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I’m continually asked what I think estimators should be paid. It’s a complicated question. I think contractors should invest a lot of money on their estimating. However, as the owner of an outsource estimating firm, I may be a bit biased.
Typically, the question comes from electrical contractors (ECs) hiring their first full-time estimator. I always respond with a question: What does your business plan and budget dictate you should be spending (or can spend) on this highly important position?
Then I ask what is the total contract volume you need to win each year? What size projects? What types? How many projects a year do you expect this person to estimate?
Then a few more questions: Do you plan on training this person, or do you expect them to be able to do everything? What type of benefits are you offering? Will you expect this person to work late nights and weekends? Will you expect them to give up their life for their job?
Basically, I keep asking questions until they go silent or hang up. I don’t really answer their initial question, but I try to get them to think more deeply about it.
Estimators come in various models
You must define what type of estimator you are looking for. Estimating is a long-term career, much like engineering, architecture or becoming a lead electrician. It requires in-depth training, a lengthy tenure and hands-on experience. I qualify estimators into three categories: junior, associate and senior.
Junior: 0–3 years (possibly 5, depending on your view). No prior experience or, at the most, a basic knowledge of electrical systems. No industry experience. This estimator will need constant guidance, hours of training and dedicated mentoring; all their work should be thoroughly reviewed by a senior level estimator. Salary range: $24,000–$45,000 per year*
Associate: 3–5 years of actual electrical estimating or engineering, some field or project management experience. This estimator should be able to handle most, if not all of a small- to medium-size commercial project on their own, without much need for a senior or owner’s help. However, they still require education and guidance. You should not let them stagnate. If you do not feed them the knowledge, money and perks they feel they need, you could easily lose them to someone else who will. Salary range: $45,000–$75,000 per year*
Senior: 5 to 10+ years of actual estimating and serious project management experience. These estimators should be able to do it all and do it well. They should be able to complete a large project from start to finish all on their own. They should also be able to handle insane deadlines, coordinate and manage a team of estimators and bid jobs. Here again, if you do not provide a serious benefits package and keep them “well fed,” you can easily lose them to someone else who will. Salary range: $75,000–$150,000 per year*
* Salaries can vary greatly by region and are determined on an individual’s education, accomplishments, work experience, age and computer skills.
What does an estimator really do?
Many contractors think their estimators are simply bean counters. They think huge projects should be taken-off in three days and that all the other details don’t really matter. Good luck with that.
Another common mindset is, “We don’t have the contract yet. Why spend a lot of money and time on something I have a 1-in-20 chance of winning?” But what about that chance you do win? In six months, you might find out you lost $100,000. Where is the value in that?
Do you really want speed and quantity, not intellect, accuracy and quality, to determine whether or not your company will make money? Is saving $75,000 in salary and overhead better than losing $100,000 because your estimator was fast or simply lacked the experience and made a mistake?
Beyond just counting, estimators also manage the estimate. They study specifications, schedules and bonding requirements. They call general contractors, write scope letters, fax fixture counts to vendors, and monitor addenda and review them for scope changes. I could list a thousand other tasks an estimator does on a daily basis, which easily add up to well over 2,080 hours of work per year.
Consider if you are doing all the estimating (or most of it), who is running your business? You may think you are saving money by spending less money on estimating. But for every hour you spend estimating, that’s an hour you are not running your business, managing contracts or meeting new clients. I bet this costs you more than an estimator’s salary in the long run.
SHOOK is the president and chief estimator for his estimating company, TakeOff 16 Inc. He has worked in the electrical construction industry for more than 18 years. Reach him at 707.776.0800 or [email protected].