How much work should you estimate?
Now, there’s a question for you. I guess it all depends on who’s asking the question doesn’t it?
Your boss might say that you should estimate a heck of a lot more than you have been estimating. If you’re the estimator, you are probably saying (or at least thinking), “I’m working my tail off, I can’t possibly estimate any more than I do now.”
Each year one of the trade magazines sends a survey to general contractors and subcontractors alike. The purpose of this survey is to determine who the “top dogs” are in annual construction revenue.
Since most of the revenue for a construction company can be attributed to the efforts of the estimators, I decided I would take an informal survey of wall and ceiling contractors to see just what is expected of their estimators.
I would like to say thank you to all of the companies that have taken the time to provide the information for this survey. Also, I want you to be assured that I will not divulge any information about any company that has taken part in a survey.
Here are the questions I asked in this survey:
– What is your annual sales volume?
– How much is each estimator expected to sell in a year?
– What is the ratio of projects bid versus projects won?
The smaller companies, those “mom and pop” operations, might not have a separate estimator. The owners of these companies tend to wear several hats, and they end up working 60 to 70 hours per week. These estimator/owners will secure about between $2 million and $4 million of work per year.
At the mid-size companies with an annual sales volume between $5 million and $15 million, the estimator is expected to secure about $4 million of work each year.
One of the surprising statistics (for me) was how much greater the expected sales volume increased for an estimator at some of the larger companies.
The companies that have annual sales above $15 million each year are where the expected sales volume per estimator is also substantially more. Several of the companies have said that they look for an annual sales volume from each estimator at $6 million to $8 million. I even have had one company tell me that their senior estimators should provide about $15 million to 20 million of work for their company each year.
Obviously the companies that have the highest requirement of sales volume per estimator are operating in areas where the number of projects to bid is plentiful and the individual project tends to be quite large.
When it comes to the ratio of projects bid versus projects won, the average of projects won seems to be static at 10 to 15 percent.
However, there are companies out there that have managed to win as much as 25 percent of the projects that they bid. These companies have found a way to distance themselves from the competition.
Assuming that I can get the cooperation from these same companies, next month’s article will be the results of a survey about “Estimator’s Compensation.”
About the Author
Charles Mahaffey is president of Accuest, LLC, Marietta, Ga. Accuest provides estimating and consulting services for commercial drywall subcontractors. See his ad on page 94.