen renovation

once you're done that kitchen  renovation that could then be your template just you know change a few things and whenever you  are building a template you want to build it as big as possible so you want a big template  so you can just delete things out of there when you are as estimating a project so if you got a  really big kitchen um you know proposal estimate template and you're doing a smaller kitchen you  just delete things out right it's easy to to take stuff out if it doesn't have an isl

and delete the  island if it you know doesn't have infloor heating just delete the inflor heating so all that kind of  stuff uh templates are key though to making sure that things are accurate so because you have this  big built out template you're not going to forget things right if you're always doing estimates from  scratch or using old projects as as your template to like estimate you know new projects have old  pricing um it's a different project it could have you know things in there that

you forget about  whereas with a template you can have everything in there so that nothing gets forgot about even  if you don't need it you just take it out like I mentioned before finally the last thing to get  you know your system set up for to get started with estimating is cost codes so cost codes is  kind of like it's a little bit higher level uh as far as like knowing how to use them properly  and which ones to put in your business it's going to depend on your business obviously ly uh I  d

o have a separate video all on cost codes and how to get that set up in your business so I'm  not going to go into it in length here uh but essentially cost codes is just you know numbered  lists of the different types of items that you're going to have in your estimate and the reason you  want to do this is for consistency it also helps for tracking later so you know you can track from  your estimate the cost code of to the the actuals on site so if you estimated you know 20 hours of  interior

finishing labor on this project later in your accounting software because you're running  cost codes you can look at it and like hey on this project it took 50 hours of interior finishing  like what the hell why why is my estimate so far off like what happened maybe there was some  change order that I should have put through that didn't go through or we just grossly you know  underestimated the amount of time it was going to take so without that information you can't  improve your estimating pro

cess so that's why cost codes are so important because you may be  losing money uh or you may be overpricing stuff um without knowing the actuals of like that Fe  feedback loop so that's the why cost codes are so important if you want help with any of this there  are links in the description I'll be uh sharing with you some like bonuses later of like things  that you can get to to Really you know up your level of estimating overall second thing moving  on so after you got the everything set up i

s pricing so the pricing is is of course important  because you want to be pricing competitively but you also want to be pricing profitably and those  things don't always uh go together perfectly so you want to be getting a cost database in place  this will be your database of costs and that will go into your estimating software so that when  you pull through um you know like your labor rates for interior finishing or maybe you know  Plumbing uh maybe you got your your journeyman um or your you

know your red sealer or whatever  you're going to have different labor rates so that all should be pulled through and be pulling  from a solid database of costs so that you can fluctuate those costs and it pulls into your  estimate whenever you know prices change with which they do uh and so you don't have to go  hunting around for like oh you know how much is a 2x4 how much uh is you know PC's Plumbing  line how much is this or that you shouldn't have to go searching around every estimate you'r

e  doing it should all be in the database so it's quick it's easy it pulls through and it's all  set up for you so get that set up usually just a spreadsheet uh and there's ways where this  can be tied to actual pliers that you use or even just like other databases but uh that's for  you know that's getting a little bit in depth uh next thing you want to look at for pricing is your  overhead markup of course you know how much extra are you charging so it's going to cost you you  know 10 grand on

labor and 20 grand on materials how much extra should you be charging to make a  profit to cover your overhead so these kind of things you don't want to just be pulling it out  of a hat um overhead markup you know generally I mean low low end for maybe like large commercial  projects or um something where it's you know just very like management style project you know you  might have 10% 15% uh overhead markup uh whereas if you're more of a trades person or maybe you  know just self-employed per

son then maybe your markups are more like 50 or 100% even uh so it  can really range and you don't again you don't want to pull this out of a hat of like oh that  seems about right should be making money uh you need to go to your actual finances and look in  your books of your bookkeeping of like what is my overhead what's my my burn rate for money  every month whether I have one job zero jobs 100 jobs you know what am I burning and how much  do I need to make sure I'm making on projects to cove

r my my overhead and then have markup so I'm  am profitable at the end of the day plus you know paying for your own living expenses and and your  your lifestyle right so uh very important to get to nail that down uh other things you want to be  think about is management so what are what pricing do you put on for management I see this common  mistake I made this when I started estimating I wasn't charging for management for many years  I came from a subcontracting uh background where I started my

business but then I moved into  General Contracting Renovations uh and I was you know the typical business owner running around  to the sites I had Foreman I had some managers more on site and not like project managers I was  doing that at the time and I wasn't charging for my time I was thinking my overhead markup will  just you know it'll cover that so I'm not going to worry about you know charging for management I  didn't think about it but it is so important how much time are you going to d

evote to a project  because you've got to manage it you got to order materials you got to coordinate guides you got  to talk with clients you have to you know get them information you maybe have to figure out um  certain you know types of construction or deal with you know the city permits whatever how much  time are you putting into that and you should be Char charging for that time typically for a  project manager I mean depending on your area and and your business but for project management I

  mean anywhere from $75 to $150 an hour is is very typical and common so make sure you're factoring  that into your estimating because later even if you are doing the management you want to be in a  position financially where you can hire someone to take over that role from you and if you're not  charging properly for it you won't have money to pay someone to do it for you so you always  be stuck in that um you know at that level of business does that you know make sense so that's  pricing supe

r important obviously with the pricing the third part of construction estimating these  are you know going in order here to really improve your construction estimating because estimating  is like it's where everything starts right if you have a bad estimating process you can't expect to  make money on the back end because if you're not if you're not effective with estimating the the  amount of time it takes to get the estimate to a client affects your sales uh and then the amount  that you sell

projects for the estimating you do affects your profitability and your financial  future when you actually get into the project if you've underbid a project you just set yourself  up for failure whereas if you've you know overbid and you and you got lucky and and things still  went through or you're you know you you hit the mark with your fi with your estimating your  profitability and your business will continue to hum and and you know grow throughout the future  so super important third thing

we're talking about here still with me calculating process so this is  all about how do you actually calculate like how do you figure out the numbers right so your your  cost database we mentioned earlier you're going to have multipliers in there A lot of times this  is like your lineal footage square footage you know surface area things like that so you can have  assemblies so assemblies could be exterior walls uh you've got your studs your insulation um siding  drywall you know everything that

goes with that you get a linear foot takeoff for if you do new  builds or or whatever and then from there it can easily spit out a number right um You just need a  multiplier for that of what's the going rate same with labor so you're going to have your your labor  rates uh again multipliers pretty self-explanatory but take a bit of time to figure out and think  about everything right so drywall yeah maybe drywall whatever $2 square foot for drywall but  what about the acoustic seal what about

you you know put poly Behind the Walls what about the the  screws that go into it what about the taping the finishing so really think about these extra things  that maybe on if you're quoting materials or even labor like what's all this extra stuff that goes  into it um you know tools rentals all that kind of stuff uh and make sure that your multipliers  are accurate what I always like to do too when I finish an estimate I would do a mental walkr  um of like okay we're going to show up on site w

e've got to set things up we got to put out some  floor protection uh we've got to get our our tools we're going to start with this um part of the  project this phase is going to go into that so just do a mental walkthrough and it's like hey  wait I forgot to add you know whatever maybe oh I forgot like wait we're we're putting new  poates in so we're probably going to have to do drywall repairs on the ceiling I forgot to put  in drywall you know patching or whatever so do a mental walkth throug

h like picture yourself or  your guys going through whatever they're going to do on site and that'll usually like make you  think about things that that you forgot finally things that often do get forgot about when  you're calculating estimates is miscellaneous so a lot of guys are a little bit hesitant to  put miscellaneous on their quote because the client's like why am I paying for miscellaneous  like what does that mean either you can explain it like hey we know every project there's going 

to be some stuff that comes up and and we account for that because we know there's going be um some  miscellaneous stuff that comes up or you could do it as like a site maintenance fee or you know just  add it in somewhere else sort of that makes sense but you want to be having a little bit of buffer  um for things that you haven't accounted for that come up and this is a great way to I mean cover  your ass for one but also save face a little bit where if clients you know you get into a project 

and something's not quite going right or there's something that's kind of on the fence where it's  like I could charge for extra for this like with a change order but it's kind of such a small  thing I don't know if I you know really want to and it might you know damage the relationship a  bit because they just think I'm trying to like get some money out of them like out of the customer or  whatever um so you got a little bit of buffer in there you can smooth out some of those patches  or just

be covered if something does go wrong that you um you know go over budget for whatever  reason so that's one thing uh project management as I mentioned before uh and then finally do  a full review of it with somebody else so if you got a foreman lead Carpenter whoever just do a  quick like 10-minute review and just hey just run through this estimate did I forget anything does  the price and seem right maybe because they're closer to the tools they'll be like man there's no  way we're going to de

mo this kitchen in two hours it takes us like 4 hours or or a full day to to  to demo something like that because we got to do setup we've you know got to get stuff out to the  dumpster and if there's weather or whatever you know so they might have insights and alert you to  things and it just increases the accuracy and only takes maybe an extra you know 5 or 10 minutes  just to run through it with another person so that's all about the calculating process final  thing I'm going to be touching o

n number four one of the most important parts because this is  like the client facing side of it is the proposal so this is the actual you've done the estimating  you've done the the construction estimate but how does it look like is it just you know how does it  look and how do you present it to the client is so important I'm a big fan of itemized proposal  I know some contractors I'll say old school guys too um I find more the kind of the the newer  construction companies are are fairly good a

t this whereas some of the kind of the older companies  um are more like I just give them a price either they say yes or they say no otherwise I'm on to  the next guy and forget about it but itemized I think it really speaks a lot to trust um because  clients can see oh you know it's going to cost this much for that this much for that this much  for that and you know you may have a bit more back and forth where they're like hey I think you  know I can do this cheaper I don't want to do this beca

use it's over budget or what have you um  but I feel that they'd be if if two proposals are presented to them even if one's a little higher  than the other one one's itemized with all the different costs that are going into the different  stages of the project or however you know details you want to get one is just like you know bottom  bottom price $180,000 it's like what am I paying for with $180,000 whereas one's you know $190,000  or $200,000 it's got everything listed it's like the Comfort

level is a lot better for itemized  pricing um so I'm a big fan of that your proposal should have that and professional so have your  logo on there have like I often um tell my clients have uh like kind of a landing page where  they can a client can go to the landing page it's got a little blurb about your company a few little  things maybe a testimonial uh I've got a template for it but uh but have something there and they  click on the link and kind of brings it to their um their estimate so t

hey can see it uh if you're  doing it in person you know make sure that it's printed on nice paper with a bit of color uh that  you know it pops a bit take a little bit extra time a little bit extra money to make sure that  your proposals really look sharp uh because that is what they're going to carry around and that's  how they're going to be looking at yours and any competitors uh it's kind of the first feel they  get as far as the pricing and how things look so super important with the propo

sal if you want more  help with creating this whole estimating system and really you know boosting your level with  estimating check out the links in the description below got a free template in there as well as a  full course on how to do this everything super in-depth with templates with training videos with  a free implementation session that's a bonus with purchasing the program so you and myself would go  through implementing a whole complete estimating system make sure your estimat are sup

er fast super  accurate you're not getting any surprises when you start the project of ah I forgot something  so make sure to check out the links below and as always got tons of other great content and  videos coming up stay tuned thanks for watching