Electrical contractors and electricians need special skills to do the work they do. But knowing how to do electrical work is just one part of it. You also need to know how to bid on electrical jobs, plus run the administrative aspects of your business like accounting and bookkeeping workflows, job costing, and payroll.
A lot goes into creating an electrical estimate, so here are some practical tips you can use to bid on electrical jobs.
Understanding How Electrical Contractor Bidding Works
Bidding electrical jobs involves taking several factors into account. Even if the job is similar to others you’ve done in the past, you can’t just assume it will be the same, as all jobs have variables.
To properly bid on electrical jobs, you have to visit the site to get a realistic view of what will be expected and what will be necessary to do it. You have also to factor in any permits or licenses needed, as well as account for unexpected interruptions such as weather problems or change orders.
From there, you’ll create an estimate of the cost of materials and labor, and submit your bid. Once your bid is accepted by the client or contractor, you’ll need to practice good labor management to ensure your electrical contract doesn’t go over budget. Pay rate reports are powerful ways to utilize technology to help control labor costs.
How to Estimate Electrical Jobs Like a Pro
Preparing for accurate estimates is at the heart of creating an estimate that gets accepted. Preparing includes triple-checking every number and calculation for accuracy, breaking down the costs, adjusting them as needed, and presenting the estimate in an attractive way.
Often, knowing how to price an electrical job is as important as the estimate itself.
Preparing for Accurate Estimates
Preparing an accurate estimate includes verifying the costs of both materials, labor, and overhead. When estimating electrical work, you can work with large numbers, so accuracy is crucial. One decimal point in the wrong place can result in a very unexpected delivery.
The best way to create and manage estimates is by using field service management software. Especially when there are multiple people accessing the same information, construction management software can help avoid miscommunication and unforced errors.
Gathering the information accurately is the best way to ensure your estimate is prepared for the next step, which is breaking down the costs.
Breakdown Costs
If you break down the costs separately, you’re much more likely to find small errors that can grow into future problems. Electrical contractors can calculate costs either by the “drop”, by the hour, or by the square foot.
Charging by the Drop
Commercial electrical jobs can often be estimated using the average cost per drop. This method works well when the RFP requires additions to an existing service, like a computer network.
Commercial electrical jobs are often estimated by the drop, as the infrastructure is usually already in place. However, estimating a commercial electrical job by the drop must also allow for the unexpected, like a routing problem that increases material costs by 20%.
The requirements will be different when estimating residential electrical work, as the electrical code requirements will change. The project will likely require more time, but you won’t be working in plenum spaces either.
Charging By the Hour
Small repairs, inspections, and deliverables (like drawings and materials lists) are usually easier to break down (and charge for) by the hour. Since the project may not deliver tangibles, breaking down the costs per hour helps the client establish a budget for the work.
For estimating purposes, historical data is often handy. If a similar past project was successful and profitable, many of the same elements will be needed for the current estimate as well.
To calculate labor costs, a project manager will have a tested time frame from the last project, so the only requirement is to make sure the labor rate is acceptable for the region.
Charging By the Square Foot
Infrastructure project costs are typically easier to calculate accurately because an economy of scale kicks in. When few variables (like old wiring) are in the way the project costs become easier to predict accurately.
Especially if you are completing the project from start to finish (as opposed to running just a backbone, for example), breaking costs down by the square foot allows for volume purchasing.
In turn, you’ll have negotiating power with vendors, helping reduce the project's costs on the front end.
Adjust Project-Specific Variables
After you’ve calculated the basic project costs, the next step is to adjust the variables that make the project unique. When you calculate labor costs, be sure the labor rates are competitive for the region. Include per diems if required, as well as travel expenses that will be reimbursed.
Also, allow for the cost of things like tool rentals and special materials the project will require. The job remains the same, but as the additional costs go up, profitability goes down.
Review and Present
Successful electrical estimators understand that how you present an estimate to a potential client can provide them with a sense of security, or a red flag. Reviewing and presenting an estimate in a clear, honest, and respectful manner goes a long way toward gaining the client’s acceptance.
If your electrical estimate is clear, concise, and accurate, presenting it is easy. Most clients appreciate honesty above all else because they are relying on your expertise. The most successful electrical estimators present their estimates in a way that reflects their dedication to quality, honesty, and expertise.
8 Tips to Help You Bid Your Next Electrical Job
As with any contracting job, bidding doesn’t necessarily mean you’ll get the job. However, there are good practices to follow that will help increase the chances of landing the job.
1. Market Yourself and Your Company
A lot of contractors don’t consider marketing to be a priority, especially if they are small companies. However, it’s worth it to invest in marketing your brand, so you stay in front of peoples’ minds when electrical jobs come up.
Be sure your company vehicles, documents, uniforms, or other company equipment and materials boast your logo and company name. You can begin small by using social media ads or hiring a marketing company to help market your services locally.
Marketing your electrical business won’t guarantee you’ll win the bids, but it will get you noticed, so you’re able to submit more proposals, rather than relying on word-of-mouth.
2. Choose the Right Projects
It may be tempting to bid on a high-paying job outside the scope of your previous work. Before you do that, be realistic. Of course, if you want to grow your electrical business, you’ll need to increase the sizes and scopes of the jobs you do. But consider what the job entails, whether you have realistic access to the necessary materials and labor, and determine if you have the qualifications to do the job right.
In addition to your own capabilities and resources, be sure the client is the type of client you want to work for. Try to get a feel for their attitude towards the project and ensure it’s a client you feel confident you can satisfy. Jobs with unfavorable clients are frequently not worth the time and effort to win over.
3. Understand the Requirements of the Project
Visit the jobsite and examine the true requirements necessary to complete it. Particularly with electrical work, there could be unknown challenges to the job, such as poor pre-existing wiring that would require more work than a simple wiring job.
Talk with stakeholders, and find out what their expectations are as well, as this will help you develop a realistic understanding of what your requirements will be.
4. Create a Realistic Estimate Considering Labor Cost, Material Cost, Etc.
As the supply chain changes frequently, you’ll need to verify costs for labor, materials, and any equipment needed for each job. If you have accurate job costing reports, you can review these to get a more realistic idea of the job costs.
Create a professional-looking estimate that includes line items that clearly explain where you’ve gotten your numbers. Include any electrical components, such as wire, boxes, hardware, switches, etc. so your client knows what they are paying for.
5. Add Overhead and Profit to Your Proposal
It helps to have meticulous records and reports to review previous overhead costs and profits. Different types of jobs will have different markup formulas. Still, for small jobs, in the tens of thousands of dollar range, the average overhead for electrical contractors is 13 to 20 percent. Your markup is going to be your profit plus your overhead, so for smaller jobs, try to keep your markup closer to the 20 percent range.
6. Submit a Professional Proposal
When you are confident your bid is where you want it to be, make sure you have it completed on company stationery when submitting it. Even more professional, is to submit your proposal electronically, which allows your clients to review them faster and, in many cases, accept them immediately.
Always review your proposals before sending them to triple-check that everything is covered, complete, and accurate.
7. Respond to Questions With Your Proposal
Often, you’ll receive questions or requests regarding your electrical bids. Be prepared to answer these questions in an honest, thoughtful, and professional manner. Try to be prompt when responding, but don’t be reactionary. Rather, consider the questions, research potential alternatives to changes requested, and try to understand why the questions are being asked.
Sometimes clients can be difficult to deal with but taking time to understand their concerns will help you communicate with them better, and make them feel more confident in your responses.
8. Be Open to Adapting
All jobs are different, even if they require the same skill sets. If you bid on a job and win the bid, be attentive to what you did right, what worked, and how the job goes. Conversely, if you submit your bid and it’s declined, try to understand why. Did you bid too much? Did you not offer enough information?
Once you have a better understanding of the things that work and things that could use improvement, you can move forward more confidently when creating future electrical bids.
Best Software Tools for Electrical Contractors
When you are trying to grow your electrical contracting business, it’s helpful to know the most effective ways to create winning bids. You need to have the right tools, just as with any contractor, and these will provide additional help on how to price electrical work.
There are a lot of software solutions available to help you grow your electrical business. To learn more, read our article, Best Software Tools for Electrical Contractors.
