WHY PROFITABLE ESTIMATES FAIL FIVE ERRORS THAT LOCK IN LOSSES BEFORE MOBILIZATION.
A job that closes below expectations almost always traces back to an estimate error rather than a field execution problem. The overhead rate was understated, the labor burden was wrong, the production rate was optimistic and never validated against documented history, indirect labor was missing, or general conditions were underbid. Each of those is a locked in loss before the first employee sets foot on the site. Understanding them is the first step, and building the financial structure that produces the data estimates should be built on is the second.
The reason these errors survive is that the bid still wins. You're competing against contractors using the same wrong inputs, so an underpriced bid looks competitive right up until closeout. The job then closes three to six points under the estimated margin and everybody blames the field. The correction is better inputs: a formally calculated overhead rate, a burden rate verified against payroll, unit costs from jobs you've run, indirect labor as its own estimate line, and general conditions off a checklist.
WHAT IT MEANS.
An estimate error is a wrong cost assumption built into a bid, which locks in a loss on the job before the crew ever mobilizes.
WHERE THE MARGIN GOES BEFORE DAY ONE.
The overhead rate applied at bid time isn't the real rate
The most common estimate failure is an overhead rate that understates the real cost of running the business. An estimator who applies 10 percent overhead when the real rate is 17 percent has built a 7 point loss into every project before a shovel hits the dirt. The bid wins because it's competitively priced against other contractors who are also underpricing overhead, and the job closes below expectations because $70,000 in overhead on a $1M project was never recovered.
The labor burden rate is understated or applied inconsistently
Most estimators use a burden rate to convert base wage to fully burdened cost, so when that rate is outdated or inconsistent, every labor line in the bid is wrong by the same percentage. A 35 percent burden rate on a foreman earning $32 per hour produces an estimate of $43.20 per hour, while the real burden including workers comp at the correct class code, health insurance, 401k, and payroll taxes may be $46.50 per hour. On 1,200 foreman hours, that $3.30 difference is $3,960 in unrecovered labor burden, and it repeats across every labor category in the bid.
Production rate assumptions were never validated against history
An estimate is a production rate assumption: this task will take this many hours per unit. When the assumption comes from memory, industry averages, or optimism rather than documented performance on comparable work, the estimate is a guess. A grading contractor who estimates 85 CY per hour for a dozer on a site type they haven't worked, based on performance on a different site type, may find the actual rate is 62 CY per hour, and that labor overrun was built in before mobilization.
Indirect labor isn't in the estimate
Superintendent time, foreman coordination, PM meetings, submittal work, and safety officer visits install nothing and all cost real money. When indirect labor isn't an estimate line of its own, the job runs over on labor from day one, because the estimate never included the people supporting the crew. A 6 month project with a full time superintendent at $85K per year carries $42,500 in superintendent cost, and if it's not in the bid the project loses $42,500 before the first pour.
General conditions and mobilization are estimated at zero or at a minimum
General conditions like temporary power, a site office, porta potties, fencing, dumpsters, and site cleanup, plus mobilization cost, get underestimated because they feel like rounding items. On a 6 month $800K project, general conditions run 2 to 5 percent of contract value, which is $16,000 to $40,000. When they're estimated at $5,000, the first month burns the entire budget and every following month of site overhead comes out of project margin.
WHAT IT LOOKS LIKE IN DOLLARS.
An estimator applies 10 percent overhead when the real rate is 17 percent. That's a 7 point loss built into every project, and on a $1M job it's $70,000 in overhead that was never recovered. The bid still won, which is what makes the error so durable.
A 35 percent burden on a $32 per hour foreman produces $43.20 per hour in the estimate. The real fully burdened cost, with workers comp at the correct class code, health insurance, 401k, and payroll taxes, may be $46.50 per hour. On 1,200 foreman hours that $3.30 difference is $3,960, and the same error repeats in every labor category.
A 6 month project with a full time superintendent at $85K per year carries $42,500 in superintendent cost. Left out of the estimate, that's $42,500 of loss before the first pour. Indirect labor belongs in the bid as its own line, estimated in hours at the burden rate.
On a 6 month $800K project, general conditions run 2 to 5 percent of contract value, which is $16,000 to $40,000. Estimated at $5,000, the whole budget is gone in month one. Every month after that pulls site overhead straight out of margin.
WHAT AN ACCURATE ESTIMATE REQUIRES.
The rate gets updated annually, recalculated whenever a significant overhead item changes, and applied consistently to every bid. Consistency is half the value, because a rate that moves for measurement reasons can't be trusted at bid time. One method, written down, used every year.
Base wage plus payroll taxes, workers comp at the correct class code, health insurance, and 401k, built per classification rather than as one company average. The rate gets verified against actual payroll data every year. That's the only way the labor side of a bid can be trusted.
Production rates come from jobs you've run, broken out by work type, by season, and by crew composition. Industry averages are a starting point and they aren't your production rates. After enough completed projects, the estimate template is built from documented history and not from memory.
Superintendent, foreman coordination, PM, and safety time get estimated in hours at the burden rate rather than absorbed into contingency. Contingency isn't a place to hide known cost. If the people are on the job, they belong in the bid.
Every site cost is listed and estimated from a checklist rather than guessed at from memory of the last project. The checklist is what keeps porta potties and dumpsters from becoming a margin surprise. It's the cheapest control in the estimate.
A well built estimate doesn't produce job profitability on its own, because the estimate has to line up with the job cost code structure so actual cost can be compared to estimated cost at the phase and category level. In the alignment meeting the estimator, bookkeeper, and PM walk the estimate line by line and map every item to a job cost code. That meeting is also the quality control step that catches estimate errors before they become job losses.
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.
