We all know that there’s no such thing as a sure thing in life. You could pay for the most accurate, budget-friendly cost estimate on the planet and still not win that construction project for reasons completely outside of your control.
So with that being said, why bother paying for a professionally-created cost estimate in the first place?
If you lose out to a competing contractor, isn’t that essentially throwing money down the drain?
The short answer is ‘yes.’
The longer answer is this:
You won’t win every job you tender for regardless of whether you pay for a cost estimating service or decide to go it alone.
In fact, you’re even less likely to win work without the help of an experienced professional.
Let me explain.
Win More Work With Accurate and Effective Estimates
Did you know that many contractors who produce their own estimates often overlook potential savings for both themselves and their clients?
As a result, one of two things typically happens.
The client chooses another contractor who put together a more cost-effective tender;
The contractor wins the job but, because they didn’t identify those all-important savings, they fail to make the kind of profits they could have enjoyed had a professional been there to help them out.
That’s not the only way that doing your own cost estimates could actually cost you more money than you’d save.
Over the years, I’ve helped scores of contractors recover from a financial setback after a simple miscalculation in the estimating process cost them money once construction actually got underway.
This is more common than you might think, which is why my company always used a two-level process to create estimates, with each one undergoing at least two thorough checks before it was sent on to the client.
First, one of my team would go over every detail with the proverbial fine toothcomb. Then, I’d take an extra look myself and check it again to ensure that there are no mistakes and no expensive surprises once our clients got on site.
OK, so you may not win every job you tender for, but by hiring a professional cost estimator, the ones you do win will produce greater revenues than if you took the DIY approach.
Ultimately, this means that revenues generated not only make up for the few contracts you lost out on, but also leave you with a sizable profit in the process.
In other words, the professional cost estimating service will inevitably pay for itself several times over when you do win.
Play to Win
Take a moment and imagine that you’re the manager of a football team.
Naturally, the aim of the game is to score as much as possible, but everybody knows that you’re not going to score every single time you grab the ball.
Still, wouldn’t you rather have the best players on your team to ensure that you get the ball over the line more often than not?
Think of your cost estimator as your star quarterback.
They can’t guarantee to score 100% of the time, but they’ll certainly have a far greater success rate than a team whose quarterback has less skill and experience.
Of course, you could always run onto the field and try to score touchdowns yourself, but you’re still not going to land as many as the quarterback who has been training his whole life for that exact purpose.
Besides, running onto the field yourself only takes time away from managing the rest of your team, and that brings me nicely to my next point.
Time is Money
Even if you don’t pay for a professional estimate, the estimate you create yourself is far from free. Rather, it costs you something even more important than money itself:
Your precious time.
We all have only 24 hours in any given day. Is the small amount of money that you’ll save by not outsourcing your estimates worth the large number of invaluable hours you’ll lose by doing it yourself?
In most cases, probably not, especially if your time is best spent on-site, using your own unique skills to guarantee quality work for your clients.
What it all comes down to is this:
Generating a Greater Return on Your Investment
Whether you decide to order a professional cost or create it yourself, you’re going to be making an investment in the future of your business, be it an investment of time or money.
As such, your main objective should be to generate the absolute maximum R.O.I (Return on Investment) possible, and that means winning contracts that generate more than enough revenue to make up for the ones you didn’t win.
Of course, there’s always the possibility of paying an in-house estimator to carry out the work for you, but in my experience, most contractors don’t tender for enough work to make that a worthwhile investment.
Meanwhile, outsourcing your estimates is like having all the benefits of an in-house cost consultant with none of the overheads or logistical challenges that come with having them on the payroll.