Growing your profits with estimating software

Estimating software can make the difference between financial success and failure for a building firm. Let me explain…

The profit you make from a building project hinges on two things:

• An accurate quote – a large chunk of your profit depends on the accuracy of the initial quote

• Project management – an equally large chunk of your profit is made or lost during the project, depending on how well it is managed

Technology – or specifically software – will help you hold onto your profit at both stages of the process.

The quotation

Many building firms rely on square-metre rates or DIY spreadsheets to produce their estimates. These approaches won’t cut it in 2022 because:

• The prices may not reflect market prices - which are highly volatile at present

• They may not include all of the detail or take into account the nuances of the job

• They don’t factor in wastage, wear and tear, theft and so on.

In addition, they may not allow for:

• Overheads

• Inflation

• A decent profit margin ON TOP of all of the above

How estimating software helps

With a professional, established estimating software product like EstimatorXpress in your kit, you get:

• access to the very latest materials prices

• wastage and wear and tear calculated for you

• an option to allow for overheads

• inflation calculated for you

• a decent profit mark-up on top of all of the above

Calculating inflation

Construction cost price rises, which have peaked at 20% year on year, are at their highest for a generation. This is significant because inflation can wipe out any profit you think you’re going to make on a building project, especially if it’s a long project or one you’re starting some way in the future. If you quote today’s prices for a job starting in six months’ time, you’ll be significantly under-quoting. Clearly, it’s essential that you take inflation into account in your estimate. You need to use “job start date” prices in your estimates – and any estimating software worth its salt will do that for you.

The importance of project management

Even if you think your current manual way of estimating is “good enough”, your square meterage calculations or spreadsheet will not provide you with the data you need to manage the project effectively – and this is where the profit leaks out of many projects.

The beauty of using a quality estimating software product, like EstimatorXpress, is that alongside your estimate, the software automatically compiles a raft of reports such as material schedules, cutting lists, plant order lists, labour task lists and so on - essentially, everything you need to manage your project from start to finish. At a time when materials are in short supply, being ahead of the game means you can get your materials locked in and negotiate fair prices with your suppliers.

Organisation is key

An up-to-date build programme or Gantt chart is key to a well-managed project. With the right estimating software, you can key in the start date and get a build programme automatically generated from your estimate. The build programme will then feed into your material, plant and labour schedules to put you in the driving seat of booking and ordering. With the best software, the chart will respond to changes in the build programme, updating to take account of any delays (or even days made up!)

You don’t have to take on every job

Using estimating software to produce the estimate quickly, you’ll have more time available to think about whether you actually want to take on the job. Use the time to consider, is there real money in the job? Does the profit justify the time/effort? Technology can help you judge whether a job is worth your time. Sometimes, it may be better to have no work for a few days rather than to take on a job which won’t make any money.

What’s more, builders who present professional, detailed quotes to their clients are more likely to win the work with better profit margins. They can demonstrate why the job is worth what they’re quoting - they can justify their costs – including inflation – with detailed breakdowns of each stage of the job. And you can be sure, the builders presenting these comprehensive quotes and winning the more profitable work are using estimating software like EstimatorXpress.