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How to Avoid the 8 Most Common Electrical Estimating Errors

January 3, 2022

Accurate estimating is the foundation of a successful electrical business. One mistake can put a real dent in your profit, but a few unprofitable jobs in a row can really hurt your business.   

  

The good news is that it’s easy to adopt consistent practices and strategies in your bidding process so you can keep these common estimating errors from stinging.   

  

Here are the eight most common estimating mistakes and how to avoid them.   

1. Leaving Something Major out of Your Estimate

 

Any estimator can miss a couple of receptacles but leaving a feeder out of your bid is a much different mistake. Anything you don’t count is money right out of your pocket.

 

There are three simple things you can do to avoid this common electrical estimating error.   

 

First, mark or highlight everything in the drawings as you take off your estimate and make certain you double-check your takeoff.   

  

Secondly, you will want to be sure you have entered your quotes. Your electrical estimating software should prompt you to enter the quote after you have done the takeoff for each of the major areas of your bid: lighting, gear, special systems, and more.  

   

Finally, create a checklist of the major systems, which includes: fixtures, gear, feeders, branch power, mechanical, site, and low voltage/special. Be methodical and refer to your checklist every time so you can be sure you didn’t leave something major out of your bid. 

2. Forgetting to Check Commodity Prices

Everyone in the electrical contracting industry knows that material prices have been on the rise. We have some suggestions for how to make sure you get the best electrical materials prices. For the high-cost materials items, you need to have an ironclad quote so that you can hang onto your profit.

 

Watch our video on material pricing strategies for electrical contractors below:  

 

To ensure that you have the best prices for your customer, you can use a couple of key reports in your electrical estimating software. Use the materials list report to sort categories that have high materials prices and print a spreadsheet for your supplier to quote.  

   

Alternately, identify the highest dollar value items in your bid using an item cost report and make sure you have submitted the costliest items to the suppliers who can give you the best prices.   

3. Not Getting Price Guarantees  

Suppliers also have been squeezed by the rise in prices for electrical materials, and so this entry is less bidding error, and more about mistakes in communication.   

  

Try to get a guaranteed price, but if your supplier says their price is only good for a week or less, it’s up to you, the electrical contractor, to write that price stipulation into your estimate. Be sure to identify any limited price guarantees to your customers. 

4. Not Getting Good Coverage on Quotes and Subcontracts

Specialty items can make up a large portion of your electrical estimate. For example, missing an item like a fire alarm could mean up to a 25% difference in the size of your bid. Neglecting to get coverage can turn into a very costly electrical estimating error.   

  

Good coverage can mean the difference between winning and losing the bid. It’s important to get enough coverage to ensure that your bid has good solid pricing. But don’t make the mistake of asking for too many quotes that you might have to delay your bid submission.   

 5. Not Getting Quotes on Big Ticket Items

This mistake is related to number two, checking commodities prices.   

 

Here’s another time where electrical estimating software can be used to help avoid this error. Before you submit your bid, call up an item cost report and sort the data to display the items worth the largest dollar amount. From this report, you’ll be able to identify items that really need solid quotes from your suppliers.   

 6. Not Qualifying your Bids Properly or Accurately

Electrical estimates must include all of the information that a customer will use to make their decision, including drawings, conditions, and exclusions. Without this data, it’s impossible for your customer to compare your estimate to the other submitted bids.   

  

Spend time qualifying your bid and don’t leave this step until the last minute. It can be very helpful to use templates to begin your scope letters, but it’s important to review your communication in detail before attaching it to your bid. Describe all exclusions and your scope of work clearly and accurately, while checking that the bid reflects the drawing numbers and dates on the plans you use to build your estimate. The plans will likely be updated before the project gets underway; it’s crucial to attach your electrical estimate to the information you have at hand. Check that you have included all the appropriate conditions and have included a price guarantee.   

  

7. Not Requesting or Reviewing Results  

Not learning how your bids compared to competitive bids is a big electrical estimating error.   

  

The results of past bids can inform the way you submit estimates in the future. You have a right to know the results of any competition, and it’s usually informative to learn the low bid, because it can help you understand when you’re competitive. When certain general contractors or owners aren’t forthcoming with the bid results, perhaps they aren’t your ideal customer.   

8. Markup Percentage

In many projects, an owner will provide certain materials, but if you fail to adjust your markup percentage, you’ll be doing the work without any compensation. For example, if an owner provides the lighting and you don’t control the purchase, you may find yourself at a disadvantage.   

  

There are two different ways to calculate markup percentage so that you don’t lose out on profit for the work you’ll be completing.   

  

The first method is based on materials price estimates. Make an estimate for the cost of the materials that are being supplied by the owner and add 10% overhead to that figure. The dollar amount of the overhead should be added to your estimate.   

  

Another way to calculate markup percentage is to include your labor overhead. Overhead is very different depending on how many employees in your shop. The calculation is to figure out what it would cost to recover your overhead for the duration of the project. Once you calculate your overhead, simply add the figure (e.g. $15 per hour) to your bid.   

  

As you can see, electrical estimating errors can do serious damage to your profits and your business. However, by employing basic estimating strategies, it’s possible to keep mistakes to a minimum so you don’t take a financial hit.   

  

For a reminder of other tips and strategies used by successful electrical estimators, you can read our Complete Electrical Estimating Guide.