How do contractors estimate jobs?

In four passes: measure the work (takeoff), price each measured quantity using production rates and material costs, add the costs that are not per-unit — supervision, equipment, dumpsters, permits, contingency — and then apply markup for overhead and profit. The order matters, because markup applied to an incomplete cost is just a smaller loss.

What percentage should I add for overhead and profit?

Whatever your own overhead requires. If overhead runs 25% of sales and you want 10% net, the markup on cost is about 54% — not the 15-20% most small contractors apply out of habit. Work it from your own books rather than from a rule of thumb, because the rule of thumb belongs to somebody else's cost structure.

How much contingency should an estimate carry?

Enough to cover what the documents do not tell you, sized to how much they do not tell you. A fully detailed set on a known building might carry 3-5%; a renovation of an occupied 1920s building with two drawings deserves considerably more. State it as a line rather than hiding it in the rates — hidden contingency gets spent invisibly and teaches you nothing about your own accuracy.

How do I get faster at estimating without getting sloppy?

Stop re-deriving the same unit prices. An assembly that already knows a two-coat wall takes about 0.011 labor hours per square foot turns a measurement into a price instantly, and the only judgement left is whether this job is harder than usual. Then let your own completed jobs correct those numbers, so speed and accuracy improve together instead of trading off.

How to estimate a construction job

An estimate is four separate jobs that people run together and then wonder why the number was wrong: measure the work, price the measurements, add the costs that are not per-unit, and mark the whole thing up by what the business actually needs. Do them in order and each one can be checked.

1. Take off quantities

Measure what is there — square feet of wall, linear feet of trim, cubic yards of dirt, counts of doors — and keep the measurements separate from the pricing. Write down where each number came from. Six weeks later, when the GC asks why your number is 12% above the next bid, being able to point at 4,200 SF instead of 3,400 SF ends the conversation.

2. Price each quantity

Every measured quantity needs a material cost per unit and a labour rate per unit. Labour is the one that decides bids: production rates — square feet per hour, block per day — times your burdened crew cost, which is a long way above the wage. A $30 hour is typically $40 to $46 once taxes, comp, benefits and the truck are counted, and it is recovered over billable hours only, not the whole paid year.

Worked through: 4,200 SF of two-coat wall at 0.011 labour hours per SF is 46.2 hours. At a burdened $44, that is $2,033 of labour. Material at $0.24 per SF adds $1,008. Direct cost $3,041 — before anything that is not per-unit.

3. Add what the units miss

Supervision, mobilisation, equipment and lifts, dumpsters and disposal, permits, parking and access restrictions, protection of finished work, and a stated contingency. These are where residential estimates quietly die, because they feel like overhead and get left to the markup — which was never sized to carry them.

4. Mark it up, deliberately

Markup covers overhead and profit, and it is not the same as margin: a 20% markup leaves a 16.7% margin. If overhead is 25% of sales and you intend to keep 10%, the markup is about 54%. Work it out rather than inheriting it — the markup calculator does both directions, and the burden calculator sizes the labour rate that feeds step 2.

5. Then let the job correct you

The estimate that matters is the next one. Record what you bid and what you won, and let the winning numbers become the defaults — this is the single piece of advice every experienced estimator gives and almost no affordable software implements. BuiltSum builds that price book automatically from every estimate you save; start with the estimate builder and the trade assemblies that already know the production rates.