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 operating and growing your electrical contracting business.
At the same time, you want to ensure that when you're bidding on electrical jobs you create a quote that's competitive enough to be selected.
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 generally include material requirements. You can read our complete guide for how to estimate electrical materials like a pro. A review of the project specifications will also help you decide 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.
Different types of electrical jobs have separate requirements. If you're looking for a primer that shows the differences between residential and commercial estimating, read more at our blog about how to estimate electrical work.
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.
Put simply, square foot pricing or bidding jobs by the square foot 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.
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.
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:
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.
Electrical wire prices are changing more quickly than they have in the past 20 years. Conduit and costs for 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:
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:
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.
Accurate estimating is critical for electrical contractors because it’s the foundation of a successful business. Creating a bid that accounts for the project costs as accurately as possible means you’ll be able to assess an appropriate profit margin and include your business overhead costs. Read our blog to find out how to ensure accurate estimating for your business.
Read our blog for more information on how to choose the best electrical estimating software for electrical contractors.
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.
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.
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.
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.
And check out our blog for more tips on growing your electrical contracting business.