6 Tips for reducing electrical estimate risk

“Risk” can be a scary term in the electrical estimating business, but it’s one we must deal with every day.  Thinking about the implications of risk in this industry can be enough to set anyone sweating. For estimators, the costs of mistakes can include financial penalties, wasted time and the risk of losing out on lucrative contracts. You might even lose your job if the penalty for the company was severe enough.  All of this means that managing and minimising risk should be priorities that are built into your processes. Let’s take a look:  

The main risks of electrical estimates

First of all, here’s a quick run-down of the main risks associated with electrical estimates:

Tender errors

Tender errors cover a broad scope of possible calamities, from simple numerical typos in the material and labour costs, basing a tender on incorrect information (such as erroneous supplier quotes), to making huge errors like missing out on an entire floor. It includes things like allowing for a certain type of material, then finding that the specification requires something very different - perhaps more expensive.  Of course, that “simple” typo may not be so simple at all, especially if it manages to add or subtract extra zeros for the quote.  Tender errors are problematic in any sense. On one end, you might over-allow for something, causing your tender to be much more expensive than others. This will probably cause you to lose the project. If you miss something, you may win the project based on your cheap pricing, then find you don’t have enough money in the tender to carry out the project. Either way, you can end up with reputation damage as well.

Take-off errors

Most electrical estimators experience this at some point - making a mistake when quantifying everything in the drawings. You might just miss the odd symbol here and there, or miscount larger amounts.  For example, you could have counted 500 light fittings, but then get distracted by the phone ringing. You accidently write down 50 or 5000 instead of the correct amount. You end up with either a blowout or under-quote, as described previously.

Missing terms in the contract

You’ve got to read and understand the contract properly before signing, otherwise there may be terms present that you end up regretting signing for. This has been a cause for consternation for many companies!

Lack of resources

A lack of resources can play out in a few different scenarios. You might not have enough personnel available in the estimating department to complete the tender by the required deadline (meaning you probably either lose it, or hand in a rush-job with inaccuracies).  Where a project has complex parts, you might not have estimators who are experienced enough to know how to properly allow for those portions of the work. Along the same vein, you might also find that you don’t have available resources or skilled labour at the right time for actually carrying out the project onsite.  

6 tips to reduce risk

You can’t always eliminate risk entirely, but you can take steps to minimise it and ensure you’ve done what you can to reduce impact on your company.  Here are some tips to reduce electrical estimate risk:

1. Take timing into account

Check the return date first before looking at bidding on any tender. Does it give you enough time to thoroughly check things over, contact suppliers and put together an accurate quote? It it’s too tight, consider whether your time might be better spent bidding on a contract with a more reasonable deadline, giving you time to check it over properly.  It’s always important to take into account that if you need third-party quotes, such as from suppliers or contractors, you need to be able to give them enough time to prepare an accurate quote too.

2. Cross-check as much as possible

Following on from having enough time - use it well! Take the time to cross-check as much as you possibly can in your documentation. For example, you should check:

 
• Supplier’s quotes - have you included them and added in the correct amount?
 
• Floor area - cross-check square metreage or footage against similar projects of this nature that you’ve completed in the past. This acts as a sort of “sense check.” For example, say you’re quoting for a standard office space that is similar to a previous project, look at the cost per square metre and compare that to the project you’re currently tendering. Is there a notable difference? If so, find out why. It may be that prices have changed or higher-end fittings are being used, but it may also be that you’ve made a mistake in your tender.
 
• Take-off count - yes, double checking your count can be a pain, particularly if you’re doing it the old-fashioned way with a printed drawing and a highlighter pen, but it can be a good way to pick up that you wrote down 50 instead of 500 (that ringing phone!). Alternatively, this is exactly why we built Countfire, so that take-offs can be counted automatically and easily cross-checked.

3. Tag items into groups as you go

Assigning material classes to items and tagging them as you add them in is a great way to help you slice up your tender in different ways, making it simpler to check over. It’s much easier (and less intimidating) to check things in logical groups rather than be faced with a large mass of data to check.  For example, if you have a lighting quotation that has hundreds of different items broken out into different sections of the pricing schedule, you can give all of these items a material class, or tag of "X Lighting supplier quotation." This then allows you to easily pull all of those items together and check the total amount you've included against the actual quotation.

4. Use a good software for counting take-offs

You’re in the middle of counting take-offs when the phone rings and you make that mistake we looked at earlier - writing down 50 instead of 500…  … except if you’re using a good software like Countfire to count take-offs for you, you can entirely avoid this situation. It doesn’t matter how many distractions get thrown at you: The automated software has 4 stages of checking baked into the app to prevent you from making these kinds of mistakes.  These checks are:

 
• A workflow for checking drawings as you go by hiding the symbols you’ve already counted. It is then easy to check the drawing and look for any that have been missed.
 
• Record and symbols removed drawing review. These two checks can be done together and involve checking the output drawings for any missed symbols or mistakes.
 
• A check sheet review. This involves reviewing the check sheet for each discipline of your project and scanning the lists of symbols for false positives or selections made under the wrong symbol descriptions.

Good software helps you improve not only your accuracy, but also the amount of time it takes you to complete (and check) a count.  

5. Improve the clarity of your estimate

When the tender is finished, but before it's submitted to the client, the estimating department and often senior members of management will have a tender adjudication meeting. This is to validate the contents of the tender, satisfy everyone that it's correct, and decide on final rates, discounts, margins and competitive approaches.  It's critical to provide clarity to everyone at this meeting, and be mindful that different people are going to want different things. The Managing Director or Commercial Director are going to want a high level view of the project and to know that you've accounted for certain things that they've likely been bitten by in the past. These often tend to be things which estimators don’t focus on so much, (for example, terms in the construction contract, or discounts available with a particular supplier because of a relationship they have).  On the other hand, an Estimating Manager is likely going to be interested in a little more fine-grain detail to make sure the fundamentals of the tender are correct. Preparing reports and documents in advance of this meeting, which enable you to quickly and easily answer the questions these people are going to have, is a great way of bringing clarity to this meeting and ensuring everyone is in a position to agree whether the details of the tender are correct.

6. Follow the client’s pricing schedule

One of the risks is obviously that the client doesn’t like your tender and ultimately, doesn’t offer you the contract. This is where a second part to improving clarity is concerned - once the tender is submitted to your client, clarity is more centred around them being able to quickly line up your bid with your competitor's bids to easily see how and where the bids differ.  In this scenario, following the pricing schedule, the requirements of the specification and any specific instructions your client has given you is key. Include whatever information they've asked for, and make sure it's logically set out and easy to read. If other bids aren’t following these guidelines, the clarity of yours can give you the edge over competitors.  

Final thoughts

There’s a lot on the shoulders of estimators when it comes to taking on risk on the behalf of your company. Ultimately, you are responsible for the accuracy of bids so that the company is in a position to not only get their tender accepted, but make a profit from it.  The steps outlined can help you to minimise that risk and ensure that your bids are accurate and timely. Be clear and pay attention to the wishes of the client - hopefully your bid gets pushed to the top!