Electical Contractor

The last line of the estimate is the most complex Picture this: The estimate is complete, including all direct and indirect costs, and overhead and net profit have been calculated as well. Any applicable additional taxes have been added to the bid.

Once upon a time, as fairy tales go, designing engineers produced workable electrical plans with very few errors. Of course that was when the average electrical project amounted to a mere 5 percent of a project’s overall costs.

Like many a novice, overworked contractor, I once found myself spread out on the dining room table making a takeoff when my teenage daughter asked if she could help. My first inclination was absolutely negative, but then I figured she could count symbols too.

Most of what project estimators work on resembles what they will be working on in the next six to nine months. But what of those longer-term projects? How can labor and material predictions be sufficiently accurate to cover such periods and ensure that the project will benefit the contractor?

It is frustrating for an estimator to come up with a meaningful number to include in an estimate for an item that has not been encountered on previous estimates.

This column’s headline might initially turn many people off. Estimators will probably mumble that accounting has nothing to do with estimating. The realities are that understanding some accounting principles is essential for providing an all-inclusive estimate and producing a bid document.

To avoid costly surprises, a complete estimate is just one part of the equation. Uncertainties must be covered with a cost factor, albeit at times information is scarce.

Much project estimate information can be readily gleaned from the plans and specifications, but some requirements are hidden in “boilerplate” wording of the contract documents. A typical area that is often left in limbo is the utilities that are to be connected to the project.

Taking literary license from real estate, to a contractor, the most critical issues are documentation, documentation, and yet more documentation. While there is a practical limit, efficient means of recording information are readily available and increasing daily.