How to Write an Estimate

An accurate, thorough and professional estimate is your best bet at making a good impression, as well as a profit, when you're bidding on your next project.

Instructions

Difficulty: Moderately challenging

Things You’ll Need:

• Financial Calculator
• Pencils
• Calendars
• Spiral Notebooks
• Computers
• Microsoft Excel

1. Determine how long the project will take, and prepare a schedule for completion. This will aid you in determining accurate labor and equipment rental costs and will help you avoid scheduling conflicts with other projects.
2. Calculate your labor costs. If you have employees, the cost for each employee is his or her gross wages, plus allowances for employer-paid items such as insurance (liability, unemployment and workers' compensation), Social Security (FICA) tax and union benefits. Also figure in any payments you'll make to independent contractors working on the project.
3. Add the cost of any special materials you'll need to complete the project.
4. Obtain proposals for any rental equipment you'll need, determine which proposal is acceptable and add that figure to your estimate.
5. Arrive at a subtotal by adding a percentage of your general overhead to your total costs.
6. Calculate your profit by taking the appropriate percentage of the subtotal and adding that number back to the subtotal. This figure is your total estimate.
7. Prepare the final written estimate. Breaking your estimate down into the categories of labor, material/equipment, overhead and profit should provide adequate detail.

Tips & Warnings

• Based on your past projects, add an appropriate amount of time to the schedule for unforeseen circumstances or minor delays.
• Use your cost records as a guide for ensuring accurate labor and overhead figures.
• Whether or not you require a separate contract once your estimate has been accepted, make your estimate as detailed as possible regarding payment terms, completion dates, delays beyond your control, refunds and collection procedures in the event of nonpayment.
• Double-check your math before submitting your estimate.
• Avoid allocating your entire overhead into estimates if you have only a few projects going. This will inflate your price, and you'll probably lose the project to a company with a lower bid.