Calculate the time and revenue won and lost each year generating estimates
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This Construction Estimate ROI Calculator is designed to help residential home builders, remodelers, or general contractors calculate how much time they spend creating project estimates and the value of the estimates that they've won and lost over the course of a year.
Depending on the type, size, and complexity of the project, creating an accurate cost estimate could take anywhere from less than an hour to several days or weeks.
To accurately estimate costs, you need to fully understand the scope, conditions of site, material requirements, and labor needs in order to identify what those costs are likely to be. From there, you'll need to evaluate any potential risks or design changes that might affect your estimate. This assessment typically involves evaluating such factors as site conditions, as well as researching various codes and regulations related to permitted zoning laws in the area—all of which require additional research time before project cost estimations can be made.
Next comes evaluation of labor requirements based on industry standards based on one's experience specific to this type of job similar ones that have previously been conducted in the same region at similar times in history (in terms of macro-economic factors). Labor rates also need to be calculated according their current market value, factoring in benefits like insurance coverage or overtime wages depending on each contractor’s policies.
From there, material quantities must also be estimated which usually requires quite an amount of historical data considering things like waste allowances for different types of materials being used during a given job (e.g., cement mix). On top of all of this, you'll need to take into consideration numerous other variables like transportation expenses, overages/underages, etc.
For contractors that specialize in smaller and more specific projects, many of these factors may be the same for every project, thus making them easy and quick to estimate. For larger and more custom projects, the variables will be different for every project requiring more time and effort to ensure that the estimate is thorough and accurate.
While there is no official research that has been conducted, but the reported averages found through various sources range between success rates of 10% to 20%. For more specialized contractors, the success rate of winning construction estimates could go as high as 40% or more.
In general, if you're winning 1 to 2 estimates for every 10 that you generate, you're right in line with the average success rate of other contractors.
If you're winning 20% of the estimates you submit, that means that you lost out on the other 80%. While it's unrealistic to win 100% of your bids, you may not need to increase your winning percentage by very much to generate a massive amount of additional revenue. Here are some ways that you might be able to improve your win rate:
One way to increase your revenue while maintaining your existing winning percentage is by simply increasing the number of estimating opportunities. To do that, you'll need to increase your marketing efforts, increase your target market, add another estimator to your team, or any other method you choose to increase your leads.
Being the first contractor to submit an estimate to a client is a great way to communicate that the client and their project is important as well as the speed in which you operate. Those factors can go a long way in giving you an edge over the competition. While you don't sacrifice accuracy for speed, you'll need to find ways to reduce the time it takes to generate your estimates — using a construction estimate template, or construction estimating software are both effective tools for saving time with estimating.
Treat each opportunity as you would if it were your own personal project. Bring your expertise to the forefront by offering suggestions on how the client could save time, money, or future problems is a quick way to establish trust with a potential client. You'll communicate that care more about the needs of the client ahead than just winning the job.
The way you present yourself, your company, and your estimate matters — a lot. All of these things are factored into how the client perceives the result of your work to be. If your presentation is sloppy, the client might assume the same is true of your work.
Dress professionally, communicate clearly, be punctual, and deliver a branded proposal. In fact, BuildBook makes this incredibly easy by automatically turning your estimates into a professionally branded proposal that can be shared and approved online by clients. You can even try it free.