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Strategies for better estimates

     Creating an estimate requires you to think through the job in detail. Break an estimate down into its basic components or tasks. Then, to save time, set up templates of preset tasks for typical jobs so that you won't have to rethink every step every time. Templates of typical tasks prevent you from forgetting key elements or steps that can be costly to absorb if they aren't itemized for the client.

     Unfortunately, estimating takes a lot of time. A final estimate can't be created without calling vendors for quotes and carefully determining the time needed to do the work. However, you don't have to create the estimates from scratch every time since repetitive work like this lends itself to automation.

Don't forget the past

     Save hundreds of hours of unbillable time with a system that allows you to quickly review past jobs and create a ballpark price for the client. Having detailed information about specific job types and their costs easily available, lets you determine whether a given project is even within your clients budget--without picking up the phone to a single vendor.

     Since costs can fluctuate over time, be sure to date estimates and specify an expiration. You may also use a revision number for the estimate to keep track of which version was last submitted for approval.

     A contingency for minor overruns will prepare the client for a slightly higher amount without having to revise and reapprove the estimate for minor changes or unforeseen costs. Show a 5% to 10% contingency amount in case some costs run a little over the original quote. The extra amount also prevents you from having to absorb extra costs incurred on the client's behalf--extra costs that eat into your profit.

How much choice?

     Before you can begin a job, it is common to provide two or more estimate choices depending on the final specifications required by the client.

     An automated system should let you keep all estimates on line so that as soon as one is selected you can immediately open the job and begin work. Sometimes a previous estimate option becomes the final estimate so you want to keep all original variations handy.
It is very convenient if your software allows you to easily merge the cost information against the estimate changes while still keeping all the estimate variations available for reference.

Change orders are essential

     If the original job specifications change once work has begun, make up change orders for the revisions and present these to the client for approval. Any changes that result in additional costs can then be readily added to the billing. Revisions made to the estimate at this point can be noted by indicating a revision number on the estimate itself.

     Determine where you can cut if the estimate is for more than you think you can charge for the job or it's over the client's budget. But, don't cut hours unless you really think you can do the job in less time. For every hour you work that goes unbilled, you're working for free.

The complexity of your estimate depends on you, your client, and the job. The more you communicate to your client through the estimate, the less likely it is that he will be surprised with your work or the bill that you present. One simple way to achieve this is to compose your estimate in the same style as the invoice.

Good estimates achieve goals

     Happy clients and healthy profits are the aim of every agency. Planning ahead--and using clear estimates--goes along way towards achieving those goals.