Some may look at the role of the estimator and think it’s quite easy to do (some even give it a go themselves). Brian Seymor explains why it’s not just a rough guess and needs attention.

Using the Oxford dictionary as a reference, it declares the meaning of estimate as “a judgement that you make without having the exact details or figures about the size, amount, cost, etc. of something. to provide/obtain an estimate”. Similar to these quotes:

• The police estimate that about 25,000 will attend the protest rally.
• The Victorian Government estimates about 4,000 Koalas exist in the eucalyptus plantations.

If the above two examples were underestimated by 20%, with only 20,000 protesters turning up or only 3,200 Koalas left, it would not affect anyone financially. However, if the estimator left $200K out of a $1m electrical installation, it may mean bankruptcy.

Therefore, providing an estimate for the cost of an electrical installation under tender conditions is far more complex than this. Apart from requiring an accurate count and measurement of all the installation materials and labour required to complete the project, the estimator needs to consider various costs to ensure they maintain profitability and avoid financial losses. This often involves a combination of available data, historical information, expert judgment and mathematical or statistical techniques.

Key costs that need to be addressed:

• The take-off: Which is the count and measure of all materials and accessories is the most time-consuming part of the estimate. This needs to be accurate, and every omission minimised to mitigate economic loss, such as:
  • Failure to check documents, with missing drawings or pages missing from the specification
  • Omissions in Scope of Work
  • Reduced drawings, causing inaccuracy in lineal take-off
  • Multiple or incorrect scales on drawings
  • Short cuts, such as square meterage take-off
  • Using averages instead of count and measure activities
  • Failure to check off items as they are counted/measured
• The labour hours: No matter how sophisticated the software program, or the Electrical Estimator’s Labour Unit Manual, the estimator must be aware of the myriad of hours that are expended in non-installation tasks:
  • Time to get to the workface:
    • multi-storey buildings
    • large industrial sites
    • distance site sheds to building
    • multiple security points to access
    • no on-site parking
  • Material handling – before any item of material is put in place, it must be managed to some extent. It must be moved from delivery to the site shed, lock-up box or vehicle and distributed to the point of installation.

Lighting fitting boxes must be broken open and cartons disposed of, as do all other accessories that arrive packaged. Therefore, there needs to be an allowance for these tasks. Furthermore, there is extra material handling caused by unusual conditions which vary from job to job.

Multi-storey buildings requiring lifting, highly secure sites that require security inspections of all materials before entering the building, as an example.

Material handling is also recognised to be the single most common cause of non-productive time on the job site, it is important to select a supplier that is a suitable partner that offers services such as staged deliveries to the workface. Choosing a supplier based on material price only, may in fact cost more in material handling costs.

• Supervisory hours – vary, dependant on the type of building, working conditions, location of the site, and experience of the installation team.
• Concrete pours – poured in one slab, or checkerboard style where the labour for conduits in the slab hours increase considerably.
• Staging – when the construction is broken into stages and requires relocating tools and materials between areas, which can be very time consuming. The contract drawings will usually indicate specific areas and the completion dates these areas must be completed.
• Weather – working in extreme heat or cold and if a substantial proportion of the job is outdoors (undergrounds, aerials, solar panels etc.) there needs to be an allowance.
• Confined space – Apart from requiring more time to work in a difficult environment, they may also require permits for areas such as.
  • Flammable – include liquefied petroleum gas (LPG), paints, varnishes and lacquers.
  • Mining – requiring permits and specialised training.
  • Hazardous areas – gas, vapour, dust, fibres etc.
  • Physical hazards – additional time working in high decibel areas, moving equipment/machinery, slippery surfaces or potential of collapse.
  • Ventilation installation – time required to install and remove temporary equipment.
• Testing and inspection are compulsory and must be attended, but must be in perspective, it is not good enough to allow “a couple of hours.” Apart from the mandatory tests and consideration to the type of installation, there is a significant difference between a new residential installation and a high-tech laboratory, a high voltage or hazardous areas and the testing and inspection times could be considerable.
• Working “out-of-hours” when a site must be shut down, due to main switchboard replacement, or safety reasons.

• Material purchasing: As above, it is important to select a supplier that offers these services. Managing material purchasing and tracking costs is essential to be able to monitor the costs with the estimate. Loyalty with suppliers will also assist with discounts and often allow more negotiating options when multiple jobs are running together.
• Hire equipment: Few contractors own heavy construction equipment and therefore need to hire these items. Whether it is scissor-lifts, earth-moving equipment, traffic boards, or specialised tools, the estimator must calculate the expected period of hire. Equipment hiring costs can be costly if not monitored. The estimator needs to highlight the expected hiring period, and numerous contractors have wasted many dollars through forgetting to return hire equipment as soon as the task is completed.
• Schedule: The specification will show the number of calendar days to the expected completion of the project. This is vital information for the estimator to assess team size, supervision, equipment rental and availability of materials within the time frame. Late completion can raise liquidation damages this is a nominated figure in the contract to provide a penalty for non-performance or breach of contract.
• Profit: a reasonable profit is based on an accurate estimate, every dollar left out of the estimate is a loss of profit. This cannot be left as a regular percentage markup when every project has variable overhead and individual risks. Identify potential risks that could affect the project’s profitability, such as technological, regulatory or market risks.
• Be selective: not every job is suitable for your business or opportunity to make an acceptable profit and consideration paid to these items.
  • Insufficient tender period, if there is not the time or resources to give due attention to the estimate, it is far better to forego submitting a price than making costly mistakes.
  • Large field of tenderers lessens the odds of winning a profitable project.
  • Location can have an adverse effect on the project, especially when labour is not local and transport of tools, equipment and materials requires specialised effort. Here are several challenges.
    • Increased costs: non-local labour often comes with higher costs, including accommodation, travel and living away expenses.
    • Logistic challenges: managing transportation of materials and equipment to remote locations can be complex. It may require specialised transport methods such as heavy-duty vehicles or even air transport for remote sites.
    • Delays: in project execution can occur due to the time it takes to transport to the site.
    • Productivity: non-local labour may not be familiar with the local conditions and may take time to adapt. This can lead to reduced productivity in the initial stages of the project.

Confidence in the tender is crucial for the contractor on tender day. To achieve this confidence, it is important for the estimator to use accurate data, consider all the variables, and apply sound judgement in preparing the estimate.

Tender day should be unhurried, the estimator should schedule the time for tender day to be free for the final details and tender submission. All the tender forms, schedules, permits, and licences should be prepared prior to the final day. Expecting an extension of time cannot be relied on unless several tenderers have applied due to difficulty in obtaining specified prices from vendors.

The tender then can be submitted with confidence.