A unit-price estimating system is essential to efficient estimating. But to develop each unit price, you need to do a stick estimate first, though you need to do it once for each component in your database. The starting point—and the subject of this article—is a stick estimating form I designed that serves as a checklist of materials and labor steps required to complete a task. I also use it to convert labor hours into labor dollars and calculate material costs—for instance, the cost of studs per linear foot of wall from the purchase price of a single 2x4x8.
I used this form for each new task in my unit-price database, and I use it for every new task I have never done before. Because my experiences with any task are well-documented on this form, I can easily add it to my unit-pricing database as a new unit. Applied to any task, this form becomes a building block for a unit-price system.
Here, I begin by illustrating how the stick-method form works. I've put together an example that lists all the cost for replacing 100 square feet of decking. As you read through the example, keep the following points in mind:
United of Measure (UOM). To be useful, the UOM used for the estimate should make it easy to think through the project. In the case of decking, one square foot may be the ideal unit of measure, but the best way to approach this project is on a slightly larger scale. I've based the estimate in this example on a 100-square-foot decking job. If I need a square-foot price, I can divide the worksheet results by 100.
Labor. The amount of time allotted to each task is the most difficult item on this worksheet to forecast. Not only is every company different, but every worker has different abilities. Initially, you could use estimating manuals for these numbers, but your goal should be to use labor figures based on the actual results of completed projects. This involves good labor tracking and regular updating of labor items in your estimates to reflect your crew's productivity.
Crew type and size. Match your field crew's abilities to the requirements of the job. In a small company, it might be best to enter specific employees by name; for a larger company, the main thing is to decide how many people will be needed at what level of skill for each task.
Cost of crew/hr. Add up the average hourly wages of crew members. In this example, a $50/hr. total is the sum of 30/hr. for the average carpenter and $20/hr. for the average helper.
Labor burden. An employee's hourly wage is only part of the cost of labor. You also need to include the employer's Social Security contribution (FICA), state and federal unemployment taxes (SUTA and FUTA), workers' comp insurance, and any benefits your company provides, such as health care, vacations, tool allowance, and uniforms. The total of these additional costs is called "labor burden" and is usually calculated as a percentage of the hourly wage.
Bill of materials. This is a simple quantity takeoff based on the "Estimating UOM," which in this case is 100 square feet. The "Purchase UOM" matches the units in which each material line items is typically purchased—for example, nails by the box or decking by a particular length.
Subcontractors. If you have a subcontractor quote, you won't need to convert it to the project UOM. But many contractors estimate with flat rates without asking trade contractors for pricing. If that's the case, make sure to use the "Quantity" column to convert to the project UOM—multiplying by 100, for example, to convert a square-foot price.
Notes Use this field to explain anything that could be useful if someone asks, "Where did you come up with that?" For example, if you inflated labor estimates to reflect difficult site access, you can note it here to jog your memory.
This is only a beginning, but it's a critical foundation. In a later article, I go into more detail about creating a full-fledged unit-price estimating system.
