If It's Only an Estimate, Why Do We Have to be So Accurate?
From the standpoint of wood floor manufacturers, production requirements should closely reflect supply and demand. The manufacturers continuously adjust their projections of demand for their products. Even so, hardwood flooring products that were considered burning hot at the time they traveled down the production line, face the prospect of cold storage in a warehouse facility when consumer demand for them wanes unexpectedly.
That said, the art of estimating arguably assumes its purest form in the hands of the dealer/contractor. In theory, manufacturers' and/or distributors' excess inventory of particular products should be temporary and subject to swift reduction through corrective planning. Unfortunately, the margin for error is far narrower for the stand-alone independent contractor. When it comes to the estimating and bidding process, small oversights or miscalculations on the dealer's or contractor's part may constitute the difference between a profit or a loss on the job.
The magnitude of loss due to a poor estimate depends largely on the size of the jobsite and the hardwood flooring requirements. But in a marketplace as competitive as ours, precise bidding is critical regardless of the job's size. It's highly unlikely, given these competitive pressures, that you'll be able to recover any significant loss by spreading the cost out over future jobs. Let's face it, maintaining an acceptable bottom line is hard enough and the marketplace won't tolerate extra fluff in a bid.
Minimizing improperly prepared estimates begins with the actual take-off or pre-job site inspection. It's imperative that you dot all of your I's and cross all our your T's when you finalize an estimate. By all means, allow yourself adequate time to consider all the variables and double-check your calculations. Running your estimate by a second set of eyes would be a wise safeguard, not an admission of incompetence.
Mistakes can be exceptionally costly when the bidding involves multiple dwellings. For instance, say there is a new subdivision that your company was recently awarded. In your original, accepted bid, the requirements for hardwood flooring installation were as follows: entryway, hall, powder room, and great room.
Unfortunately, your final estimate neglected to include the powder room specified by the builder, and that area requires an additional 40 square feet of hardwood. The entire project consists of 100 homes to be constructed over two years. Based on this situation, your current installed price of $7.50 per square foot equates to a $300 loss of revenue per unit, or $30,000 for the whole project. Little mistakes can add up fast.
The waste factor, an unavoidable component of any hardwood installation, is another important variable to consider when estimating. Failure to pass on this cost in the bid will require the dealer/contractor to absorb an expense that rightfully should be borne by the builder.
For example, a typical parallel installation requires a 5% waste factor. Diagonal installations require 10% and a herringbone design can require a waste factor as large as 15%. Be forewarned that there's a fine line between compiling a competitive bid and creating an unwanted shortage.
In addition to the needed hardwood flooring materials, the required transitions between adjacent floor coverings need to be provided. If the dealer's operation is multifaceted, meaning he deals with a variety of flooring types, this wouldn't present much of a problem. But when the contractor is a dedicated specialist in hardwood flooring alone, a working relationship must be established with the other floor covering company that's working on the project. In addition to the transitions, installation sundries - such as fasteners and adhesives - are related expenses that demand realistic computations of consumption and/or spread rates.
The last but certainly not least important variable in estimating is the production rate of your installers. Labor, if improperly calculated, will quickly drain your profit on the job. Experienced installers understand the importance of properly mixing quantity and quality.
Wood or Wood Knot realizes that estimating is rather like a game of darts. Gauging the distance to the target, and accurately understanding its size, will help you improve your aim. With experience, it probably won't take long before you start hitting bull's eyes. So, start throwing.