How to Estimate Construction Jobs

To estimate construction jobs, break down every part of the project, materials, labor, equipment, and overhead, so your bid is both competitive and profitable. A good estimate goes beyond a simple number; it shows clients exactly where their money is going, builds trust, and protects your margins.

Review the Project Scope in Detail

Start by carefully reviewing project plans, drawings, and client specifications. Understanding the scope helps avoid costly mistakes later.

Questions to ask during this step:

• What type of project is it (remodel, new build, commercial, residential)?
• What materials are required and in what quantities?
• What labor skills are needed and how many workers?
• Are there any special permits, inspections, or compliance requirements?

Example: For a 2,000 sq. ft. home addition, you’ll need to account for foundation, framing, roofing, electrical, plumbing, and finishing work.

Break Down Material Costs

List all materials needed for the project and price them accurately. Always check with multiple suppliers for the best rates and account for delivery costs.

Tips:

• Add 5–10% to cover waste or unexpected needs.
• Consider fluctuations in market prices (e.g., lumber, steel, or concrete).
• Separate specialty materials (e.g., custom windows) from standard ones.

Example Table for Material Costs:

Calculate Labor Costs

Labor often accounts for 30–50% of total project costs, so accuracy is key.

Steps to calculate labor:

1. List each trade (carpenters, electricians, plumbers, painters, etc.).
2. Estimate the number of hours each trade will spend on the job.
3. Multiply hours by the hourly rate (including taxes and benefits).

Example:

• Carpenters: 2 workers × 80 hrs × $40/hr = $6,400
• Electrician: 1 worker × 40 hrs × $50/hr = $2,000
• Painter: 1 worker × 30 hrs × $30/hr = $900
  Total Labor = $9,300

Include Equipment and Subcontractor Costs

If you’re renting equipment or hiring subcontractors, include these costs in your estimate.

Examples:

• Excavator rental: $500/day × 5 days = $2,500
• Scaffolding rental: $1,200 for 2 weeks
• Subcontracted HVAC installation: $7,500

Always request written quotes from subcontractors to lock in accurate pricing.

Add Overhead Costs

Overhead includes business expenses not directly tied to a specific job but necessary for operations.

Examples of overhead:

• Insurance
• Office expenses
• Salaries of administrative staff
• Vehicle maintenance and fuel

A common method is to apply an overhead percentage (e.g., 10–20%) of direct costs.

Factor in Profit Margin

Profit margin ensures your business remains sustainable. Typically, contractors add 10–20% profit depending on project size, complexity, and competition.

Formula: (Total Costs + Overhead) × Profit % = Final Price

Example: ($25,000 + $5,000) × 15% = $30,000

Review and Adjust the Estimate

Before submitting, double-check your numbers for accuracy. Consider potential risks, such as weather delays, material shortages, or labor changes, and adjust the contingency percentage (5–10%) accordingly.

Pro Tip: Use construction estimating software or spreadsheets to streamline this process and reduce human error.

Present the Estimate Professionally

Clients appreciate clear, transparent estimates. Make your document easy to read by including:

• Project summary
• Itemized breakdown of costs
• Timeline and milestones
• Payment terms
• Your business details and logo

Example Layout:

• Total Estimate: $45,000
• Payment Schedule: 30% upfront, 40% halfway, 30% upon completion
• Estimated Duration: 6 weeks

Bonus Tip: Create Free Estimates with DepositFix

With DepositFix, you don’t need to rely on complicated tools or spreadsheets to prepare professional estimates. The free estimate generator lets contractors and service-based businesses quickly create free estimates that can be shared directly with customers.

Here’s what you can do with DepositFix:

• Build detailed estimates in minutes by entering project costs for labor, materials, and services.
• Customize layouts and branding so your estimates reflect your company’s professional image.
• Send estimates directly to clients through email or shareable links.
• Convert approved estimates into invoices instantly, saving time and ensuring a smooth transition from quoting to payment.
• Offer flexible payment options once the estimate is approved, including credit card and ACH.

Using DepositFix’s free estimate generator helps you present clear, professional proposals while speeding up the approval-to-payment process.