Compensation

Charles Mahaffey

July 2006

Are you underpaid? Overpaid? About average? Last month’s article was about how much work an estimator is expected to bid and secure for his company on an annual basis. In this month’s article are the survey results for compensation of the estimators who are responsible for securing this backlog of work. The survey asked questions regarding salary ranges, bonuses and car allowances.

I would like to point out that these results might not truly reflect the geographic market in which your company operates. Even with a booming economy, there are some areas of the country that are just not as busy as others. Of course, if the construction market in your area is lackluster, you can expect that your compensation will be on the lower side of the scale.

The "Junior Estimator” category reflects the compensation of an estimator with fewer than five years of experience. The compensation for the junior estimator is as follows:

• Average (entry level) starting salary of approximately $35,000 per year.
• Top salary range is $45,000 to $50,000 per year.
• Bonus (in addition to salary) is discretionary at $1,000 to $5,000.
• Car allowance is an average of $300 per month.

At the "Senior Estimator” level, the compensation becomes quite attractive. These are the estimators who carry the burden of backlog and profitability for the company. With the exception of New York and California, there doesn’t seem to be much variation in the compensation for estimators as a whole.

The "Senior Estimator” category reflects the compensation of an estimator with more than five years of experience. The compensation for the senior estimator is as follows:

• Salary range between $65,000 and $75,000 per year.
• Bonus (in addition to salary) average $25,000.
• Car allowance is an average of $450 per month.

One company told me that their estimators are also project managers. The salary for their estimator/project manager is about $95,000 per year, and they receive a bonus on jobs with a gross margin over 16 percent. On the down side, don’t fall below a 16 percent gross margin or you could be looking for another job!

I mentioned that the compensation for the senior estimator in New York and California is an exception to the average compensation for the rest of the country. This could be $15,000 to $20,000 more per year higher than the average.

The bonus arrangement was discretionary at most companies, but some companies go to great lengths to establish a formula based on the profitability of the estimator’s projects. Having a formula that will allow a business to calculate the bonus for an estimator is a great idea, but you need to realize that there could be an unpleasant consequence if you have not taken all of the variables into account beforehand and your gross margins turn out to be lower than expected.

In my opinion, providing an incentive for your estimators helps to ensure a more stable estimating staff. What company would want to be constantly searching for a new estimator to replace the estimator who left for "greener pastures?” I know some companies that had estimators who have worked for them for more than 20 years. The dependability and consistency provided by these experienced estimators can be invaluable to the stability and profitability of the company.

Now you know how you rank with other estimators around the country. Is your compensation right on target with your years of experience? Should you ask your boss for a raise? Or should you hide this article so that your boss won’t cut your pay or take away your car allowance?!

Whatever the case, your job is important to the sales and profits of your company. With your compensation comes the responsibility for making sure your estimates are right and that you have covered everything in the bid package to avoid those unpleasant consequences for you or the company.

About the Author
Charles Mahaffey is president of Accuest, LLC and The Academy of Construction Estimating in Atlanta.