One of the difficulties when growing your company is the step up from residential to commercial estimating. The work is more complex, requiring a more complex estimating method to match. Here is a recap of the residential estimating methods I am aware of, with thanks to the members at Electriciantalk.com.
1st Method, Unit Pricing – Some contractors have a list of unit prices they use such as $100 for a cut in receptacle or $2000 for a service change.
2nd Method, Price Per Hole – In my 1 month working for a residential contractor, we used this method for apartments and condos. Each hole (receptacle, switch, fixture outlet, etc.) cost $9 (it was a long time ago). Add labor and material for the fixtures, switchgear and feeders.
3rd Method, Square Foot Pricing – This method can be used if you have accurate historical data that matches the work you are bidding.
4th Method, Material Plus Labor Allowance – The contractor puts together a priced material list and adds an allowance (such as 2 men 4 days) for labor.
All of the residential electricians I have talked to use an estimating method based on one or more of the methods mentioned above. Some use a combination of methods. Some enhance these methods with custom built spreadsheet templates.
The forth method is closest to the way commercial estimates are prepared. Instead of a labor allowance, labor is calculated for each piece of material. The labor is expressed as decimal or whole portions of an hour, and is called a labor unit. Here is an example of a duplex receptacle.
4S Box .20 (.20 * 60 minutes = 12 minutes)
4S 1 Gang Ring .10 (.10 * 60 minutes = 6 minutes)
Duplex Receptacle .20 (.20 * 60 minutes = 12 minutes)
Plate .05 (.05 * 60 minutes = 3 minutes)
Total = 33 minutes
Here is the hard part. Labor units are subjective, meaning they do not always work with a particular installation situation. Labor manuals with one column of labor units are meant for “normal” labor situations. Other manuals have multiple columns, one column for normal and other columns for more difficult installations. Make sure you read the scope of work covered by the labor units in the manual you obtain. There are differences between the manuals.
Where do you get these labor units? If you purchase a computer estimating system, it will come with built in labor units. Labor guides are also available from a number of organizations. A quick search of the internet came up with well over a dozen.
The above is only a brief description of commercial electrical estimating. There is much more to it, and proper procedures should be learned or you risk losing money on projects. There are several ways to learn the process. N.E.C.A. offers classes in many areas. There are many books available. There are also a few universities that teach electrical estimating.
