Every contractor knows the feeling of winning a bid only to watch the margin disappear by the time the job closes out. More often than not, the problem didn’t start on the jobsite — it started when the estimate was being built.
Accurate estimating is one of the most valuable skills in construction, and it’s one that separates contractors who consistently win profitable work from those who are constantly playing catch-up.
We talked with Dave Chapman, Estimating Edge’s sales director, to draw on what he hears from contractors every day and the practices that make the difference.
Key Takeaways
- Never start estimating before you fully understand the project scope
- Labor drives costs more than any other variable — build your rates from real performance data
- Review closed jobs to determine area of improvement for future bids
- Detailed job codes, verified specs and current pricing protect your margin from bid to closeout
Establish the Full Scope Before Building Your Estimate
It’s one of the most common issues Dave hears about — and the consequences don’t show up until the job is already underway, when fixing them is far more expensive.
The pressure to turn around an estimate quickly is real but starting the estimate before the project scope is fully understood is one of the most common ways money gets left on the table.
Scope gaps don’t announce themselves. They hide in specification footnotes, phasing requirements and coordination details that only become visible with a thorough read.
Before starting the estimate:
- Confirm what’s included and excluded
- Identify any requirements that affect material selection
- Flag ambiguities in the drawings that could become change orders later
The time spent here is far less costly than discovering a missed scope item once work is already underway.
Understand That Labor Defines the Cost of the Job
When Dave talks with contractors about where estimates go wrong, labor is almost always part of the answer. It’s the variable with the most exposure, and it’s sometimes overlooked.
Material costs get significant attention in the estimating process, but labor is where most jobs are actually won or lost.
It’s the most consequential line item and the hardest to price accurately because the factors that drive it — crew experience, site conditions and installation complexity — vary from project to project.
Published production rates provide a starting point, but they can’t account for the specific characteristics and experience of your workforce, your markets or your typical project types. That complexity is exactly why Dave points contractors back to their own data.
“Labor is the piece everyone struggles with because it depends on so many variables that are specific to your project, crew, trade and market,” Dave said. “Really it comes down to analyzing past performance and adjusting your labor estimates accordingly.”
Analyze Closed Jobs to Improve Bids
Every completed project contains information that can sharpen the next bid. A few things to compare across projects include:
- Actual production compared to the original estimate
- Tasks that took more time than expected and the conditions that contributed to that
- Areas where the crew outperformed the budget
What Dave hears most often is that the data exists, it’s just not making it back into the estimating process. Jobs close out, the team moves on and the lessons stay buried in the paperwork.
“What I notice with the contractors who improve year over year is that they’re going back and looking at how jobs performed before they move onto the next bid,” Dave stated. “Even something simple, like checking whether a task took the crew longer than expected and why, can change how they price that same task on the next job.”
Contractors who regularly review this information create a compounding advantage because they’re always improving the accuracy of their bids.
Their labor assumptions become more precise with each project. Their bids reflect real-world performance rather than approximations or gut feelings.
Over time, that consistency shows up in their margins.
Create Different Job Codes to Track Production
Production tracking is only useful to the degree that it’s specific to the job at hand.
A single labor line item tells you whether a job came in over or under budget — it doesn’t tell you where or why.
“That distinction matters, because if you don’t know what went wrong, you’re liable to repeat it on the next bid,” Dave said. “That’s why I tell contractors to break labor into task-level job codes — framing, hanging, finishing, tracked separately instead of lumped into one category. Once you do that, the patterns start to show up, and so does a real competitive advantage. You start walking into every estimate already knowing where your risk is.”
Confirm Material Pricing Before Every Estimate
A scenario Dave encounters often: a contractor builds an estimate using pricing from a few months back, wins the bid and doesn’t realize the gap until materials start invoicing. By then, the contract is signed and the margin is already gone.
Material costs fluctuate, and not always in predictable ways. Pricing that was accurate several months ago may no longer reflect current market conditions, and building an estimate on outdated numbers means absorbing the difference out of your margin once the job is underway.
This gap between what a material costs at bid time and what is actually costs when it’s purchased is often referred to as escalation. Many estimators build an escalation markup into their bid — alongside taxes and other standard adjustments — specifically to account for this kind of price movement between when you submit the bid and when you purchase the materials.
Verifying current pricing with suppliers — or investing in an estimating tool that offers real-time supplier updates — is the best way to reduce exposure to cost variance.
Verify Material Specifications and Quantities
Accurate takeoffs require more than correct quantities — they require the right materials. Ordering to the wrong specification creates a chain of downstream problems:
- Reordering materials
- Installation delays
- Rework
- Strained relationships with project stakeholders
During the estimating process, verify specifications directly against the project drawings and specs rather than relying on assumptions carried over from similar jobs.
A discrepancy identified during estimating is a quick correction.
The same discrepancy identified mid-installation is a costly one.
Put the Right Tools Behind Your Process
The estimating tips above are only as effective as the system you use to execute them.
Tracking labor production, maintaining current pricing databases, managing detailed job codes and comparing estimates to actuals all require a level of organization that’s difficult to maintain in spreadsheets.
The EDGE® is an all-in-one construction takeoff and estimating solution that gives estimating teams the tools to:
- Build more accurate bids
- Track production data
- Dynamically adjust labor rates based on the complexity of the tasks at hand
- Connect estimate performance directly to project outcomes
For contractors serious about improving their estimating process, it’s worth a closer look. Speak with an expert today to learn more.
