Construction Professionals

Do Away With Guesstimating!

Are You Losing Money Before You Even Start?

Nick's PictureLet me ask you a question. Would you ever cut a board like this? You look at the space where the board is going to go and say... "That's 82 1/2" and then you get out your saw and look at the board and say there's 82 1/2" and start cutting. Would you expect the board to fit? No!

If you're like every contractor I've ever seen, you get out your tape and measure the space and measure the board and cut it. No guesswork involved.

I don't know if you're one of them, but a lot of contractors bid that way. I call it "eye balling and guesstimating." How can anyone expect to make money guesstimating this way?

It's even worse, because if you get a job and make money on it you don't know why. You can't duplicate the process on the next project.

It's a viscous cycle and a death spiral.

Organize Your Estimates for Accuracy & Speed

One of the things that's going to make your estimating faster and more accurate is using what I call "Sections." Sections are a way of breaking a project down into the steps you take when you're doing a job. Some people call them tasks, phases and classes. It's all the same concept.

Sections are a logical breakdown of your jobs. Sections would include things like: Site Preparation, Foundations, Framing, Roofing, Landscaping, and so on. By the way, most of the examples in this letter are based around general contractors. However, exactly the same principles apply to specialty contractors. No matter what trade you may be in, these rules apply to you.

Here's how it's going to make your estimating more accurate, and faster too. When you use sections you take one section at a time and you take each of the items you need for that section of the job. If you're taking off foundations all of the items for foundations are in the Foundation section. By having only foundation items it's much easier to spot missing items and duplicates. That eliminates errors.

Imagine what your estimate would look like without sections and you have several hundred items in the estimate - that's at least 2 pages. You could spend hours reviewing the estimate looking for missing items and duplicates. Because it's all one big random list, it's much harder to find duplicates or missing items which creates errors and it take a lot longer to find any errors.

Use Measurable Items

The only way you can estimate consistently job after job and make money is by making sure everything is in measurable units. A measurable unit is a linear foot, a cubic yard, or a square foot, and so on. It's something you can measure with your measuring tape.

What that means is you have to have a system that everything is taken off in measurable units that you can calculateContractor Tools a cost for materials and labor. For example, a 2X4 interior wall with drywall on both sides takes (I'm totally making up numbers here) 1/2 hour of labor per linear foot (your labor production rate, i.e. how long it takes to do something.) and $10.75 in materials.

That's measurable and when the job is complete you can compare your cost for materials to what you thought it was going to cost. If there's a difference, you know which part of your job cost your profit and so you adjust your estimating for the next job. Maybe your material cost should be $11.25 a linear foot, or maybe $10.25.  It doesn't make any difference if you're high or low, adjust to the correct number.

And, you can compare your labor hours to how long it actually took. Adjust labor hours, labor production rate, in the same fashion.

Do NOT estimate by hours always estimate by the units you are taking off. For example, I've talked with a contractor that would estimate that a 10 foot wall will take about 8 hours to build and the same contractor a week later will look at a 15 foot wall and say it will take about 8 hours. How do you measure that? You can't!

  The Contractor's Profit System

When you use The Contractor's Profit System with LiteningFast Estimating you will:

  • Have more time for other things that are important
  • Get accurate estimates... estimates that you will feel confident giving to a prospect and making money
  • Make money job after job

Estimating is important! If you don't estimate, you don't get jobs. Without jobs you don't have an opportunity to make money.

If you estimate, but you don't know what it costs to do the work, are you estimating or guesstimating? Are you making the same mistakes over and over again, job after job? QuickBooks Logo

One of the ideas behind The Contractor's Profit system is that it no only includes LiteningFast Estimating, it is integrated with QuickBooks® so you can do job cost. Not only is it integrated with QuickBooks, it creates simplified budgets that give you the power you need to make money job after job. By the way, the program has been tested and certified by QuickBooks.

What do I mean by "simplified budgets"? Budgets are created based on sections. This means that:

  • It's easy to do job cost as your bills and employees
    • 10 seconds per bill to capture costs
    • 10 seconds per paycheck to track hours and costs

  • You will easily track your job cost with QuickBooks reports
    • Job Estimates Vs Actuals Summary show you at a glance where you stand
    • You will see the forest for the trees
    • Catch small issues before they become BIG job threatening problems

  • You will discover how easy it is

I'll tell you more about the system in a minute, but first...

Why Should You Listen to Me?

I had my first construction client in 1977. It wasn't that I was a contractor or specifically interested in construction, I had a good reputation and approached by someone that wanted me to develop software for his company. His name was Doug Nick's Book on AmazonAllen and his company was a large plastering and drywall company. When I say large, I'm talking millions of dollars in revenue in 1970's dollars. His company was involved in plastering the Moscone Center in San Francisco many years ago, as an example.

With one contractor "under my belt", I started looking for other contractors to do business with. From going on the road talking with contractors about my system I learned what they needed that was different from my original system. The system evolved over the years based on user input.

I created a system that ran on PCs, before the days of Windows. They were DOS machines and the program included everything a contractor needed to do business: Estimating, Payroll, Payables, Job Cost, Receivables, Financial Statements, everything.

One of the most important discoveries I made over the years talking with 1000s of contractors is that successful contractors were keeping track of their costs and adjusting their estimating when they found differences. A successful contractor is one that's been in business for years and is making money consistently on his or her jobs.

In 1994 I sold the original system to another company. When talking with contractors I heard a lot of "I'm using QuickBooks." That unleashed an idea.

After digging into QuickBooks I discovered there was an import function that that would allow me to import budgets. I figured an estimating program that would create budgets for job cost in QuickBooks had to be a winner. I created that program. I called it LiteningQuick Estimating. Back in 2001 Intuit (the makers of QuickBooks) didn't like the fact that I had "Quick" in the name of the program. They were helping me market the program, so I was happy to change the name to LiteningFast, which it remains to this day. That was over 4,172 clients and 7 versions ago.

Saving You Time... Estimating Quickly and Accurately

You will estimate more quickly for 4 primary reasons:

  • Everything is done by sections. Your item list for take offs is organized by sections. This means that you can find the items you're looking for quickly. That's because if you're taking off framing, for example, you're only going to see framing items. You're not going to see roofing items or foundation items, just framing items

  • You can create assemblies that include many individual items and that means with one click you've done the work of as many as 20 or 30 clicks. An example of an assembly for a 2X4 wall would include: Studs, Top & Bottom Plate, Drywall, Insulation, Exterior Sheeting, Tyvec, and so on

  • You can also create what I call templates. A template is all the items you need for a particular type of project. For example, if you do a lot of bathroom remodels, you can create a template for that. When you have a new project, just select the template, update the quantities, delete the items you don't need for this job and BAM! you're done

  • If you need to give your prospects different options for a project, the Copy Estimate function makes it easy. You can copy and save the estimate and modify it with the different options you want to present to your prospect. This will save you time and lot's of work. In addition, when you give your prospect options, you look a lot better than your rivals.

  • Would you like to have accurate estimates in less time?

Estimating Accuracy -
The Other Half of the Estimating Success Story

Estimating faster by itself, doesn't mean you estimate accurately. With The Contractor's Profit System with LiteningFast Estimate you not only estimate faster, you estimate accurately. Let me tell you why:

  • Once again Sections come into play. As you've read before, Sections organize your estimates. They also improve the accuracy of your estimates because it's easier to spot problems in your estimate.

    Since you're only looking at, say, roofing items when you are taking off and reviewing the Roofing Section it's easy to spot duplicate and/or missing items. You're viewing a few items in each logical section not 100s scattered in an estimate.

  • You can print a material list and send the list to your suppliers to get prices for the materials. In a matter of minutes you can update the prices in your estimate (and your database as well) so you have EXACT pricing for your estimate. No surprises
  • When you're tracking and reporting your costs in QuickBooks, you can easily hunt down any area that you have problems. Maybe current costs too low or too high. In either case you can correct your estimating so your prices are right on the next time you bid. You keep your estimates competitive
  • Are accurate estimates important to you?

Customizing the System to Fit YOU!

You probably do things somewhat differently than every other contractor. I've heard numerous different ways of doing things over the years. That's why the system is flexible and customizable.

Here's how:

  • You can change the Section list to suit your way of working by adding, deleting or changing the sequence to the way you want to do your take offs.

    The system comes with different sections built in: Our Default, CSI - Construction Standards Institute, NAHB - National Association of Homebuilders, and Electrical. You can add, change, and delete any of the section items in the list to fit your specific needs

  • The "Browse n' Build" catalog is 23,000+ items that you can use to build your customized take off Item List. Only huge contractors need 23,000 items in their database. The system allows you to pick and choose the items you use and skip all the ones you don't need. That means the database is customized to your specific needs. You can go back at any time and get more items from the Browse n' Build catalog as your needs change

  • Assemblies allow you to build common groups of items you estimate with. For example, a 2X4 exterior wall could have: Studs, Top and Bottom Plate, OSB Sheathing, Tyvek, Insulation and drywall. Assemblies are easy to build and fit your exact needs

  • You can add your own items to the take off item list in seconds. You may have items you use that aren't in the Browse n' Build catalog and you can add them in a few seconds, so the take off item list is specifically set up for you

  • You have numerous choices for the format of the estimate that you present to your prospect. You can display as much information or as little information as you wish. Include your notes, or not, Include individual line item prices, or just a grand total at the bottom of the estimate printout

Easy -
Easy to Use & Easy to Master

One of the major design concepts for The Contractor's Profit System with LiteningFast Estimating is that it has to be simple, easy to master, easy to use.

Here's why that's true:

  • Video Tutorials - everything in the system is covered with a video tutorial that takes you step-by-step through the process. We've found that our clients that spend a few minutes with the video tutorials get started 62% faster than those that don't watch the videos.

  • Get Started! manual - for those that prefer following written instructions the Get Started! tutorial will have you up and running in no time.

  • Point & Click takeoffs - doing take offs is a snap: Click on a section e.g. framing, click on an item, e.g. 2X4 Wall Framing, Enter a quantity, click Ok. That's it.

  • Update Budgets to QuickBooks with one click. Everything QuickBooks needs for the budget is automatically created. No extra work on your part

  • Do you want to get started with a system without spending weeks trying to learn it?

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