Every residential builder has to provide estimates. It’s just part of the job.
A good estimate allows you to plan and budget for what materials and labour you need ahead of the work, as well as project your own revenue.
But estimation can be a very painful part of running a building company. With ongoing inflation and rapidly changing material costs, estimating can be time-consuming and confusing – and getting it wrong can slash your profits.
If you’re transitioning from a trade and just starting your own company, you need to get the estimating process right or risk getting things off the ground at all.
And even if you already run an established firm, you may be struggling with inaccuracy and searching for a better, more exact method.
Either way, getting precise estimations can help you cut costs in your business and ensure better profits and sustained growth.
Your three estimating options
There are three main ways to create estimates for residential building projects:
- In-house staff
- Software
- Outsourcing
Each of these options has pros and cons:
| Pros | Cons | |
|---|---|---|
| IN-HOUSE | Control: You have more authority over the estimating process | Cost: Hiring and training in-house staff can be expensive – and if you don’t win a project, you still have to pay for staff |
| Development: You can build your own team of estimators who are familiar with your company's specific needs | Time: It can be time-consuming to develop and maintain your own estimating process and software | |
| Customisation: You can develop and use your own estimating software and tools | Complexity: You may not have the expertise or resources necessary to handle complicated projects. | |
| SOFTWARE | Savings: Software can save you time and money in the long run | Cost: Estimating software and licensing can be expensive |
| Accuracy: You may produce more precise estimates, resulting in better profits | Limitations: Finding a product that meets all your needs and integrates with your existing software tools can be challenging | |
| Analysis: The right software can help you to track your progress and identify potential problems | Training: Staff will need training – and time – to use it; it’s not a complete solution on its own | |
| OUTSOURCING | Affordability: Outsourcing can be far more cost-effective than hiring and training your own in-house team | Authority: You may lose some control over the estimating process, especially if the team is overseas |
| Expertise: You gain access to a wider range of skills and experience, reducing the chances of errors | Risk: You may struggle to find a trustworthy firm for a long-term partnership | |
| Expansion: You can accept and prepare for more complex projects that you might not otherwise be able to handle in-house, resulting in more opportunities and better profit margins | Trust: You may have to share sensitive information with the outsourcing company | |
Additional considerations
Here are some additional factors to consider when choosing between software, in-house and outsourced estimating:
- Project size and complexity: If you have a lot of complex projects, it may be more efficient either to outsource or use estimating software because you can take advantage of a wider range of knowledge and/or technology.
- Budget: If you have limited funds to hire staff, outsourcing or software may be a more cost-effective option.
- Expertise: If you don’t have estimating experience and are struggling to recruit estimators, then it can be easier to outsource your estimating to an experienced team.
In a nutshell:
- In-house estimation gives you the greatest control, but also the greatest costs
- Software saves some expense, but the output is only as strong as the team using it
- Outsourcing is your least expensive option, but you may lose some control
Choosing the right fit
Ultimately, the best way to choose between these three main options is to consider your specific needs and requirements.
Outsourcing to a trusted partner who knows how you build and is basically an extension of your team could be a great option – doing away with the need for expensive software or staffing, but still having the control you’re looking for.
If you’re searching for a trustworthy, experienced partner in residential building estimation, talk to Vision 2 Estimating. With 30 years of construction expertise we provide outsourced estimating services to residential builders using unique technology tools, so you can get on with running your construction business.