One of the biggest challenges that electricians frequently encounter is how to fairly and accurately estimate the price for electrical work. There are a number of specific steps involved in knowing how to bid for electrical jobs. So, let’s look at some top tips for electricians who are looking to improve their pricing estimation process and the accuracy of their job quotes.
The electrical contracting industry is both very competitive and highly dynamic. Electricians need to generate new job quotes while strictly adhering to the standard bidding procedure for every new job. Above all else, they need to attempt to achieve that delicate balance between presenting an accurate price that generates sufficient income while also remaining competitive against other bidders on the job.
There’s a lot that goes into determining how to price an electrical service. The estimated price electricians come up with and share with customers must cover all project expenses, from labour and material costs to indirect expenses and earnings, while still being competitive and low enough to outbid other contractors.
Electrical estimating is the process of calculating the overall cost of an electrical project. It is used to determine the services required and provides clients with a clear, itemised understanding of where their money will be spent. For every project, whether it involves a new client or an established one, accurate estimates are essential. One mistake in a job estimate can result in you losing the work.
So, what do you need to do to stop that happening and increase your chances of winning the job? Well, it’s simple really. It’s all about creating a standardised estimation process for all of your electrical projects. Here are the critical steps that are involved in estimating electrical work for your next job.
1. Be strategic and selective with the projects you take on
As any reputable electrical business guide will warn you to never accept any project that comes knocking on your door as an electrical contractor just to keep the money coming in. Recognise your area of competence before attempting to expand your electrical business. Figure out if your sweet spot where you excel is residential, commercial, industrial, or a combination of all three types of electrical construction jobs.
A skilled or expert electrical contractor can meet the specific requirements of each of these fields. Consequently, determining the scope of your skills is the first step in submitting a bid for an electrical project.
By doing so you will be able to focus on tasks that you know you can successfully execute while exceeding client expectations. Additionally, it stops you from submitting a bid for a job for which you have little-to-no experience, or where there is a high likelihood that you may not meet client expectations. Accepting such jobs that are outside of your scope of expertise can actually harm your reputation, your income potential, and your brand.
To present a precise and reasonable bid, remember that it’s best to stick to the types of jobs that you are confident and competent in. You can gradually tap into new opportunities with the same effectiveness as you gain experience.
2. Critically evaluate the client’s requirements and expectations
What are the client’s requirements and expectations for the electrical component of the job that you are being asked to deliver? Are there any irregularities or mistakes in their scope? What is the client anticipating from you if you are selected as the winning bidder? You need to thoroughly evaluate the project specs to uncover the answers to these queries.
You can’t determine the quality of the work you’re supposed to produce unless the specifications are accurate. Furthermore, without clarity, you may end up underquoting or overestimating, often losing the bid as a result.
The only way to prevent this situation is to carefully check the specs of the electrical work you are being tasked with delivering. Ask questions of the client, and don’t stop asking questions until you are satisfied with the answers given to you. Being crystal clear about the specifications will enable you to deliver a precise and honest quote.
3. Examine the plans
As an electrical contractor, you can access blueprints, illustrations, and drawings with the RFPs so you can get a thorough understanding of the electrical requirements. To establish a clear scope of work, carefully examine the available plans and blueprints.
Additionally, if you can, get architectural photographs of the site to better understand all of the technical information, such as working elevations and heights. In addition, don’t forget to note the wiring for the HVAC and plumbing systems that are currently in place on the property. What happens if none are provided? Plan a site inspection to determine the extent of the job, and request that the scope of electrical works be amended if needed.
All these factors influence the material and labour expenses, as well as the equipment needs, regardless of whether the project is for a residential or commercial setting. Your material estimates may be wrong if you overlook any one of these factors, rendering your efforts and estimates useless.
A pro electrician tip you might consider is keeping an eye out for any discrepancies between the specifications and the designs. Note them down and alert the client.
4. List the materials that are required
Your ability to correctly obtain the supplies needed for the task in the right quantity will decide how accurate your estimate will be. Typically, a supplies list would cover all components that you will use for the electrical project, from the number of electrical outlets, panels, and switches to circuit breakers, light fixtures, and receptacles.
5. Determine labour costs
Once you have a good understanding of the project’s scope of work and materials required to deliver the electrical component, it’s time to evaluate the project’s labour requirements. How many employees, both on and off site, would you require? How much will you need to pay them? The entire estimated labour cost of your electrical contracting job can only be calculated once you have the answers to these questions.
Some electricians demand a one-time price for the entire process, while others prefer hourly rates. Add the amounts after making a list of the hourly and upfront remuneration.
Calculate the entire number of hours you anticipate the project will require, then multiply that number by the total amount of earnings. Keep an eye out for unintentional damage and overtime hours. This process will enable you to obtain an accurate labour cost for the job, which will allow you to itemise and increase the credibility of your electrical estimate.
6. Produce the estimate
It’s time to put everything you’ve assessed and calculated about the project’s scope, labour requirements, and material requirements, along with their associated costs, into an estimate. You might either start from scratch, make use of prior calculations, or use electrical estimating software to prepare and produce your formal estimate.
7. Include your profit and expenses
You are running your own business, which means in order to survive you need to turn a profit. As such, you must include both your profit margins and operating expenses when making your price predictions.
Once you’ve calculated the overall task cost, add the desired profit mark-up to each project. Make sure the mark-ups are in line with the going rates in your industry and geographic location. In addition, include your company’s overhead expenditures, such as business insurance and insurance for electricians and transportation, to the estimate.
Recommended reading: 14 steps to increase your business profit
The typical overhead rate for a business ranges from 12 to 20 per cent of sales costs. Depending on the size and scope of your business, this figure might change. So, before you include final figures in the estimate, carefully consider your options.
8. Draft your proposal
Electrical estimates are typically a minor component of the bigger proposal you submit for the bidding process. So, once you have the total sale price, create a polished proposal.
It should clearly describe every small aspect of what your estimate includes and excludes. Describe any terms and conditions. Consistently use the same terminology as the project specifications and drawing papers. Doing this will help prevent future arguments between parties and establish trust from the start.
9. Check everything again
Review your proposal carefully before submitting to your potential client. Carefully ensure that there are no errors, from material and labour expenses through the final project quote.
You can recalculate the figures at any point if you are unsure. Verify the client’s information, including their name and address, twice. Submit the final proposal to the client, make any necessary corrections, and retain a copy for your records. Then, all that’s left to do is wait for the feedback, then get to work.
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