Consistency is extremely important for your estimates. Every company has business procedures to keep it running smoothly and it is just as essential to establish and adhere to procedures for your estimating. Which colors are used to mark up the drawings for specific systems during takeoff procedures? Do we need detailed material lists or will a list of major components satisfy our requirements? What labor level should we use for specific types of projects like hospitals, hotels, office buildings, etc? How do we apply Job Costing information in our estimates? Without specific procedures and consistency, the estimate is little more than a guess.

Do we add the labor unit for installing the breakers in the panel or is the panel labor unit sufficient to cover the entire installation? This is extremely important if you are using Job Costing to correct labor values. As a chief estimator, I could not attempt to finalize a bid if each estimator in my group addresses takeoff differently. Without consistency in estimating, Job Costing reports indicating labor variance from the original bid proposal will be useless. To avoid this problem the contractor must have specific takeoff procedures for all estimators to follow. Every estimator must adopt the company procedures and do it the same way each and every time. Set levels of detail for various installations. Consider the cost for this detail in estimating hours. Remember that assemblies can provide more breakdown detail in less time than single item takeoff. Then document these procedures in a handbook with examples.

As an estimator or chief estimator, you must keep your finger on the pulse of the company. This includes being aware of where your company’s strengths and weaknesses lie. No two companies will complete the same project in the same time, nor will two electricians finish an installation in identical times. Labor results are as unique to each company as they are to each electrician. It follows that the same labor units will not work for every company. Customizing the labor units in your database could be very time consuming and costly. In addition, every company is in constant transition. The labor units you use today will not be the same labor units you use on tomorrow’s projects. Management and field personnel will not be the same team next year as it is today. Education and experience also play a critical part in your company’s productivity. You need a solution. The answer is to apply actual job cost results to your estimate.

Job Costing
Job costing is the percentage difference you get when comparing the actual job costs to the estimated job costs. Job costing results are the most accurate way to correct labor values for your estimates. Labor units should not be used to correct labor values since labor units are designed to apply to a complete installation. Adjusting individual item labor units can cause discrepancies in the total results. Do not change one labor unit unless you are prepared to change every labor unit in the database. Instead, use labor factors to adjust your estimate based on working conditions or degrees of difficulty on a job. For example, you may want to add a percentage to your labor to account for an installation that will take longer to do because it is for the upper floors of a high-rise, or you may want to decrease the factor when duplicate tasks can be performed at the same time.

For factoring, consider:

• Installation of identical materials in a hospital, hotel, office building or home will not carry equal labor values. Predetermine the labor level column you will use for each project type and consistently use that labor level on all projects of the same type.
• Labor should be factored for installation degrees of difficulty. Conduit mounted at eighteen feet cannot be installed in the same time as conduit mounted at nine feet. Installing fifty fixtures in the same area will average less time each fixture than installing only one or two fixtures.
• Use a standard factoring chart or use the Auto Labor Factor feature in ConEst IntelliBid.

Determine Job Factors

1. Collect job costing data by project type, i.e. hospitals, schools, residential, etc.
2. Determine factoring levels for each by project Subtotals. If the projects were estimated manually or using another system, enter the jobs into your ConEst IntelliBid system. The comparison for factoring must be done using the same labor units you will be factoring for your formal bids. It is better to use two or three projects of the same type for averages and not rely on only one project.
3. Create Bid Templates in your master database for each of the project type.
4. Calculate the bottom line factor needed to correct the total estimated labor to the actual labor by job cost code. Cost codes will have varying results and may span more than one Subtotal.
5. In the Master Bid Template for each project type, enter a conservative factor for each Subtotal. Note that each Bid Template has its own unique set of Subtotals.

For example: You have a Bid Template for Schools set up in IntelliBid. The job cost results indicate that the Branch cost code result for EMT labor is 10% higher than the actual hours and the Feeder cost code is 8% higher than actual. I would recommend a 9% factor to reduce EMT labor. In ConEst IntelliBid, enter a factor of .91 in the Labor factor column for the EMT Subtotal. Repeat this process for each cost code for the Schools Bid Template. Then compare jobs for the next Template and calculate the factors using the same process. Document your changes so you can reference the calculations and decisions made when making future adjustments. Remember, your company is constantly in transition and adjustments will need to be made.

With all your Templates complete, you will then put them to use on formal bids. As projects are finished, review the results of the estimated hours verses actual hours for every job. It is not necessary to modify the factors for each job. Use a 5% rule. If the trend has the company moving by 5% in either direction, change the factor by 2-1/2%. Here is my reasoning: You should strive to be within 2% of the labor estimates. Most contractors work with at least 5% profit. If you are off the mark on labor by 5%, your risk position is break-even. Change the factor in very small increments; one job should not determine the entire labor adjustment as there may have been some exceptional circumstances for the greater than estimated results.

As you continue to work with this concept, the amount of time required to keep the factoring updated will be minimal. The major portion of effort is in the setup and collecting the data. Couple this with NetPricer material updates to your jobs and you will be producing precision estimates each time.

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