5 Profit Pitfalls to Avoid When Producing Estimates

When you put together an estimate, no matter what type of contractor you are, the price you end up with is going to be a key factor determining whether your project ends up being successful or not.

When the price is too low, you might stand a better chance of being selected over your competitors, but it won’t be worthwhile if you can’t make a profit. Conversely, overpricing makes your bid less competitive and there’s a good chance your work will all be for nothing.

Either way, mistakes can end up costing you dearly, so accuracy should be a high priority. Here we round up five shortcuts to help keep you on the right track when you’re producing your estimate.

Mistake 1: Skipping things during your takeoff

It’s understandable that when you’re faced with the time pressure of analysing technical drawings, measuring and counting up the elements that are relevant to your trade so you can produce a quote, mistakes aren’t difficult to make.

Although common, these kinds of errors can have serious consequences, so it’s important to do all you can to avoid them. The first step to take is to follow a set process every time you do a takeoff, and work through the drawing one logical step at a time, instead of trying to count up different elements from all over the plans simultaneously.

Processes are equally important when it comes to reviewing and checking. Make sure you dedicate some time to look over all the details again, and if possible, have a colleague do the same so any mistakes are likely to be spotted in time.

Of course, it’s worth mentioning that the traditional process with printed paper drawings is likely to lead to a higher error rate, so you might also consider switching to a digital takeoff. Using software makes it much quicker and easier to take an organised, methodical approach.

Mistake 2: Double counting

It’s just as easy to count something multiple times by mistake as it is to miss it entirely. It’s slightly harder to spot this later once you’ve already made the error, but again, reviewing carefully will help detect these kinds of mistakes. It goes without saying that taking notes and highlighting while you work are essential!

There’s an obvious reason why this is one of the top estimating mistakes for contractors everywhere, other than being common. Double counting can easily cut into your profits because you’ll end up pricing too high (as we considered earlier) or wasting money buying more materials than you actually require.

Mistake 3: Taking too long to get back to the client

Estimating isn’t easy, as we’re increasingly seeing as we go through this list. There’s no way around it: it takes a long time, especially if you’re checking all your work multiple times (which we still highly recommend!).

That being said, taking too long to finish a quote and return it to the client will probably mean they become impatient and look to your competitors. You can usually assume you’re not the only one in the race. Can you afford to lose another job to your rivals?

So how do you work faster and reduce your error rate at the same time? The trick is usually to ensure you have an efficient, flexible process that you can easily apply to every estimate. Using software to modernise your approach is often a big factor, as is making sure your staff are properly trained.

Mistake 4: Leaving too much to chance

There really is no valid reason to overlook the finer details in pursuit of getting your estimate done faster. This applies to many different areas, because you can’t predict which factors might end up impacting on your profits if you simply haven’t paid enough attention.

For example, think about the site. Have you visited it before you submit your estimate, or spoken to the client about it? Making assumptions can be a profit killer if you realise at the last minute you’ve misunderstood something crucial about the design of the building.

Your profit margins should be carefully calculated, otherwise you have no way of knowing whether a job is worth taking on. Remember that your business can only thrive and stay competitive if the numbers are healthy, so the estimating process is not somewhere you should be cutting corners.

Mistake 5: Failing to learn lessons from projects past

Like many other situations, you can usually learn valuable lessons if you stop to consider why certain projects didn’t work out the way you intended. If a client doesn’t take you up on your offer, make sure you investigate and record the reasons why.

If you fail to think about what went wrong last time when you embark on a new project, there’s a much higher chance you’ll make the same blunders again, and there’s no room for that when you’re in a competitive market. In any case, it’s always good to have a positive outlook: every error is an opportunity to improve.

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