Electrical Estimating is Essential for Electrical Contractors. One flawed estimation can put you out business.
In dealing with Electrical Estimating we look at three processes:
ANALOGOUS ELECTRICAL ESTIMATING
Analogous Electrical Estimating uses an “Analogy” comparing similar past projects to estimate how long or how much a current quote or tender will cost or take and may include pre-point, pre-builds or assembly methods.
An Analogous Estimate is considered “Top-Down” and is generally not accurate as other estimating processes. Because the estimators and possibility the organisations, experience and judgement are applied to this estimating process, is considered a combination of judgement and historical information.
PARAMETRIC ELECTRICAL ESTIMATING
Parametric Electrical Estimating uses unit material cost / Labour hours with quantities on the number of units.
Parametric Estimating is a more accurate estimating process. In order to be accurate the measurement must be scalable.
For example:
If we had to supply and install one metre of cable; material cost of $0.80 per metre plus labour 0.02 per hour per metre.
Then 100 metres will be 100 times the combination of material cost plus labour hours.
This is considered “Bottom-Up” estimating, refers to determining the individual task estimates first, then rolling them up into an overall quote or tender cost estimate.
COST-BASE ELECTRICAL ESTIMATING
Cost-Base Electrical Estimating uses parametric bottom-up together with some top-down analogous estimating processes by comparing successful similar past projects. This combined process helps you establish accurate cost baselines for each quote or tender overtime.
Using the parametric estimating process, here we calculate the cost of every single material cost / labour hours with highest level of detail and roll them up to calculate the total quote or tender cost.
We breakup the quote or tender activity into its smallest components, then we estimate the cost of each component and aggregate it to get the accurate quote or tender cost.
Using the accurate cost-base quote or tender cost from successful similar past projects we can strategized our business process in determining our market level in our market niche.
The current quote or tender estimated gross margin can be changed by adjusting the mark up on cost for material and labour hours as well as changing our calculated efficiency rate. By making these adjustments we are trying to find out where the market rate is for the type of project in our targeted niche market area.
Continue this process for each targeted niche market area over the lifetime of the business by adjusting the estimated gross margin for each new quote or tender either up or down depending on the changing market conditions. This process increases our success rate with profit.
This is a very accurate process of estimation and may seem time consuming; electrical estimating software application packages help reduce this time factor substantially with automative processes and quantative calculations. While the automation may be quick, we will need good data to load for an accurate outcome.
Our process uses proven independent measurable variables from successful past projects in order to create an accurate quote or tender cost-base estimation.
If you produce a quote or tender with flawed estimation, you will have to complete the project out of pocket. This is bad for your project and the business reputation affecting your credibility.
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