Management Articles — Estimating Software

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How To Select Computer Estimating Software

Introduction

Today's computers come in a wide range of capabilities, speeds, sizes, and prices. Their use is common in all types of businesses for estimating, billing, word processing, accounting, and a wide variety of other purposes. Advances in personal computer design and software has improved the estimating process to permit increased bid accuracy, improved project management and the bottom line.

Computerized Estimating

A leading electrical contracting publication conducted a national survey of electrical contractors and learned that the number one function that computers were used by electrical contractors was estimating and bid preparation. This was considered more important than general ledger, accounts payable, payroll, or job costing. It comes as no surprise that the second choice is material price updating.

Advantages and Benefits

A computer assisted estimate more complete and more accurate than manual estimating and can be completed in less than one-fourth the time as compared to a manual estimate. This translates into additional time for other important functions such as, more time with the family, more time to better organize and manage your company, or time to estimate additional jobs for business expansion.

Estimating

A computer does thousands of mathematical computations in a fraction of a second, it never makes an error, it never gets tired or careless, and it never forgets the information that is stored. Computer estimating will reduce your estimating time and cost because you no longer need to price, labor, extend, or total material or labor.

Reduce Material Cost

Once the take-off is completed and the take-off quantities have been entered into the computer, a report of all the materials required for the job can be printed and broken down by job phase. This list can be submitted to multiple suppliers in order to get competitive prices and fixed delivery dates. In addition you can reduce the storage requirements for material, waste and theft.

Labor Savings

A computer estimate permits the electricians on the job to have a labor budget to insure that the job gets completed timely. Material will be on the job when needed and idle time and inventory handling will be reduced.

Reduces Overhead

Overhead will be decreased because of reduced estimating costs, inventory storage space cost, and reduce financing costs. You'll also improve billing, expedite collections and increase cash flow.

Increase Business Volume

The saving in estimating time will permit you to estimate more jobs to expand your business volume.

Other Benefits

A computer estimate provides you with increased confidence and security that your bid price is correct, and you'll communicate a higher level of professionalism. This all adds up to improved competitiveness with increased profit margins.

Can I Afford It?

In today's world, it's highly unlikely that you can be competitive if you estimate without a computer. The question is not can you afford a computer, but, can you afford not to use a computer to assist in your estimates. To determine the dollars required in sales to cover the purchase of computer estimating software, use the following formula:

Sales to Cover Overhead Expense = Estimating System/Gross Profit Percent

Example Let's assume the following: You have a three-person shop and you're thinking of purchasing a computer estimating system. Cost including software and training is $6,000, and your accountant indicates that your gross profit is 30%. Answer: Sales = $6,000/.3, = $20,000

To pay for the software you only need to get $20,000 in additional sales over the life of the software!

Frequently Asked Questions Must I be a trained computer operator?

No. Most software vendors assume that you have no computer experience and designed their software to be easy to learn and use. All you need to do is follow the commands on the screen to get the results you want. In fact, after a brief training period, a clerical employee can use the take-off and complete the estimate for you. Leaving you more free time to start another bid, or devote yourself to other responsibilities.

Must I still do the take-off?

Yes, however, with a computer estimating system, you have two methods of performing the take-off. The manual method or the direct input method.

Manual Take-off - This method requires two steps. The first step is the manual take-off where you pencil the information on to paper. The second step is the input of the take-off into the computer.

Direct Take-off - With the proper computer estimating system, you can input the take-off directly into the computer. Saving one step which permits the estimate to be completed quicker and more accurately.

How much time can I save?

It depends on the software, the estimator, and the complexity of the job. As the estimator becomes more familiar with the system, less time is required. The more complicated the job, the more time saved. As a general rule, you should be able to complete the estimate in 1/4th the time it would take you to estimate the job manually.

How will my bid accuracy be improved?

A computer doesn't make mistakes when it is tired or overworked. It doesn't forget the data it has stored when distractions occur. It doesn't omit steps in calculation and it doesn't make errors in overlooking taxes, overhead, profit.

Will my estimates be as complete?

Yes, with more information to increase your efficiency and impress your customers. As well as improved profit margins.

Must I change my methods of estimating?

No, the estimating system should be flexible, it adapts to your estimating style, but don't expect a computer estimating software program to fit all of your needs.

Can I realistically expect to increase profits?

Without question. You won't lose a job because of an error, nor will your bid be too low through error or omission. Getting more jobs, reducing estimating time and financing costs, and improved project management translate into a brighter profit picture.

How big must I be to derive any benefit?

Size doesn't matter. Any contractor who estimates, needs to have a computer to increase business efficiency. Many small companies, where the owner or manager does the estimating, can use computerized estimating to free more time for administration, selling, and project management. The professional appearance of a computerized estimate gives the impression of significant in size and standing, and will help increase the percentage of successful bids.

How long will it take me to learn how to use a computer for estimating?

It depend on your experience with computers and estimating. Those that have lots of experience will be estimating in a matter of days and even hours, without attending a training class! Those with less experience require a training class and a few weeks to get comfortable with the process.

Training And Support

Even the most carefully designed software requires training, service, support and technical assistance. These requirements are even more important when the software is highly specialized, and requires special skills, experience, and background in the field for which the software was designed. Specialized software systems should be purchased directly from the software developer, who is equipped to explain the product, provide the training and support if you run into difficulty.

Note If you attempt to use your software without proper training, you may never learn all of the valuable features that are designed within the program.

Pricing Services

Many companies have contracted with pricing services to save office time, and to gain assurance they have current material prices. If you do decide to use a pricing service, be sure you select one whose prices are broken down by geographical area, so that they will more accurately reflect those where your job is located.

Software Selection

Don't expect a computer estimating software program to fit all of your needs. However, a quality estimating system should not require you to make any major adjustments in your estimate style. As a matter of fact the computer assisted estimate should considerably improve your estimating technique. Regardless of how well an estimating system is designed, don't expect optimum results without complete training. Along the same lines, find out what kind of technical support is available and the annual technical support cost. Also determine the cost of new versions and upgrades.

Before Purchasing

Some things to consider before purchasing:

Simple to Use

The software should be logical, intuitive, simple to use and easy to understand. The commands must be precise and there should not be any danger of losing data. There should be an on screen audit trail so that you can review and modify the take-off at any time.

Portability

Estimating software must have the capability to be use it at the office, at home, or even in your car with a laptop or possibly a palmtop computer. Flexibility The software should have the ability to factor labor or material cost for every line of the take-off to reflect the diverse installation conditions. You should be able to view or change anything in the estimate at any point without the requirement of a printer.

Reports

The software should print a wide variety of reports that furnish information to the client, as well information for project management decisions.

How Much Should It Cost?

The cost of computerizing a business is dependent upon whether or not you already have a computer. Make your decision on the value you receive for your investment. Be sure you can count on long-range service and close personal attention. A quality estimating and management software system generally cost between $4,000 and $8,000.

Who Sells Estimating Software?

Because of the technical nature of electrical estimating, you'll not find estimating software on the shelves of computer stores. Only a trained person in electrical contracting can adequately explain how computerized estimating works, and the many ways it will benefit you. Find out about as much as you can about the software vendor. How long have they been in the business of selling software? How many customers do they have? What other software products do they sell? Don't get too excited, take your time to investigate the different vendors and make a selection based on facts, not opinions. If possible, see if you can have a trial period to try the software. Naturally this will cost you a few hundred dollars.

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