Accurate estimates start with accurate take-offs. Brian Seymour looks at how electrical contractors need to manage the variables in any given job.

Estimating is one of the most difficult jobs in electrical contracting and one of the most important. The profitable outcome of a project is based on the accuracy of the estimate.

Sure, there are many excellent estimating programs available that can be great timesavers, but these tools are only as good as the user. Without the skills to evaluate those variables that are not shown on the plans, these programs are no more than an up-market calculator.

The prime objective for starting a contracting business is to make a profit, not just to win tenders or prestige jobs. The estimator’s job is to secure works the company can complete at a price that will return a profit. However, to win a competitive tender, the estimator will have to base their assessment on the understanding the project will be professionally managed on site.

In estimating costs, many uncertainty factors that will occur during the implementation of construction projects. Risk is something that can never be avoided in human activity, including the activities of project development and construction projects.

The skilled estimator will have factored into the estimate the many variables which make up the complete tender over and above the base labour and material. These variables need to be highlighted in the estimate to enable the site staff, (project manager/supervisor/foreman) to follow the reasoning.

The good news is you can manage these variables if you factor them into your estimate and the ultimate layout of the job. Failure to do so, however, may result in a monetary loss and loss of credibility and reputation. Some of the most common project variables that the estimator needs to consider:

• Every construction project comes with risks and conducting a risk assessment must be part of your estimating process. This assists your decision-making on whether or not they submit a tender and a good estimator can identify a project that is too risky.
• Understand the scope of work – do not include anything not specified in your contract. There needs to be a clearly defined scope of work and any items that are incomplete or unclear should be addressed before starting the take-off.
• Attend pre-tender meetings, this is an opportunity to thoroughly assess and plan to mitigate risks associated with the installation, including evaluation of permits and any other special situations that need to be resolved before or during construction. No two job sites are identical and unknown site conditions can cause unexpected, and costly, issues.
• Record all communication with the architect/engineer/owner.
• Labour requirements, there are several variables in play when it comes to estimating labour costs including the number of available workers for the project, their experience level, and productivity.
• Pricing materials in a competitive market, requires having a good relationship with your suppliers. Negotiate the best price for supplier material packages and ensure all materials are complete, i.e., lamps included with all light fittings. Establishing relationships with your suppliers is an advantage, they can help you lock in accurate prices but also can also guide you to alternative materials that may be a better deal for this tender.
• Material availability, are the materials in stock or are the materials or products needed faster than the manufacturer’s turn-around time?
• Sub-contractor’s costs, as above, ensure they have the scope of work for their contractual obligations. Be sure to review their estimates and proposals thoroughly. Make sure they understand exactly what aspects of the projects you are wanting them to price and complete. This will avoid duplication of work in their estimates that are being covered by you or another subcontractor. Have them confirm they have the labour capacity to meet the schedule. A defaulting subby can wipe out your profit margin.
• Alternatives may need to be offered when material availability will not meet the time schedule. An alternative price is defined as the amount clearly stipulated by the tenderer for an alternative material or system and can be stated as an addition, a deduction or no change to the base bid price.
• Material storage, is it available on-site or to supply your own? Is it close to the workface or do you need to supply transport? Do you have to pay for storage space? Do you have to pay lifting costs or is it the builder’s responsibility?
• Pre-fabricating materials on projects with multiple pattern installations of cable looms, conduit bending, cut-to-length grid conduits, cable tray configuration or specifically designed brackets and fixings. Cost savings include reduced labour cost, improved productivity, less wasted material and reduced material handling.
• Tools and equipment hire costs can be a key consideration on a major project. Would it be more economical to purchase or hire? Does your company do enough of this type of work to warrant purchasing? If hired, will the site staff be directed to keep the period of hire to a minimum? There have been many projects that have had hired winches, scaffolding, scissor lifts and the like still being paid for months after their use and the hire company will not give a discount for non-use.
• Personnel transport for sites on several hectares and multiple buildings, multi-stories or inaccessible workfaces. Do we need to supply site vehicles, lifts or hoists, watercraft or helicopters? Whilst any of these may need to be used to get labour and materials to the workface, the estimator must assess the most economical method and time requirement. Labour productivity decreases as the job size and complexity increase. The wrong assessment here could result in a financial disaster.
• Confined spaces are another variable the estimator must recognise and identify. Confined space is not just small apertures, these spaces may include underground vaults, tanks, storage bins, pits and silos and other similar areas. Also include hazardous atmospheres, oxygen-deficient, flammable atmospheres, toxic atmospheres, high-decibel areas, moving equipment and extreme temperatures.
• Non-productive time is one of the most difficult to assess with so many activities that contribute to this loss. The daily routine including unpacking and packing storing tools and materials, shifting, and locating ladders and scaffolding. Material handling, moving delivered materials to job boxes/stores, and checking delivered materials for completeness or damage. Companies that use labour tracking costs on every project and can assess the percentage of non-productive time, adopt the following formula:

NPH = LH * (1-LE/100)

(NPH is the Non-Productive Hours, LH is the total number of labour hours, LE is the labour efficiency)

• Overtime is a variable difficult to assess and the estimator needs to study the construction schedule to calculate where the peak workforce will occur. Can we guarantee enough labour during this period, or will it require overtime to meet the schedule? When overtime is introduced to the project, not only are the labour costs higher but productivity is reduced.
• Weather, a most variable factor to affect working conditions if the job includes an appreciable proportion of outdoor installation such as external underground cabling, outdoor lighting, aerials, mains feeders etc. The estimator needs as much information as is available for the area on weather patterns for the time of year this work is scheduled to proceed.
• Temperature conditions, studies have shown that extreme temperatures cause workers to concentrate on their discomfort rather than on the job to be performed, with an increase in accidents, deterioration in workmanship, and lower labour productivity. Extremely freezing conditions such as cool rooms or freezers, cause a significant reduction in labour productivity because of the need for frequent warm-up breaks.
• Hot temperatures cause a decrease in labour productivity due to difficulty handling material, equipment, and tools. With elevated temperatures, the workforce becomes easily fatigued.
• Stacked trades occur when too many subcontractors have been scheduled to work on a given area of a project, simultaneously. While this overscheduling can be adjusted on a new construction site, the same cannot be achieved on a critical refurbishment. Jobs where the shut-down time is crucial, such as a manufacturing plant change-over or a hospital operating theatre. These works are usually worked around the clock and therefore stacking is unavoidable. The estimator must make allowances for working with limited space and restricted access to resources, which all cause distraction and loss of productivity.
• Occupied premises – working within an open trading business, an operational medical facility or a manufacturing plant in production is sometimes unavoidable. In occupied spaces, much of the work must be done ‘out-of-hours’ which will require shift work. Not only will your estimate need to make allowance for the shift loading cost, but there are also ‘clean up’ hours at the end of the shift before the building is occupied the next day.
• High-security projects (national security offices, defence departments, banks, laboratories, prisons) have plenty of non-productive time. It often requires a body and toolbox search on entering and leaving and security personnel to accompany you to the workface. If you need to return to your vehicle for a misplaced tool or accessory, the entire process is repeated.
• Demolition works are more than a case of ripping out and throwing on a heap. Does this waste include asbestos or contaminated soil? Will either of these works require a licenced or trained specialist? The question the estimator needs to know, is where does all the material go after an installation has been demolished? The answer to that question can vary, but one thing is universal—no matter where it goes, it will cost you money to get it there and to dump it.
• Obtaining competitive sub-contractors’ prices for the removal and disposal of redundant materials is the easy part. Estimating the time required to remove an existing installation and transfer it to a collection area can be quite formidable. Before you quote a potential demolition project, understand what you need to perform the forecasted work safely and legally.
• Planning tool and equipment availability, the estimator should explore the opportunity of sharing equipment rental (trenching, lifting etc.) with other sub-contractors to minimise costs. The estimator needs to create a project schedule that indicates which resources are required and when. A resource allocation plan helps project the peak times when these resources are required, and assessments can be made on costs.
• Tender Terms: It is prudent for estimators to ensure there is a comprehensive force majeure clause included with the tender. Some examples of catastrophic events identified in force majeure clauses, including but not limited to; acts of war, terrorist attacks, epidemics, pandemics (such as COVID-19 and future events of a similar nature), death, labour strikes, riots, crime, or property theft, acts of God, natural disasters (like blizzards, earthquakes or hurricanes), or acts of terrorism, to name a few. The key is whether the act is “reasonably unforeseeable”, causing a party to be incapable of performing their obligations under the contract. It has the effect of suspending or terminating a party’s obligation under the contract, which in other circumstances, would amount to a breach of contract or claim by the other party for liquidated damages due to delays.
• It is important to note, there is a specific procedure to be followed when relying on a such clause in the first instance. One would be to provide formal notice to the other party.
• Authority Fees and charges should also be addressed in the tender terms to limit unknown expenses, especially where there is an hourly rate quoted without an estimated quantity.

An electrical installation has many variables, and it is these variables that can have an impact on the way the estimator evaluates the work and ultimately its costs. The process and methods selected, or the strategy to implement the work, will influence the price substantially. The main components of the estimate are measurement, quantity, and cost, with labour being the greatest variable. It is of great advantage to the estimator to have knowledge of the proposed installation team and their skills.

A competent fully developed estimate document, with accurately estimated time means that project planning can be successfully laid out and project deadlines are met. This provides a guide to the project manager’s evaluation of the installation team and the processes required to complete the job.

Disclaimer: The information provided in this article does not and is not intended to constitute legal advice instead all information and content is for general informational purposes only. The reader should consult their own legal experts for specific contractual advice.