ESTIMATING ERRORS THAT REDUCE CONSTRUCTION MARGIN, FIVE SPECIFIC MISTAKES.
The five estimating errors that most consistently destroy project margin share one thing: they're invisible at bid time. The overhead rate looks right. The labor burden multiplier is what it has always been. The general conditions number is what got used last time. The subcontract markup is standard. Nobody looks at any of it critically, because the estimate template hasn't been updated. The loss is fixed before the first crew day, and the post mortem at closeout can measure it but can't get it back.
None of these five are estimating skill problems. They're data problems. The estimator is doing correct math on numbers somebody wrote down years ago, and correct math on stale inputs gives you a confident wrong answer. That's why the fix isn't a better estimator. It's a bid template rebuilt from current cost every year: overhead recalculated from this year's fixed costs, burden pulled from the last 12 months of payroll, and unit costs taken from jobs you already finished. Then the estimate stops being a guess with a decimal point in it.
WHAT IT MEANS.
An estimating error is a wrong assumption built into the bid that sets a margin loss before the first crew day.
Estimating accuracy gets fixed by building the data that makes an accurate estimate possible, not by asking the estimator to be more careful. That means documented unit costs from completed projects, an overhead rate recalculated every year, and a general conditions checklist that catches every site cost before the bid goes out the door.
WHAT GETS BUILT INTO THE BID.
Overhead underbidding, last year's rate on this year's cost structure
The overhead rate in a bid should match what it costs to operate the business today, not last year's rate, not the rate from three years ago when the company was smaller, and not the rate a competitor mentioned at an association meeting. A contractor who grew from $2M to $4M and added two PMs, a truck, and an office manager without recalculating is bidding at 11% when the true rate is 17%. Every bid submitted at 11% leaves 6 points of overhead unrecovered. On a $400,000 project that's $24,000 the job will never produce.
Labor burden assumption outdated or applied wrong
Most estimators use a labor burden multiplier, something like 1.30, 1.35, or 1.42, against base wages to get fully burdened labor cost. When that multiplier is stale the estimate is wrong on every labor line in the bid. Workers comp rates change at renewal, health insurance goes up every year, and new hires move the average burden composition. A multiplier that was right two years ago can understate today's burden by 5 to 8 points. On a labor heavy project with $280,000 in base labor, a 6 point understatement is $16,800 of unrecovered labor cost.
Mobilization and general conditions estimated at zero or at a minimum
Mobilization cost covers equipment transport, site setup, temporary utilities, and first week overhead. General conditions covers the site office, porta potties, dumpsters, safety signage, and cleanup. Both get underestimated routinely because they feel like small items next to the core scope. On a 5 month $700,000 project, true general conditions are 2% to 5% of contract value, so $14,000 to $35,000. When the estimate allows $4,000, month one uses up the whole budget and every month of site overhead after that comes out of project margin.
Subcontractor markup too thin for the coordination and the risk
When you sub out scope like hauling, concrete, or surveying, the subcontract cost in your estimate has to include a markup for coordination overhead, contract risk, and the admin cost of managing that relationship. A 5% markup on subcontracted scope that comes with meaningful schedule or performance risk isn't enough. If the sub fails, performs badly, or generates back charges, all of that flows to you as the prime. The markup should reflect the risk you're taking, not just the cost of cutting the check.
WHAT IT LOOKS LIKE IN DOLLARS.
A fixed price contract on a project that will last 18 to 24 months holds material and labor price risk for the whole duration. Concrete moves, steel moves, and labor rates in a competitive market move mid contract when crews can get more somewhere else. An estimate submitted today for a project that starts in 9 months and lasts 18 covers 27 months of price exposure with nothing set aside for it. The standard fix is a 2% to 5% escalation allowance on material heavy scope wherever the duration goes past 12 months.
WHAT AN ACCURATE ESTIMATE REQUIRES.
Before bid season, the overhead rate gets recalculated from current fixed costs and the bid template gets updated with it. That's one afternoon a year against 6 points of margin on every job you bid, which is the best return on an afternoon available to a contractor.
Actual payroll data from the last 12 months gets pulled and the true burden rate gets calculated by classification. The bid template gets updated with those rates. Doing it by classification rather than as one blended number is what keeps the labor heavy bids honest.
A standard checklist of every site cost category gets applied to every project, and no line stays at zero without somebody making a conscious decision to leave it there. The checklist is what stops mobilization and site overhead from being the thing nobody remembered.
Markup on subcontracted scope gets set by risk level in a written policy and applied the same way every time, rather than negotiated case by case at bid time. Consistency is the point. A policy applied unevenly is the same as no policy.
The most accurate estimates get built from documented historical unit costs, meaning what your specific crew achieves on the specific work type. Unit cost gets tracked from every completed project and added to the estimate template every year. Over time the estimate gets better every cycle, because it's built from what happened instead of what somebody assumed.
FLAT MONTHLY FEE. NO SURPRISES.
Three tiers, priced by your trailing twelve month revenue. Which one you're in depends on how much of the work you want off your desk. No hourly billing. No payroll. The one-time onboarding fee is right here in the table.
| Last 12 months revenue | Monthly fee | One-time onboarding |
|---|---|---|
| Under $1M | $1,900 to $3,300 | $1,000 |
| $1M to $3.5M | $2,600 to $5,300 | $1,500 |
| $3.5M to $6.5M | $3,800 to $8,300 | $3,000 |
| $6.5M to $9.5M | $5,100 to $11,800 | $4,500 |
| $9.5M to $12.5M | $6,100 to $14,900 | $6,000 |
| $12.5M to $15.5M | $7,400 to $17,650 | $7,500 |
| $15.5M to $18.5M | $9,400 to $22,400 | $9,000 |
| $18.5M+ | Quoted individually | Quoted individually |
The onboarding fee covers migrating your books back to the start of your last taxable year and getting you fully operational in 60 days. It's billed once, with your first invoice. It's the same for all three tiers. Your first month is prorated, and your monthly engagement starts on the first of the first full month.
Range reflects the three tiers below. Which one you're in depends on how much of the work you want off your desk. No payroll. No hidden line items. The onboarding fee is right here in the table.
You stop guessing.
You get the CFO work. Job costing built against the way you estimate, a 13 week cash forecast, monthly WIP, and a meeting every month that ends in decisions and never in a report.
Your bookkeeper still does the books.
Every job shows its margin while it is still open.
Everything in Core, plus the bookkeeping and bank reconciliations done for you, and the job costing and WIP software set up, loaded with your cost codes, and managed every month. Use your own online software, or move to ours and we cover it.
A bookkeeper we choose does the books and reconciliations. No payroll.
You approve, and the money side gets handled.
Everything in Strategic, plus a controller we choose who handles your bills and receivables for you the way an in-house controller would. They call vendors, pay the bills and keep the accounting current. We plan the cash flow first, and you approve every payment because it is your money.
A controller we choose does the payables and receivables. No payroll, no pay applications, no collections.
FREQUENTLY ASKED.
