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Fundamental Review : A brief beginner’s guide to electrical estimating

By Stephen Carr | Dec 15, 2021
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I have been writing this column for quite a while now, and recently realized I have never talked about the basics of electrical estimating. So, let’s get to it.

Unit pricing

There are several ways to prepare an electrical estimate. Most of the smaller contractors I have spoken to use some form of unit pricing. While these methods work well for residential and small commercial estimates, they fall short when applied to larger commercial and industrial projects. This article will concentrate on methods I learned from beginner and advanced classes I have taken. The knowledge gained has served me well.

The unit pricing method consists of gathering all the costs for an electrical installation into a single number. For example, you may charge $150 for a duplex receptacle. That price includes the material, labor and enough markup to cover all the other costs and profit. This method— good for residential— starts getting risky when applied to commercial bids and should never be applied to industrial work. The risks of using unit prices comes from the subjective areas of electrical estimating. For instance, the average length of a branch conduit can vary a lot between projects, which causes an inaccurate unit price. Keeping up with material prices can also be difficult, especially during times of hyperinflation for electrical materials.

Line-item estimating

Another method is line-item estimating, which uses the pricing sheet, as pictured above. Each row on this sheet will be filled in with the information for one electrical component, with columns for description, material price, discount and labor unit. The totals will need to be calculated for the material and labor extensions. Then, each extension column will be totaled at the bottom of the price sheet.

You may ask how we get the material components to list on the pricing sheets. Start with the takeoff, the other foundation of electrical estimating. The takeoff consists of counting and measuring every electrical item required by the bid documents, including the plans, specifications and addendums. Once that is done, transfer your takeoff to the pricing sheet. Individual items, such as a disconnect, can be transferred to a pricing sheet with no additional breakdown. Assemblies, such as a duplex receptacle, need to be expanded to include all component parts before being added to the price sheet. Consider a single-pole switch. At a minimum, the assembly includes a box, plaster ring, switch and cover. You may also add small items such as screws, wire nuts, labels and ground pigtails. However, if you are estimating manually, adding the four small items will double the time it takes to add pricing and labor units and do the math for the single-pole switch. I was taught to save the time by ignoring the small items and adding a markup on the material total for “miscellaneous materials.” For commercial work, 7% is typically added.

After you have finished the price sheets, it is time to complete a recapitulation. This form adds the finishing touches to your estimate. After transferring your material dollars and labor hour totals to the form, add prices for quotations, subcontractors and rentals, as well as direct costs, such as a small tool allowance, permit costs and indirect costs, such as a project manager and supervision.

Labor hours need to be assigned to your electricians. For a 500-hour estimate, you might assign 250 hours to a foreman and 250 hours to a journeyman. Then add your rate (cost per hour) for each electrician and multiply the hours by the rate, arriving at the project’s total labor dollars. Please note that the labor rates used in this part of the recapitulation are without markups for overhead and profit.

Finally, add your overhead and profit markups. First is overhead, which is the cost to keep your office open (rent, insurance, office employees, etc.). An accountant can help you calculate this percentage, which may fluctuate. I have seen overhead markups between 7% and 15%. You will also add a markup for your desired profit.

If you’re not confident about your estimating skills, get additional training. The last thing you want is an inaccurate estimate.

About The Author

CARR has been in the electrical construction business since 1971. He started Carr Consulting Services—which provides electrical estimating and educational services—in 1994. Contact him at 805.523.1575 or steve@electrical-estimating.com, and read his blog at electricalestimator.wordpress.com.

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