Job Cost Estimating

The purpose for estimating is to determine the cost of a job in advance. By estimating the actual cost, as accurately as possible, you can make an intelligent bid on a job and set parameters for factors such as

• The profit you expect to earn on the job

• How long the job will take to complete

• The quantity and types of employees and subcontractors necessary to complete the work

• What parts and supplies you are required to have on hand before the work begins

By preparing a detailed estimate, you can judge your company's capability to complete the job on schedule.

Included in your estimate should be the following types of expenses:

• Employee labor The number of employees, types of skills needed, cost of labor, and amount of time required to complete the job

• Subcontracted labor The same information as with employee labor

• Materials The types of materials and quantity of each, length of time required to obtain or produce materials, and cost of materials

• Tools The types of tools and equipment required to perform the job and the cost of any tools or equipment not already owned by the company or subcontractors

• Overhead The cost of indirect expenses such as administrative costs, facility expense, employee benefits, and wear and tear on equipment and tools