Applicants of bid proposals must provide an estimate of the job they are bidding on, based on their professional assessment. An estimate is a calculation of time and resources that itemizes the cost of the project. The customer reviews the estimate along with the rest of the bidder's application, and compares it against other applicants' estimates. Bidders must understand how to develop an effective and comprehensive estimate.
Consider the job as it is described in the bidding application, and outline all of the steps that will need to be taken in order to complete the project. Create a work breakdown structure to keep the tasks organized. This will help you visualize the project in case you overlook a step.
Use the work breakdown structure to determine approximately how much time the project will take from start to finish. Be realistic with the time frame by leaving some room for potential setbacks, such as a shortage of resources or uncooperative weather. Create a time-line schedule for the project as part of your final estimate.
Study the time line and all of the project's tasks to identify the fixed and variable costs of the job. Include equipment, machines, vehicles, tools, paint and labor as fixed costs. Leave room for financial adjustments for variable costs, such as the cost of your time if the job requires you to travel.
Create a list on a spreadsheet of each expense. Insert the estimated cost of each expense next to the item in a separate column. Break down the total expense by week, month, quarter or year, depending on the anticipated length of the project. Use a calculator to reach a grand total at the bottom of the spreadsheet to represent your final figure for your bid. Rely on the itemized expenses to justify how you arrived at your final figure.
Review the estimate thoroughly and make sure that all of your calculations are correct. Fix any mathematical errors, and submit the estimate with your bid application.
An estimate is not set in stone, and it can be changed or negotiated at any time between the customer and the contractor. As such, it is important to develop a contract to create a binding agreement among parties, and to establish a payment methodology or schedule, so that both entities know when payments are due.
You may need to conduct an onsite visit to take dimensions of a work area for an accurate estimate.
2016 Salary Information for Cost Estimators
Cost estimators earned a median annual salary of $61,790 in 2016, according to the U.S. Bureau of Labor Statistics. On the low end, cost estimators earned a 25th percentile salary of $47,330, meaning 75 percent earned more than this amount. The 75th percentile salary is $80,570, meaning 25 percent earn more. In 2016, 217,900 people were employed in the U.S. as cost estimators.
Kyra Sheahan has been a writer for various publications since 2008. Her work has been featured in "The Desert Leaf" and "Kentucky Doc Magazine," covering health and wellness, environmental conservatism and DIY crafts. Sheahan holds an M.B.A. with an emphasis in finance.