Electrical estimating: Which method is best for you?

The work of an electrical estimator requires a high level of skill and accuracy.

The estimates you produce form the basis of how an electrical project will proceed. Clients use your estimate to determine who wins the job or what they can have done for the budget they have available.

That said, producing an accurate estimate is not an easy task! There are many variables that go into creating an estimate and on some projects, the estimating task alone is huge.

Your estimating methodology plays a role in how accurately or easily you can produce an estimate. Here, we’re looking at some common methods:

Electrical estimating methods

Below are some of the estimating methods used most by electrical estimators. Each come with their own sets of pros and cons.

Automated takeoff software such as Countfire can help with any method outlined here. The advantages of using it include quicker, more accurate counting of takeoffs, along with easy collaboration and editing abilities. Takeoff software can free up your time considerably:

Per-point method

The per-point method means that each fixture - whether it’s a power point, switch, sensor or otherwise - is counted as a “point” that is assigned a common dollar value. To give an example, if you counted 1000 points and each was given the value of £100, your quote for the project would be £100,000.

While a pro of this method of estimating is that it is quick and easy, on the negative side of the equation, it is rife with possibilities for an inaccurate estimate. For example, let’s consider labour and how much it can vary between jobs. If you’re assigning the same points to every fixture, you can have huge variation.

Let’s say one project has more cable that needs to be run between power points, or some have single sockets while others have doubles. Further, the work conditions might automatically involve greater labour - what if you had to drill into concrete?  Labour is the common pitfall with the per-point method because you can very quickly go over budget with your labour costs. For any electrical company, this can cause a huge hit to your profitability.

This method of electrical estimating is an averaging method, which means highs and lows aren’t accounted for. Discrepancies in the final estimate are common because it’s a sort of “one size fits all” approach. The caveat here is that if you were building something that has little variation from past projects, this method may work out for you.

Labour unit method

The labour unit method assigns a value (in units) to the human labour required for the installation of each item of hardware. A labour unit is defined in the OECD as the average cost of labour per unit of output produced. It is the ratio of total labour costs to real output.

So for example, perhaps each labour unit is £75. Installation of a single socket might be one labour unit, a sensor might be three, and so on. You then multiply the total number of labour units by your labour unit value to come up with a quote.

We’ve talked about calculating labour costs accurately on a previous post. Labour units are usually calculated either by using a “shop average labour rate,” where the total field labour rate over the last 12 months is divided by the total number of labour hours; or the “job average labour rate,” where the labour unit is calculated based on the type of job and its complexity. 

The labour unit method can be more accurate than the per-point method because there is the opportunity to more reasonably calculate for the labour conditions. There are still some common pitfalls though. For example, sometimes people forget to include “labour burden” costs - those costs associated with your workforce that aren’t directly related to their work. For example, costs like sick leave, holiday pay, insurance or taxes.

If you use the labour unit method, you also need to be careful to distinguish between different working conditions as this is where you can end up with an inaccurate estimate. For example, the difference in labour between “easy” and “difficult” conditions can be considerable, so you wouldn’t want to short-change your company by basing your labour units too cheaply.

Pre-build

Pre-build is also known as the “assembly estimating method.” This can be a simple way to count takeoffs because it packages your elements by including the necessary materials and creating a unit price.

There are many parts in electrical construction that include multiple components. For example, power sockets include the power point, mounting bracket and cabling. You can package this together as one unit cost.

When you quote for pre-builds or assemblies, you might include a combination of materials and labour, or separate billable items for labour and materials. Some contracts are known as schedules of rates or unit price contracts. If you’re quoting for one of these, you will usually be required to quote your unit rates for pre-builds or assemblies in the schedule.

The pre-build method can run into similar inaccuracies as the per-point method (it’s really a more complex version of the per-point method). Common mistakes include inaccurate labour calculation, or failing to account for travel costs to the job.

Design and construct

In the design and construct method, the electrical contractor is involved with the design as well as the actual implementation of the project. The customer will usually provide a design brief that details their parameters for the project and the electrical contractor will complete a more detailed design, before continuing with the electrical construction.

This is one of the most complex estimating methods. You will usually have to work within the budget of the client and provide very accurate forecasting from design to construction. This differs from the sorts of projects where you bid a price for a completed design.

The electrical estimator using the design and construct method needs comprehensive design methodology knowledge, as well as construction, labour, materials and equipment expertise. The main drawback of this method is its complexity, which can leave the possibility of error open at any stage.

Guesstimate

There’s a good reason we left this estimating method until last - while guesstimating is still often used, it’s the most prone to error. If you’ve ever come across the contractor that eyeballs a project and provides a quote off the top of their head, this is a good example of guesstimating.

Guesstimating is often based on gut feeling rather than any sort of thorough analysis of the job at-hand. For this reason, it can lead to highly inaccurate estimates that fail to account for complexities of the job or conversely, overestimate them.

In saying that, someone who is highly experienced might be able to look at a job and guesstimate with some accuracy, especially if it is of the type and size they have been doing for years. We’d suggest this isn’t a good method for anyone who is less than an expert though - it’s too open to error.

However, with Countfire's electrical estimating software you can build an estimate based on the work you have already created in other estimates. As soon you import your takeoff quantities (in one-click!) the software will automatically price as much of your estimate as possible, based on how you have priced items in the past.

This is a much more robust way to quickly price and get a ballpark figure for your estimate, that's based on actual previous projects.

Final thoughts

Estimating methods tend to come down to the skill of the estimator and their preference (or their company’s preference) of methodology. Factors like speed, accuracy and experience are also a big part of that choice.

Overall, we suggest any method used should be based on good data. For example, labour estimates should involve the best possible information about similar jobs done previously and how the working conditions impact labour.

Of course, if you want to improve speed and accuracy when counting takeoffs, we recommend using a good takeoff software. Countfire is here to help you estimate with confidence.