What is Electrical Estimating?

Electrical estimating is the process of calculating the total costs associated with the electrical components and systems for a construction project. The goal of electrical estimating is to provide an accurate projection of the total budget required to cover all electrical aspects of a construction project before it begins. It includes estimating costs for:

 

• Materials
• Labor
• Overhead Costs
• Permits & Fees
• Profit Margin

 

And any other expenses required to complete the electrical work.

 

Over 81,045 electrical estimators are employed in the United States, and these estimators play a crucial role in determining the costs associated with electrical work.

It is a fairly common goal among contractors to achieve a high return on every project in electrical estimating. However, electrical estimating is a complex and tedious process, as any sort of inaccurate estimates lead to unhappy clients, budget issues, and lost profits. Achieving an accurate estimate is crucial to avoid these issues and ensure project quality and business profitability.

The final step is a detailed list of what the electrical work will cost. Getting it right is important as this helps plan your budget. So if are looking for complete information on what is electrical estimating? keep reading.

Electrical Estimating Methods

The estimates you generate will become the basis of how your projects will progress. There are various estimating methods used in electrical estimating to calculate the cost associated with electrical projects. Here are the methods:

Common Estimating Methods:

1. Unit Cost Method:

 

This method assigns a fixed dollar amount to each type of fixture or installation point. The total estimate is calculated by multiplying the quantity of each unit by its assigned cost. It's simple but can be inaccurate.

Estimating in this way is typically easy, but manual calculations are prone to inaccuracy. It does not take into account differences in labor.

2. Assembly Estimating Method:

With the assembly estimating method, electrical components are bundled into pre-defined assemblies or systems, each with an associated cost.

Electrical estimators frequently use this method to incorporate both labor unit costs and material costs. Rather than considering each hardware or fixture as a single entity, the necessary materials are viewed as having multiple components.

Assembly estimating is more precise and useful than unit price estimating, as unit price estimating provides a flat rate per unit of measurement.

3. Labor-Unit Method:

The labor unit method assigns a value, measured in units, to the human labor required for the installation of each piece of hardware. The labor unit method assigns a value to the human labor required for the installation of each item of hardware. A labor unit is defined as the average cost of labor per unit of output produced.

The labor unit method may be more accurate than the per-point method because it allows for a more reasonable calculation of labor conditions. However, there are still common pitfalls. For instance, people may forget to include ‘labor burden’ costs, which are costs associated with the workforce that are not directly related to their work, such as sick leave, holiday pay, insurance, or taxes. The job average labor rate and shop average labor rate are two methods of estimating labor costs.

When using the labor unit method, it is important to distinguish between different working conditions to avoid inaccurate estimates.

4. Design and construct:

The electrical estimator who uses this design and construct method needs to have extensive knowledge of design methodology.

In the design and construction method, the electrical contractor is responsible for both designing and implementing the project. The customer provides a design brief outlining their parameters, and the electrical contractor completes a more detailed design before proceeding with the electrical construction.
It can be a complex estimation method as you may have to work within the client's budget and provide an accurate forecast.

5. Guesstimate:

Making assumptions without proper analysis can lead to highly inaccurate results that fail to account for the complexities of the job.

But on the other hand, highly experienced individuals might be able to make the guesses with some accuracy, especially when someone who has been doing this for years. So, if you have less experience, avoid going with this approach.

6. Electrical Estimating Software:

Electrical estimating software can be the most effective approach for getting highly accurate cost estimates for both small and major construction projects.

Compared to manual estimating techniques, the software can get accurate electrical estimates. This software takes input of all variables and specifics of the project, such as materials required, labor types and hours, site factors, and electrical, to generate the meticulous cost estimate.

The software ensures that even tremendously complex projects with thousands of components and labor hours are methodically accounted for in the estimate. It consistently delivers speed, precision, and reliability that manual techniques cannot match.

How do you do electrical estimation the right way?

 

Creating accurate electrical estimates is one of the most important and critical skills in the growing and complex electrical industry. As electrical costs vary based on materials, labor, permits, and other factors, developing precise electrical estimates requires time-tested methods. Here is how you can you it right way.

1. Choosing the Right Projects:

One of the most crucial starting points in creating an accurate electrical estimate is selecting the right type of project to bid on in the first place. Estimators should avoid bidding on electrical work that involves services or building types where they have limited hands-on experience.

Without a solid background in a specific field of electrical contracting, estimators will lack the historical data and cost benchmarks needed to produce a precise quote. For example, an electrical firm experienced mainly in residential and light commercial work would struggle to properly estimate costs for a large industrial job.

Taking on electrical projects in unfamiliar territory also means a steep learning curve during execution if the bid wins, further eating into profitability. Essentially, a bid is only as good as the experience and expertise behind it. Specialization pays off through rock-solid estimates grounded in experience.

2. Study the drawings:

It is important to thoroughly review all the relevant drawings and documents to accurately estimate costs and labor for the project. Examine the full architectural drawings to have a comprehensive understanding of the overall scope of work.

Check for anything that may add complexity to the project or impact the necessary materials and equipment.

Pay attention to a building's:

 

• Plumbing
• HVAC
• Elevations

 

Pay attention to dimensions, layouts, and working heights as they may impact material quantities, equipment needs, and labor requirements across all trades.

Develop a clear list of questions and issues that require clarification before creating a final estimate. Thinking holistically about the documents can help uncover disconnects between drawings or specifications that could result in change orders or delays if not addressed early.

3. Confirm the specifications:

It is crucial to review the specifications in the request for proposal when participating in the bidding process. Commonly, RFPs use complex language, which can be difficult to understand. However, analyzing the specifications of the RFP can truly make the difference between moving to the next round or instant disqualification.

Study the current electrical circuitry, including circuits and subpanels, of the house that you will be working on, as it will help you to ensure the success of your RFP. However, if you see anything unusual or a possible mistake, be sure to point it out in your proposal.

Also, ensure that you comply with the building codes and state and local regulations while working on a project. Check for legal issues, such as contract disputes, that may arise later.

4. Perform a material takeoff:

Performing a material takeoff is essentially taking inventory of all the materials needed for a construction project, including understanding the electrical systems required for the project. Think of it like making a detailed shopping list based on blueprints and specifications. The material takeoff sheet may include the following:

 

• Electrical wiring
• Switches
• Switchboards
• Light fixtures
• Conduit

 

This list helps you estimate the project cost accurately and improve your project planning. It also helps to find out potential challenges and mitigate risks.

5. Calculate your labor costs:

Once you have identified the full requirements of the job, you can find out how many electricians you need and how long it will take to complete the project. Calculating labor costs is crucial for creating accurate electrical estimates.

Identify the hourly rate of your electricians using Bureau of Labor Statistics data and calculate their hourly costs for completing the job.

Here is the formula to calculate the labor cost. It gives you the total estimated labor cost for the electrical work.

Hourly labor rate x number of labor hours

Electricians typically charge by the hour for residential or commercial electrical work.

6. Add Overhead and Profit:

Only charging for labor and materials will result in a loss of money. Calculating labor and material costs is not enough to make a profit from a job. It is important to factor in overhead costs, such as transportation and the cost of electrical equipment and tools, to ensure that all expenses are covered.

A general rule is that overhead should be between 13 to 20% of your total sales cost.

Add a markup for profit based on the average prices for electrical work in your area and the desired profit margin for each job to estimate the final cost.

7. Create your electrical estimate:

After you have considered all the elements, you need to create a proposal that clearly shows what is included in the bid, which is crucial for the success of an electrical project. Generally, electrical contractors provide lump sum bids to provide a fixed fee that covers everything in the bid.

It is important to clarify any inclusions or exclusions to avoid confusion once the project is awarded.

It is important that you double-check all the information before you present the final bid.

Conclusion:

It is true that estimation requires a lot of work, planning, and effort. The estimation could go up significantly if you don't have things in place.

Knowing how to create a professional-looking estimate will help you win more jobs. It is where electrical estimation software is an easier way to get your work done accurately and quickly.

FAQ on What is Estimating in Electrical?

Q1: Why is electrical estimating important?

A1: Accurate electrical estimating is crucial for setting realistic budgets, securing funding, and ensuring that projects are completed within financial constraints. It helps in avoiding cost overruns and ensuring client satisfaction.

Q2: What are the main components considered in electrical estimating?

A2: Electrical estimating typically includes the costs of:

 

• Materials
• Labor
• Overhead Costs
• Permits and Fees
• Profit Margins
• Any other expenses required to complete the electrical work

Q3: What challenges are associated with electrical estimating?

A3: Electrical estimating can be complex and time-consuming. Challenges include accounting for fluctuating material prices, labor rates, and unforeseen project changes. Inaccurate estimates can lead to budget issues, client dissatisfaction, and lost profits.

Q4: Can electrical estimating be automated?

A4: Yes, many aspects of electrical estimating can be automated using specialized software. These tools help quickly calculate costs, generate reports, and manage data, improving efficiency and accuracy.