How to Do an Electrical Bid Right: Complete Electrical Estimating Guide
August 26, 2021 14 min read
There’s no quick and simple formula to electrical estimating. A successful electrical estimate must account for your material and labor costs and build in sufficient profit so that you can continue to operate and grow your electrical contracting business.
At the same time, you want to ensure that your bid will be competitive enough to be selected.
Here are the five steps to create a competitive electrical estimate.
- Bid preparation
- Square foot vs. unit pricing
- Quantity takeoff and when to use it for your Electrical Estimating Bids
- Make Sure You're Getting the Best Materials Pricing
- How to Calculate Labor Costs Accurately and Fairly
Bid Preparation: How to Prepare for Your Electrical Estimate
Get prepared so you can submit the best quality electrical estimate. Early preparation means you won’t waste your time on projects that you aren’t qualified to take on. Before bidding any job, make sure you carefully review the document specifications to ensure that you are qualified to bid on the job. For example, you’ll want to check that your bonding capacity and insurance meets the requirements.
Project specifications will generally include material requirements, and this is the time to note whether you will need to hire any subcontractors for specialty work like alarm systems. With a thorough understanding of the project you can get to work on the bid.
Choose the Best Electrical Estimating Method for the Job
Depending on the type of work you typically bid on, there are several different electrical estimating methods to choose from. The most common electrical estimating methods are square foot pricing and unit pricing.
What is Square Foot Pricing?
Put simply, square foot pricing is when you determine the square footage of the project and multiply that figure by a certain cost factor to produce your bid.
While square foot pricing is the simplest method to create a bid, this electrical estimating methodology has some drawbacks.
When should square foot pricing be used?
Using square foot pricing may be best for electrical contractors who work in residential construction and who can use their experience of completing many similar projects to determine the accuracy of a bid. For example, an electrical contractor who completes many condominiums of similar size would have the experience to rely on square foot pricing.
What is Unit Pricing?
Unit pricing is based on the number of individual units required to finish the job. That means that the electrical contractor sets prices for units, such as switches or receptacles, and the owner agrees to pay the contractor for the number of those units needed to complete the job.
Often unit pricing bids do not specify the number of units at the beginning of the project.
Unit pricing contracts are best when the project involves the repetition of easily identified units of work. Some unit pricing contracts use qualified pricing to ensure that the amount of labor to install certain fixtures or assemblies is accounted for. For example: you may bid one price for one or two of a certain type of fixture and bid a second price for six or more of that fixture.
Generally, electrical estimates that deploy unit pricing should have a built-in cushion to prevent a loss of profit.
When Should you Use Quantity Takeoff for Electrical Estimating?
For larger projects, most electrical contractors will use quantity takeoff for their electrical estimates.
With the project drawings in hand, make an accurate and detailed count of the project’s fixtures, switches, and wiring, as well as drops to switches, receptacles, and panels. You’ll also need to measure all wiring runs.
With these figures in hand, you can create a list of material quantities, which are assigned prices and labor units. Add them up and you have your bid.
Consider using onscreen takeoff software to improve your efficiency
Many electrical contractors are turning to onscreen takeoff software.
Here are some advantages to using onscreen takeoff:
- Cost savings. With onscreen takeoff you can say goodbye to thousands of dollars in printing costs because you won’t have to print the plans for every job you bid — all counts, measurements, and notes are tracked on the plan in your onscreen takeoff software.
- Faster estimates. Do away with the headache of paging through a huge stack of printed drawings and time-consuming measurements. Onscreen takeoff software allows you to search plans digitally and calculate measurements with the click of a mouse.
- Simplified record keeping. Storing PDF files is simpler and takes up less space than stacks of project drawings.
- More accurate estimates. Onscreen takeoff software helps eliminate human errors such as misreading plans, double counting, or wrongly calculating the project’s scale because onscreen takeoff software allows you to create assemblies and then extrapolates those assemblies into materials and labor units, which allow you to accurately and smoothly bid on a project. More than that, electronic files make it easy to zoom in to the detail you need for your estimates.
Don't Forget to Cover Your Overhead
Preserving your profit is more than simply taking off the job and adding a percentage on top. Different types of jobs require different markup strategies to account for the work you’ll put into the actual job. Large jobs, small jobs, difficult jobs, highly competitive jobs, and jobs where the owner furnishes materials each requires a different markup calculation. Learn how to adjust your electrical markup strategy for maximum profit in every situation.
How Can You Make Sure You’re Getting the Best Materials Pricing?
Prices for electrical wire, conduit and other materials have soared as supplies fell during the Covid-19 pandemic. That means it’s more important than ever to ensure that you have quotes from your electrical materials suppliers so that your profits don’t disappear.
Many electrical contractors use a material pricing service to make sure their bids are accurate. Materials pricing services should include a wide range of materials and should be updated regularly.
Here are some tips to maintain your profits despite high electrical materials costs:
- Check pricing from two or three local suppliers so that you can see you have the best price options available.
- If you use a local supplier for your electrical materials, check to see if they offer a deal sheet with discounts on their high moving items.
- Take the time to compare prices on your invoice against target prices from a pricing service.
- Get quote on key commodities, switch gear and lighting to keep ahead of the rapid increases in those materials.
- Get time guarantees on pricing from your suppliers.
- Build a time limit into your bids to protect yourself from profit erosion or add a caution that pricing will be renegotiated if the bid is not approved in a short time frame.
How to Calculate Electrical Labor Costs Accurately and Fairly
Project bids that don’t utilize unit pricing must account for labor costs. Here are some factors to include in your estimate.
Make sure your calculations include the cost of your labor. You want to include the hourly rate that your electricians see on their paycheck, as well as the labor burden, which includes the cost of benefits such as vacation pay and sick pay, as well as workers comp, liability insurance. Typically, labor burden amounts to at least 10% to 15% of additional labor cost.
Two valuable resources for labor costs are NECA (National Electrical Contractor’s Association), which provides and updates a manual of labor units biannually, and MEANS Labor Manual, which provides pricing for most of the trades. While not all electrical contractors use these resources for estimates, they are essential for use in creating change orders.
ABCs for pricing labor units:
- Account for non-productive time, such as material handling and set up and clean up time. A good rule of thumb is one third of each hour is non-productive time.
- Build in a buffer. Realistic labor units are typically higher than you think they are.
- Conditions can vary. Use your experience to adjust your bid based on your knowledge of job conditions.
How to Make Accurate Electrical Estimates in Less Time
It’s easy to see that there’s no quick method to complete an electrical estimate. Creating successful bids requires planning, attention to detail, and experience with diverse types of electrical projects. It’s helpful to use electrical estimating software, which can help you to organize your bids, count and compile your materials and labor costs more quickly, and organize and report on your outstanding estimates.
Use Your Winning Bid to Increase Your Profit
Once you win the bid, there are more opportunities to maximize your profit. Use your estimate to boost your productivity by guiding how you budget your labor hours and manage electrical change orders. Read how to increase your profit on electrical jobs.
Bidding Post Mortem
Successful contractors allot time to revisiting previous bids so that they can become more proficient at electrical estimating and win more bids. You can’t improve your electrical estimating process if you don’t have a solid understanding of your bidding results. Read our five top tips to analyze your electrical bids. We’ve also included links to useful spreadsheet downloads so you can track your bids and manage labor more easily.
Avoid Common Electrical Estimating Errors
Faster bidding means that electrical contractors can bid on a larger number of jobs and improve their chances of success. But saving time is no substitute for consistent, accurate bidding. Many estimators risk making the same electrical estimating errors if they don’t have a consistent bidding practice. We’ve compiled a list of eight of the most common electrical estimating errors so you can keep these mistakes from cutting into your profits.
What Makes a Better Electrical Estimator?
Consistency is a key qualification for effective electrical estimators. Develop good working habits to reduce estimating errors and give yourself a better chance of winning the jobs you bid on. Read our article to learn the seven habits of highly effective electrical estimators.