ESTIMATING ERRORS THAT KILL 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 locked in 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 arithmetic on numbers somebody wrote down years ago, and correct arithmetic 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 fed back 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 locks in 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 run 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Labor burden assumption outdated or applied wrong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 run 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 run 2% to 5% of contract value, so $14,000 to $35,000. When the estimate carries $4,000, month one burns 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 carry a markup for coordination overhead, contract risk, and the admin cost of managing that relationship. A 5% markup on subcontracted scope that carries 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 run 18 to 24 months carries 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 runs 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 runs 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 fed back into 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, and no add-ons.
| Last 12 months revenue | Monthly fee |
|---|---|
| Up to $1M | $1,900 to $2,900 |
| $1M to $3.5M | $2,600 to $3,900 |
| $3.5M to $6.5M | $3,800 to $5,700 |
| $6.5M to $9.5M | $5,100 to $7,100 |
| $9.5M to $12.5M | $6,100 to $8,500 |
| $12.5M to $15.5M | $7,400 to $11,000 |
| $15.5M to $18.5M | $9,400 to $13,500 |
| $18.5M+ | Quoted individually |
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.
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 rather than a report.
Your bookkeeper keeps doing the books.
You stop touching the books.
Everything in Core, and we run the bookkeeping and the controllership as well. Nobody in your office is answering coding questions or chasing a reconciliation at month end.
We do the books. No payroll.
Every job shows its margin while it's still running.
Everything in Executive, plus the job costing and WIP platform set up, loaded with your cost codes, and managed for you every month. You never have to learn it.
We do the job costing.
FREQUENTLY ASKED.
