In the world of electrical contracting, it is imperative to estimate and submit bids to win more projects and foster your construction business. We know that commercial kitchens demand routine cleanliness and inspection, right? The same goes for electrical work. Regardless of the size and type of the industry, regular electrical maintenance checks are important. Performing accurate electrical estimates allows different construction companies to allocate resources effectively. While inaccurate estimates can cause cost overruns, project delays, and more issues.
We understand how challenging and intimidating it can be to calculate commercial electrical work. It demands much perfection and attention to detail. Read this article for more valuables!
Why Estimates Are Important For Electrical Projects?
Electrical estimates are crucial for effective project management because they provide a comprehensive prediction of the resources and costs needed for an electrical renovation or installation. By detailing the expected expenses for labor, materials, and other overheads, estimates assist project stakeholders in creating realistic budget plans and avoiding unwanted financial burdens. Adding more, this upfront clarity leads to better financial planning and informed decision-making, minimizing the risk of cost overruns and ensuring that the electrical project remains within its financial limits. Precise estimates also facilitate an efficient resource allocation, ensuring you complete your project keeping deadlines and within the set budget.
Furthermore, estimates also play a considerable role in establishing transparency and trust between contractors and clients. For example, a well-generated estimate offers a clear budget breakdown, making it much easier for clients to understand the budget. From identifying potential risks to reducing disputes and increasing client satisfaction, accurate electrical estimates help enhance project efficiency. This ultimately leads to a higher quality of workflow.
Ways To Estimate Commercial Electrical Work
Knowing how to estimate electrical work accurately can help commercial electrical companies win project projects and drive profitable results. Anyhow, if you want to ensure your electrical estimating firm secures more bids, you need to take into account the following.
Bid On The Right Projects
The first and most important way of running a successful electrical business is ensuring you bid on the right projects. It’s paramount to be aware of the necessary skills and understand what type of electrical jobs are right for you. Whether you’re a seasoned veteran or new to the electrical industry, there have always been types of work that fit service suppliers more than others. Having diversified experience with these types of electrical jobs will help provide a more precise estimate, and complete the whole electrical work seamlessly with no potential overheads.
Review Job Specifications Carefully
Whether you are bidding on construction or commercial electrical jobs, you will often be provided with an RFP (Request for Proposal) that details the specifications of the job. Review your bid proposal document carefully to ensure your electrical pricing precisely reflects the crucial requirements in the RFP. However, if anything is causing ambiguity or is unclear to you, ask questions from professionals to get clarification before moving on to the next critical step.
Analyze Electrical Drawings
Analyzing drawings for your electrical project is equally important. You need to carefully analyze pictures, Construction Companies, architectural drawings, or blueprints given to understand the crucial electrical requirements of the job. Consider every crucial aspect that can increase your project’s difficulty level or affect the equipment or materials required to get the job done. For example, you’ll need to pay utmost attention to elevations, HVAC, and plumbing. So, carefully assessing your project drawings and blueprints earlier can help estimate the electrical work effectively.
Undergo A Material Takeoff
Performing a detailed material takeoff can also help you end up with efficient electrical work. A material or an electrical takeoff is a comprehensive list of the inventory required for the job. To come up with a material takeoff, you need to work off the existing blueprints to produce a list of all the essential materials and quantities needed. Depending on the project type, the material takeoff sheet comprises light fixtures, switchboards, switches, emergency or backup systems, electrical wiring, energy efficiency upgrades, electrical outlets and switches, and more.
Determine Labor Costs
Once you’re done performing material takeoffs, the next step is to calculate labor costs. Now that you clearly understand the job requirements, you can determine how much labor will be required to get the electrical work done within the stipulated period. You can determine labor costs by multiplying the hourly labor rate by the number of labor hours. However, commercial electrical contractors usually charge per hour. Before you decide to charge for your project, be sure to add a little extra time in case the electrical contractor runs into any issues on the job.
Don’t Forget To Add Overhead Costs
Have any idea about overheads? If not, these are the operational expenses you need to pay to keep your construction business running flawlessly. This may include electrical advertising and marketing, office rent, business equipment, taxes and business revenues, electrical tools, and many more. To find the hourly overhead rate, divide the total monthly overhead costs by the number of billable hours per month. However, by multiplying the hourly overhead costs by the number of hours the electrical job will take to complete, you will get the exact overhead costs.
Decide Your Profit Margin
Deciding your profit margin can also help estimate the electrical work. The profit margin is nothing but the exact money you make once you’ve covered all the significant costs for your job, including labor and materials. If your ideal profit margin is up to 15%, you can calculate the markup by adding the hourly rate, material cost, and overhead costs, and multiplying the result by 0.15. Now you can add this markup value to the budget estimate to get the total pricing for the whole electrical work. You can also use an electrical estimating calculator for that purpose.
Generate An Electrical Estimate
Now, the last step is to generate an electrical estimate. The estimate should comprise the contact information, logo, and name of your electrical business, your client’s name and contact information, an estimated number, a breakdown of the electrical services, the electrical materials needed, the validity period of the estimate, and the total cost for the whole electrical project including taxes. Unlike paper and pen on Google Sheets, this method can be easier and quicker.
Electrical Estimating Methods
As an electrical contractor, you must be familiar with some electrical estimating methods, like;
Labor Unit Method
This method primarily focuses on the total labor involved in the electrical estimating work. For example, it helps estimate the exact time it will take to finish each part of the electrical job flawlessly. Additionally, it’s a more detailed practice that considers the complexity level of the project, making it appropriate for a variety of construction projects, including the electrical job.
Pre-Build
Pre-build is detailed in a well-written proposal or estimate before the actual process of construction begins. It means you must investigate how the electrical project is based on the square foot of the area as well as the resources needed, resulting in the most precise budgeting.
Pre-Point Method
The pre-point method is often used for simpler or smaller projects. It means the price of each electrical component is fixed. For instance, pricing considers the total number of electrical outlets and fixtures. This estimating method makes it easier to determine the total budget as you itemize your list and consider each point. However, it can be a helpful practice at some point.
Guesstimate
The guesstimate estimating method is the least formal way when recognizing how to calculate the budget for electrical work. Aside from this, commercial electrical contractors typically leverage this method for informal or very small jobs. Though this technique offers significant benefits, it is based on your intuition and experience for a quick idea of the estimated budget.
Design And Construct
One of the other practices used for estimating electrical work is the design and construct method. This method usually combines both the design as well as construction terms as a single point of contact for the clients. Unlike other methods, this technique is highly effective for complex construction projects where the design significantly impacts the whole electrical work.
Difference Between A Quote And An Estimate
We have observed that most people mix up the concepts of a quote and an estimate. Though both terms are related, they bring two different concepts. A quote is nothing but the exact price that your potential customer will pay for your commercial electrical services. For example, when you give your customer a quotation, you’re contractually obligated to adhere to the services at that given price. The prime purpose of the quote is to give customers great peace of mind. However, if you create the total costs efficiently, there is no need to worry either.
In comparison, an estimate is the prediction of the overall scope and cost of the electrical construction project. An estimate is usually generated when it’s not possible to end up with a standard price. Adding more, accurate estimates helps contractors allocate resources effectively, reduce overhead costs, and manage potential risks, ensuring the flawless project’s completion.
How To Create A Quote Or An Estimate?
Creating an estimate or a quote is a meticulous process that demands attention to detail as well as a thorough understanding of the client’s needs. Start with a detailed consultation to encompass the crucial requirements of the clients and celery define the project’s scope. This ensures that both parties are on the same page related to tasks or services to be provided. Next, collect all the necessary information that comprises listing all material and labor costs involved.
Don’t forget to consider any additional costs, like subcontractor fees, permits, or taxes that might arise. Once you’ve got all the information, it’s time to calculate costs. For instance, sum up the direct costs, which include labor, materials, and equipment. Then, consider adding up indirect costs, such as administrative fees or overhead costs. Not only this but adding a reasonable profit margin to all these costs helps ensure that your business remains lucrative.
Create The Document
To create the document containing a quote and an estimate, you need to start with a header that consists of your company name, contact information, logo, and date. Ensure to add the client’s name and contact details, assigning a unique quotation number for tracking purposes. You must ensure to provide a detailed breakdown of the budget with clear descriptions for each item. Afterward, clarify your terms and conditions, including deadlines, payment details, and any other relevant information required. Don’t forget to mention the validity period of the quotation to inform your clients of how long the offer for your commercial electrical lighting stands.
Before you send the quote, be sure to cross-check all details to ensure 100% accuracy. If needed, you can get internal approval. Afterward, the quotation will be delivered to the client by email.
Detail Requirements For An Electrical Estimate
As a rule of thumb, you must include as much detail in your commercial electrical estimates as possible. What customers want to see in the estimate consists of contact information and the name of your business, the name, and address of the clients, a detailed description and comprehensive breakdown of the work, and the total price.
However, the work breakdown should summarize the total materials, labor, and any additional costs so that potential customers can verify the final price in an efficient and precise manner. On top of that, you also need to verify whether the total price includes any kind of taxes or not.
The Final Statement
The commercial electrical job is undoubtedly very tricky but important at the same time. In this blog, we discussed how can you estimate your electrical work effectively to ensure a flawless project completion. Having a clear understanding of electrical estimation steps and the quote provided can help streamline your project to the next level. So, before you begin working on the construction of your commercial building project, ensure to create a proper budget plan first.
