Contractor estimates can be overwhelming and intimidating with their complexity, detail, and sheer volume of numbers. Nonetheless, it is critical to understand how to accurately read and evaluate these contractor estimates in order to make the right selection.
Every contractor estimate, also known as a bid, is intended to display the sum of all expected costs for a project. However, each company may use a different format due to the many software applications available for creating these estimates. When reviewing bids, you should compare how material costs, crew and labor expenses, and profit margin add up to the total cost for each provider. Understanding these elements allows you to more accurately compare different contractors, as well as identifying if a bid is structured in a manner that risks quality.
QUANTITY OF MATERIAL USED AND INDIVIDUAL COST PER UNIT
Some of the most important things to be aware of are the amount of materials needed to complete the job and the individual cost per unit of material. Each type of material used in the project should be individually listed, with an individual cost per unit. In evaluating these costs, a general contractor will often add in an acceptable percentage variance, as raw material prices fluctuate based on supply and demand.
NUMBER OF CREW MEMBERS, HOURLY WAGE, AND DURATION OF PROJECT
Of course, materials used and material costs are immensely important in a contractor estimate, but the number of employees working on the job, their hourly wage, and the hours they are expecting to be on site must also be clearly expressed. It’s important to carefully review each contractor’s estimate of how long the project will take, along with how many crew members will be working on that project and their hourly wage. A complex job with numerous subcontractors and trades on site requires significantly more project management to keep the project on track. It is all too common to see an inexperienced subcontractor provide a bid that doesn’t take into account the scope or intricacies of a big project.
CONTRACTOR PROFIT MARGIN
Another item to look for in your contractor estimate is the company profit margin or markup. This is the cost of the company providing their service and managing an effective process to project completion.
Once all the above components have been individually identified including the volume of materials used, cost per unit of material, number of workers working on the project, hourly wages, the number of hours they’ll be working on the project, and finally the profit margin for the subcontractor, then the total project costs should be clearly indicated. While it is natural to focus on this final number, it is only by analyzing the individual bid components that you can accurately compare what each contractor is offering as their service.
United Builders Service is a leader in framing, drywall, acoustic ceilings and project management. We would be happy to provide a contractor estimate, or to help you analyze and compare estimates that you have already received. Call us at 303.466.7200 to request a quote.