Estimating 101: What Are You Worth?

In the weeks leading up to graduation, our building construction technology class is burrowing into the Estimating textbook. That is to say, now that we’ve learned how to fix and build things, we’re learning how to get paid for it.

Short of standing on a ladder to trim rafter tails with a circular saw, this is the scariest part of construction school, as far as I’m concerned. Not only does estimating require technical understanding of construction, it requires a certain amount of psychic prognostication: How long will the work take? Will it rain? Will materials prices change between now and the job? Will I need to pay someone to help me? Will I need to buy new equipment? Will someone else bid to do the job cheaper?

Suddenly, freelance journalism, with all its erratic by-the-word billing, seems so straightforward. In all my years of writing, whether I was typing for 20 cents or two dollars a word, I never lost money on an assignment. But if you estimate wrong, you can end up paying cash out of pocket to do a construction job.

As it turns out, construction estimating—like writing—is more art than science. Everyone brings personal flair to the task. For example, a client collecting bids for cabinetry might hear the following estimates:

  1. By the project. If you frequently build cabinetry and know that a wall of shelves and cupboards usually comes in at about $1,500, you might feel comfortable setting a fixed price.
  2. Daily rate. A veteran carpenter I know says he sets a revenue goal of $1,000 a day. If the shelving job will take three days, it’s a $3,000 job.
  3. By the cubic foot. Consider this response: “A 12-foot wall with three bays of shelves, each eight feet tall and 11.5 inches deep…depending on the type of wood and whether you want it painted or stained…at $XX per cubic foot, that’s gonna cost you…”
  4. Time and materials. When the project is complete, add up costs of supplies, then multiply by a premium—say, 15 percent—then figure out the number of hours worked and charge accordingly.

Based on these approaches, we got estimates—for the exact same cabinetry job—ranging from $1,500 to $8,000.

“How do we not shoot ourselves in the foot, by making sure we don’t lose money without pricing ourselves out of the market?” one classmate asked.

While different estimates might emphasize different aspects of a job, they all have one thing in common. One colleague, who had been burned by his own optimistic estimates, put it like this: “It all depends. How much is your time worth?”

It’s a question that probes far beyond the scope of building construction technology—with an answer not to be found in an estimating textbook.

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