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Remodelling Estimating
How not to lose your shirt on the next bid

With the recent slowdown in the housing market, more and more home builders are taking on remodelling projects. And why not? Projects are usually smaller, take less time, and can sometimes have higher profit margins. However, preparing an estimate for a smaller remodelling project is a much different process than estimating the costs of a new home. A fumbled estimate can result in you paying the client to complete the project. 
We talk to a lot of builders who often find that it took longer than planned to demolish a wall in a kitchen, or that replacing a countertop required more substantial work to be done on the cabinets. Does any of this sound familiar? Hopefully not, but a lot of builders are encountering these and similar problems. Given the large number of bricks and sticks involved in a typical remodelling job, these issues are understandable and expected when estimating new types of projects. Fortunately, many of them can be avoided by implementing effective cost estimating software designed for residential remodelling firms. Let's take a look at how a relatively small investment can have a profound impact on your business.

Knowing Costs Instead of Guessing
Too many remodellers rely on past experience and personal knowledge to estimate the costs of a project. With material and labour prices constantly changing, these "guesses" often become just that. Theoretically, it would be possible to call your building materials supplier and inquire about the cost of every material right before starting a project. But what about labour? If you're not totally sure, you'd probably just bid a fair amount and hope that the mark-up is enough to keep you making money.
Fortunately, you can eliminate a lot of this guesswork with cost estimating software. Today's remodelling estimating programs come with cost databases that have up-to-date pricing information on thousands of construction materials. These databases track pricing trends and costs from different building suppliers. They also track the going labour rates for different regions, helping you account for the fact that labour downtown will cost more than out in the suburbs. A thorough and up-to-date cost database is the foundation of an effective estimating program, and the best way to ensure that your bids are based on fact instead of memory.

Pre-built Templates
Most estimating programs come packaged with a number of templates that help you generate bids, in minutes, for typical projects such as new additions, bathroom and kitchen renovations, and window replacements. By selecting the type of project that one is bidding on - a bathroom remodel, for example - the program automatically generates a list of materials needed to complete a typical job. From there, you can adjust the quantities to reflect the specific job and be well on your way to generating a bid, already hours ahead of your peers who do it all by hand.
Time savings are not the only benefits to be gained by using pre-built templates. When the program generates a thorough list of necessary materials, the chances of forgetting a key component are almost entirely eliminated. This reinforcement of estimating best practices saves you the pain of confessing to the homeowner that a mission-critical aspect of the job was left out of the original bid. It will also help you bid on different types of projects more confidently.

Raising the Bar on Professionalism
After walking the user through the steps of creating an estimate, a good program sends all of the bid data directly into a proposal. The proposal contains lines for every material to be used for the job, including their associated quantities and costs. Some systems even let you insert a company logo, add your own text throughout the document, and present a detailed payment schedule.

We all know how tough the remodelling business is. The balance between winning the bid and maintaining profitability is notoriously hard to strike, especially when the market is slow. So instead of underbidding to make sure you get the job and then figuring out later that you lost money, pick up a professional remodelling estimating program. You'll be amazed that it won't cost an arm and a leg to prevent yourself from losing your shirt on the next job.

Austin Merritt is vice-president of Construction Software Advice, a Web site that helps home builders and remodelers find effective software for their businesses. He can be reached at www.softwareadvice.com/construction or by e-mail.

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