We all know that you need to create systems and procedures in your business. You may even have heard us talk about them on this podcast. 

Systems and procedures not only allow you to stay on track, but they also allow you to focus on more tasks because your employees can keep working on jobs and know what to do without you being there.  

Today we are going to talk about the importance of an Estimating System.

Are you just guessing when it comes to knowing what to charge?  

You might take the material costs and multiply it by 2 or 3 or 5...and you hope you make enough to cover your costs.   

If this is your current method of estimating, this could be why you make money on some jobs and then not on others.  

We are all in the business to make money right? We want to not only better our lives but our employees as well, but in order to do that we need to charge the proper amount.  

So this brings us to 4 reasons why you absolutely need an estimating system! 

Reason #1:  You should make money on every job.

This seems obvious, but way too many people aren’t charging enough!

By having an estimating system in place it will help ensure that you are on the right track to make money on every job. 

You will know that all of your costs are included and accounted for. 

Now I am not only talking about materials.  We should be able to accurately calculate materials….

But a proper estimating system ensures you include your overhead, your labor, and equipment.  

You will include your travel time, your loading and unloading time, or the time to gather materials. All of these costs should be accounted for in an estimating system.

Reason # 2:  Estimating in man helps you communicate with your staff.

Man hours? People hours? Labor hours? Production Hours?

Whatever you want to call them...

Your employees need to know how much time they have complete that particular job.  

If you tell an employee that they have $2,000 to complete this job, that doesn't tell them anything.  

But on the other hand, if you tell them that they have 16 man-hours to complete this job…

And there are 2 people out on the job, a little bit of math lets them know the two of them to have 8 hours to complete the job. 

Reason #3 An estimating system can help you win jobs. 

What????

You heard me...

With an accurate estimate, you know how low you can go and still make a profit.

Do you want to do that all the time?  No, but in some circumstances, it might pay off.

For example when you are bidding on a job that you are pretty sure will get you future work, knowing how low you can go and still make a profit gives you a huge advantage.

You can lower your price and not end up having to eat any costs.

So if that job is something you really want, you can lower your profit margin slightly and still be confident that you are going to make money.  

And if you don't get that job because someone went even lower you can walk away happy knowing that you won't be doing that job and losing money.  

Reason #4: An estimating system allows you to have fairly consistent estimates, no matter who (owner/designer/estimator) puts together the estimate.  

Of course, it might vary a bit because nobody is going to input in the exact same everything…

But…

A) it should be pretty dang close to what you would estimate

B) if someone one of your staff does the estimate and you have a question about it since you are all using the same process to complete the estimate, this makes it easy to look at the numbers and see what they did.

A designer might not have the best idea of dirt yards, production times, etc…

So having a system in place makes it easy for you to check their estimates and help them out until they get a better feel for all the numbers.

There you have it, folks!  There are tons of reasons why having an estimating system in place is great for your business...

But here are 4 that should be enough motivation to get you to give a serious look at how you are currently creating estimates in your business.