How to Estimate Electrical Work in 2024 (9 Simple Steps to Follow)

The electrical contracting business is highly dynamic and competitive. 

The market size of US electrical services has been valued at USD 100 Billion in the year 2020. It is all set to register a CAGR of 6% or more between 2021 and 2027.

In this cutting-edge competitive industry, it becomes difficult for electrical contractors to bid and win projects, especially for those who are starting their own electrical business.

So, what’s the solution?

Producing detailed and accurate estimates is the ultimate key to securing more jobs and ensuring profitability on electrical projects.

This comprehensive guide will walk you through 10 key steps to refine electrical estimation so that you start winning more bids in 2024.

9 Essential Steps to Estimate Electrical Work

As discussed above, the key to winning over crucial competitive projects is the efficient bidding process. And the key to creating the perfect electrical bid starts with an accurate estimate. 

Remember that your final price should satisfy the client and still keep your business afloat. You definitely shouldn’t bankrupt yourself trying to bid lower than your competition. This means that there are certain crucial factors you’d have to consider when calculating the cost of an electrical wiring job, be it residential or commercial.

Consider going through the following comprehensive guide to understand the nitty-gritty of accurate and competitive electrical estimation.

1. Bid the electrical jobs correctly

This isn’t a step in the estimation process, generally speaking. However, electrical contractors should be picky when selecting projects to bid on.

Haphazardly agreeing to every job that comes your way might get you in inappropriate trouble.

As an electrical contractor, you should never say “yes” to every job or client that comes your way. Understand your niche or area of expertise, and evaluate whether you’re best at industrial electrical projects, commercial projects, residential electrical jobs, or a mix of the three.

Each of these job types has a unique set of requirements that experienced or expert electrical contractors can fulfill, depending on the difficulty level. Thus, the first step to bidding on the right electrical job is to identify the scope of your specialties.

It is wise to stick to the projects you can handle. And as you gain experience, you can gradually expand your horizons.

2. Review the specific job requirements

Listed here are the few questions that you need to answer yourself first. 

• Where does the project stand in terms of its present electrical situation? 
• Are there any abnormalities or oversights? 
• What do customers expect from the new electrical work if you win the bid? 

Following answering the question, you have to analyze the project specifications carefully given in the request for proposal (RFP).

Unless you get the specifications right, you cannot know what type of work you’re expected to provide. And without that clarity, your estimates would suffer. You would end up underquoting or overestimating and eventually losing the bid in both cases.

In case of any doubts, or queries,  get clarification before continuing to the next step. 

Also, be sure to obtain approval in writing for these edits to avoid future disputes. The clearer you are about the specifications, the more precise your estimates will be.

3. Analyze the drawings

As an electrical contractor, you may receive drawings, graphics, and blueprints along with the request for proposal (RFPs) for a project. Make sure you study these visuals closely to get a clear sense of the work.

Plumbing, HVAC, and elevations are the areas that require close attention to detail.

However, if the blueprints are not provided, ensure that you ask for architectural images of the site to understand all the technical details, including working elevations and heights. 

What if the blueprints are unavoidably unavailable? In that case, arrange a walk-through or site visit to assess the scope of work.

4. Perform the material takeoff

Material takeoff acts as a type of electrical material price reference and is a significant component of the cost estimation procedure for many construction projects.

The line item of your material takeoff list varies from project to project. Some of the items to list in the material takeoff sheet are listed here: 

• Light fixtures
• Conduit
• Electrical wiring
• Switches
• Switchboards
• Circuit breakers
• Receptacles 
• Panels

A detailed breakdown of the necessary materials simplifies project execution and helps you make a near-accurate estimation of the total material cost.

5. Calculate labor and overhead costs

Once you’re clear on the scope of work as well as the material takeoff, it’s now time to assess the project’s labor and overhead requirements. 

• How many workers would you need on-field and off-field? 
• How much would you pay each of them? 
• What would be the pay rate and the method to calculate the rate as well? 

Finding answers to these questions is central to calculating the total expected labor cost of your electrical contracting job.

While some electricians prefer hourly wages, some workers charge an upfront fee for the entire project. 

Determine the total number of hours you think the project will take and multiply it by the sum of the wages. 

Don’t forget to keep a window open for accidental damage and overtime hours. That way, you would get a precise cost of labor, which would boost the credibility of your electrical estimate.

While some electricians prefer hourly wages, some workers charge an upfront fee for the entire project. Make a list of the hourly and upfront compensation, and add up both numbers. Ideally, you should have a list of electricians you typically call for large projects. If you don’t, ask around for the usual hiring price and use that to make your estimate.

Determine the total number of hours you think the project will take and multiply it by the sum of the wages. Don’t forget to keep a window open for accidental damage and overtime hours. That way, you would get a precise cost of labor, which would boost the credibility of your electrical estimate.

6. Create the electrical estimate

Now that you have all the essentials figured out—the project scope, labor hours, and material needs with their respective costs—it’s time to put them together in an estimate. You could use your previous estimate template or create one from scratch. Whichever way you choose, make sure it’s precise, itemized, and easy to understand.

Besides an electrical work pricing guide or template, you can also use electrical estimating software to create a cost estimate for any electrical work. These systems come with a range of estimating templates that are sleek, professional, and error-free. They also automate typical manual processes, so you can complete estimates in half the time and with less stress.

Reading an electrical price guide book can also help you estimate costs accurately without spending an extra penny.

7. Add profit margin and calculate markup

At the end of the day, you are running a business. And you have to make a profit to survive. Therefore, your estimates must include your profit margins as well as overhead costs.

Once you’re done summarizing the overall job cost, add your profit markup for each section. However, make sure the markup is in line with the standard rates in your local area. Remember to factor business overhead expenses like insurance and transportation costs into the estimate.

The general overhead percentage tends to range between 12% and 20% of your business’s sales costs. It may vary based on the size and scale of your operations. So, give it careful thought before adding the final numbers to the estimate.

8. Build your proposal

More often than not, electrical estimates make up a small part of the larger proposal that you submit for the bidding process. Thus, once you have the final cost price of the electrical work ready, build a professional proposal.

It should detail every component your estimate includes and those it excludes as well. You should also outline the terms and conditions for the successful completion of the project. Keep the language simple and similar to the project specification document. Doing all this saves both parties from future conflicts, builds trust, and helps you start on the right note.

9. Verify each item twice

Before you hit the send button to submit the final estimate to your prospective client, review your proposal thoroughly. Ensure there are no mistakes, from material and labor costs to the final project quote.

Recalculate the numbers. Double-check client details, including their name and address. Correct any mistakes you come across, and ask a trusted person to proofread the document for you. When you’re done, hand over the final proposal and keep a copy for your records.

Now the hard part is over, and the wait begins. If you’re lucky, your potential client will pick your proposal from the myriad of bids littering their inbox. But don’t fret; you can’t go wrong with this detailed guide. All you have to do is follow the steps above to nail those bids and spike your business’s bottom line.

How to Estimate Electrical Work More Accurately and Easily

Bidding electrical estimates is a tough job. There are multiple tasks involved in electrical estimating. For instance:

• Creating professional personalized electrical estimates
• Quickly bid and win on electrical estimates
• Attaching contracts electronically and securely
• Electronically signing the estimates for a streamlined workflow
• Accepting upfront deposits to secure your business
• Getting instant estimate approvals from clients
• Instantly converting estimates into invoices to get paid faster

What if we told you there’s a way to do it all in one place?

Introducing InvoiceOwl, your efficient estimating solution designed to streamline your workflow and save you valuable time. 

InvoiceOwl helps you centralize multiple tasks under one roof. Here’s what it offers: 

• Tailor estimates to match your brand.
• Instantly create standard and quick bids to never miss a chance on winning jobs.
• Export estimates in multiple file formats.
• Save estimates and client data for recurring use.
• Track the estimate status whether approved, rejected, or pending.
• Accept upfront payment deposits and lock your deals.
• Manage up to five businesses under a single InvoiceOwl account.
• Get automated syncing of your estimates with QuickBooks Online.

So, stop struggling with manual processes and outdated tools. 

Try InvoiceOwl today and experience the future of electrical estimating!

Why Estimating is Important?

Ever walk into a home improvement project with a vague idea of cost and end up paying double?

That’s why getting a good estimate is crucial, not just for electricians, but for anyone tackling a project, big or small.

Here’s why estimating matters:

• Avoids surprises: Knowing the ballpark cost upfront helps you budget effectively and avoid unexpected expenses that derail your plans.
• Keeps everyone on the same page: A clear estimate sets realistic expectations for both you and the contractor, preventing misunderstandings and ensuring a smooth project flow.
• Helps make informed decisions: With a solid estimate, you can compare different options, weigh the pros and cons, and choose the best solution for your needs and budget.

Estimating empowers you to take control of your project and achieve a successful outcome!

Conclusion

Creating an electrical estimate is a difficult process. You have to make sure there are no loopholes or unreasonable prices that could cost you the project. In this blog, we’ve explored a simple checklist of steps to implement when estimating the total project cost of a job.

Feel free to adapt these steps to suit the standard operations of your business. These steps would help structure your estimating operations and speed up the entire bidding process.

But an electrical estimating software can truly streamline and speed up your estimating process. If you’re spending a lot more time drafting an estimate, InvoiceOwl can help you generate quick estimates with easily customizable predesigned templates.

Are you ready to improve your estimating process?

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