David Gerstel has been a licensed builder for four decades and is the author of the construction industry classic, Running a Successful Construction Company. The following article is adapted from his new book, Nail Your Numbers: A Path to Skilled Construction Estimating and Bidding.
Right at the beginning of my new book, I offer this encouragement: “You can nail your numbers.” I want to emphasize to readers that bidding and estimating can be mastered, though it is not easy to do so. (Of course, it’s not. Is there any construction industry skill that’s easy to master?)
In fact, you can master estimating to the point that your projected numbers for the direct (on-site) costs for building your projects will vary, on average, from the actual costs by a mere one or two percent. That is, on any given project, you may run off somewhat one way or the other. But over a series of projects, the slippages will balance out.
The “trick”—or the skill, actually—to nailing your numbers comes down to abiding by four fundamental rules of estimating:Don’t miss any work called for or implied in the plans and specs.Don’t miss any component of labor costs, from wages all the way through minor insurance burdens.Don’t miss any of the costs for materials to be used by your crew all the way through consumables, like dry line and pencils, and delivery charges. Make sure that none of the work you are subbing out falls between trade partners and is, thereby, left out of your estimate.
A category of items that are especially easy to miss, but that must not be neglected, is best described as “General Requirements.” GRs are a big cost on virtually every project, yet they are often underestimated or outright overlooked because they are merely implied in the plans and not explicitly called out. Even detailed specifications may barely mention them. For example, daily cleanup is a significant GR. Likewise, a portable toilet, temporary power, and erosion control devices are often required but are called out only in comprehensive specs.
It is critical to spot such items during estimating. If they are missed, an estimate can wander way off target—towards the low side. For that reason, Nail Your Numbers includes an entire chapter on the subject.
When I first sketched out my book, I had no intention of giving GRs such detailed attention. I thought that they would be obvious to every builder who took the business side of his work seriously enough to spend money on my book, and that I’d be wasting readers’ time if I made more than passing mention of them. I was wrong.
The need for a detailed discussion of GRs started to dawn on me as I was doing the research for Nail Your Numbers. I was interviewing a builder I will call “Ed,” sitting beneath the 200-year-old ridge beam of the cabin that he repurposed as the kitchen space for his beautifully crafted home. I had asked him how he handled General Requirements in his estimates.
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