Not making enough money on your projects? Is your estimate right?

Q: When I look at my financials I am not making the money I should be. How do I know if my estimate is wrong or something else is wrong?

A: There can be many things that cause us to lose profitability. The 3 key areas to look at first are productivity, overhead and market conditions.

In today’s Coachcast I am making the assumption that the overall estimating practice is sound and done based on crew production, not a plug and play unit price number.

1. Productivity
   1. Your estimate should be based on productivity – that is a crew should complete so many units per hour
   2. Track your projects to determine if you are getting the same or better production then you bid
   3. Be careful of using best case productivity for your estimates
   4. If you are not getting the productivity then find out why and if you can correct it
2. Overhead
   1. Are you making money on the projects only to lose money in the business?
   2. Make sure you have accurate overhead mark-ups
   3. Can you lower overhead, cna you increase mark-ups and still win
3. Market Conditions
   1. Is your pricing being controlled by market conditions – you wouldn’t win if you raised your price
   2. Make sure that is the truth – many people say that then find out they actually win more with higher pricing
   3. If you cannot raise your prices then you have two choices
      1. Lower costs by increasing productivity and cutting expenses
      2. Find a new market