It has been said several times but working with a GC is not a bad idea the first couple of times out. Here is what I have found:
There are three general types of cost estimates, each with corresponding degree of accuracy:
1. The “guess†method: (i.e. “All bathrooms cost $5,000.â€)
2. The “square footage†method: (i.e. “Remodeling costs are $60 a square foot, the job is 500SF, so the price is $30,000.â€)
3. The “unit-based†method: (i.e. “To replace a toilet the bowl costs $45 and the tank costs $50. The installation of the tank and bowl will take a plumber 1 hour at a rate of $32/hr. Therefore, the cost of material and labor for adding a toilet would be $127.†)
The guess(timation) and square footage methods are the most widely-used methods of estimation. They are fast and require less skill. Unfortunately, they are also the least accurate.
When used, these methods introduce too many variables in the areas of material, labor, and timing into your projects and deals. That costs you and your customers a lot of money.
But let’s not discount the guesstimation and square footage methods altogether. If you do use these types of estimates, use them for qualifying a deal but never for bidding or negotiating a price.
Unit-based estimation on the other hand, is the least used and most accurate method. So if accuracy matters, then why is it that unit-based estimates are not the standard?
Up until now, producing an estimate that itemizes material costs (unit by unit), labor costs (demolition, removal, and installation) and project timing costs (don’t forget those holding costs); was extremely time-consuming, required expert knowledge, and was very costly.
Regardless of time, knowledge and cost; the results of the unit-based method are a very satisfactory tool for determining economic decisions based on price and generate accountability due to the supporting information available for review.
Put in the simplest of terms, if you are doing deals; please use the unit-based method.
Let me know if your interested in learning more about the unit-based method. I have some cool stuff that makes it so simple and cheap it will blow your mind, but I have rambled on enough already.
Best of luck to all!