Many estimators start out as electricians, and a significant portion of those are most experienced in residential work. The purpose of this article is to help move these estimators along the path to commercial and industrial electrical estimating. The work is more complex, requiring an estimating method to match. There are several residential estimating methods, all of which differ from commercial estimating in one or more respects. Since my experience with residential estimating methods is limited, I spent some time talking to forum members on www.ElectricianTalk.com. They were very helpful in laying out the residential estimating methods outlined below.
Unit pricing: Some contractors have a list of unit prices they use, such as $100 to cut in a receptacle or $2,500 for a service change. While this method works well in an average house or multifamily complex, it starts to break down for larger, more complex work.
Price per hole: In my one month working for a residential contractor, we used this method for apartments and condos. Each hole (receptacle, switch, fixture outlet, etc.) cost $9 (it was a long time ago). Add labor and material for the fixtures, switchgear and feeders, and you’re done. This method also breaks down on larger commercial and industrial projects.
Square-foot pricing: This method is simply too dangerous to use on commercial and industrial work. I advise that you keep a log of everything you bid. The log should include the square-foot price, the price you bid and the price the project went for. Square-foot pricing history is a good way to check your bids. For instance, say you have bid a few projects of the same type that went for $24 per square foot. However, the project you are bidding now comes in at $18 per square foot. The difference indicates that the scope on the new bid is very different or that you made a mistake in your bid. Square-foot pricing also can be used for budgets if you have accurate historical data matching the work you are bidding.
Material plus labor allowance: Using this method, the contractor puts together a priced material list and adds an allowance (such as two men, four days) for labor. The labor allowance is based on the contractor’s experience with similar projects. When you consider all the variables, changing parameters and labor conditions on larger commercial or industrial work, this method also breaks down.
All of the residential electricians I have talked to use an estimating method based on one or more of the approaches mentioned above. Some use a combination of methods. Some enhance these methods with custom-built spreadsheet templates. None of them used the methods taught by the National Electrical Contractors Association (NECA), which have been used by every commercial and industrial contractor I have worked for.
The fourth method is closest to the way commercial and industrial estimates are prepared. We prepare a complete list of the materials required for a project and add material pricing for each item. However, instead of a labor allowance, labor is calculated for each piece of material. The labor is expressed as a decimal or whole portions of an hour and is called a labor unit. Here is an example of a duplex receptacle:
4S Box: 0.20 (0.20 × 60 minutes = 12 minutes)
4S 1 Gang Ring: 0.05 (0.05 × 60 minutes = 3 minutes)
Duplex receptacle: 0.20 (0.20 × 60 minutes = 12 minutes)
Plate: 0.05 (0.05 × 60 minutes = 3 minutes)
Total = 30 minutes
Here is the hard part. Labor units are subjective, meaning they do not always work with a particular installation situation. Labor manuals with one column of labor units are meant for “normal” labor situations. Some manuals have multiple columns, one column for normal and other columns for more difficult installations. Make sure you read the scope of work covered by the labor units in the manual you obtain, because there are differences between the manuals.
Where do you get these labor unit manuals? If you purchase a computer estimating system, it comes with built-in labor units. Labor manuals also are available from NECA and several other organizations. A quick internet search came up with about a half dozen on the first three results pages.
The above is only a brief description of commercial and industrial electrical estimating. There is much more to it, and you should learn proper procedures, or you risk losing money on projects. There are several ways to learn the process: in-person classes offered by NECA and independent estimating firms, books and a few universities that teach electrical estimating.