Increasing Return on Investment- How to Bring in Big Profits

It goes without saying that producing fast and accurate estimates is how contractors win more jobs. However, if you are still working with manual takeoff, then you probably aren’t as fast and accurate as you think you are. Some seasoned professionals may ask “If it ain’t broke, why fix it?” In reply to that though, “Blockbuster was not broke, so why did it go bankrupt?” It is not a question of being ‘broken’ or not, it is the reality of being adaptive – adapting to the fast-paced world we are caught up in.

Nevertheless, embarking on the quest to digitize your takeoff and estimating can be intimidating; especially if you are a sceptic yourself. A quick search on the internet may reveal numerous benefits of using a takeoff software, however, sometimes qualitative reassurance is just not enough. So, using a fictional case study, we will depict and guesstimate how much you could realistically save in terms of hours and costs.

Fictional Case Study

Ruler&Grind Ltd. is a boutique kitchen remodelling contracting firm with 1 full time Estimator on its roster of 10. The average salary per annum is around $50,000.00 USD. The estimator spends around 60 hours per bid and is able to submit a bid every 1.5 weeks equating to roughly 35 submitted bids per year. So, as it currently stands, Ruler&Grind Ltd.’s yearly estimating costs could be summarized as follow:

Current Estimating Costs
Annual estimating costs $50,000
Hours per bid 60
Estimator cost per hour ($50,000 ÷ 2,080hrs, where 2,080 = hours worked per year [40 hr work week, 52 weeks in a year]) $24
Cost per bid ($24 x 60hrs) $1,440
Bids submitted per year (52 weeks ÷ 1.5 bids/week) 35

Now, different sources on the internet note varying percentages of time saved or efficiency gained when using a takeoff software. These range from 20% all the way up to 90%. If you are purely looking at the time saved for takeoff, then the number would easily lie in the upper percentile, however, if you are encompassing the whole procedure with a complete estimate, then a moderate 30% time saved seems fairly rational. For the sake of our case, let’s just use a 30% in time saved.

Assuming a 30% in time saved, you can expect to save 18 hours per bid (60hrs x 30%) which would equate to $432.00 USD (18hrs x $24.00) in savings per bid. From a different perspective, you could have submitted 15 (630 [18hrs saved per bid x 35 bids] ÷ 42hrs per bid [60hrs – 18hrs]) more bids per year; therefore rolling in 50 (35 + 15) bids per year at just $1,008.00 USD ($1,440 – $432) per bid. Using the average kitchen remodelling cost of $22,103.00 USD and assuming a 50% bid win rate, you could expect an additional revenue of $176,824 USD (8 [50% of 15] bids x $22,103)!

Now, assuming eMeasure was your choice of software and you initially invested around $1,077.00 USD- $750USD for the software, first year’s maintenance for $135USD, and the remainder is time spent on training using our comprehensive resources (8 hours at $24/hour). This would mean that you would have broken even after completing your 3rd bid ($1,077.00 ÷ $432 saved per bid = 2.5). And the profits keep going up from there! This equation only takes into account one estimator- if you had 3 estimators on the team and you factor in the other benefits such as the reallocation of saved time into other tasks, the enhanced accuracy, the streamlining of your practises and the costs saved from printing and storing paper plans, an initial investment of per estimator with eMeasure could in reality spike your revenue by a great deal! So, now’s definitely the time to get on board the software train and increase your ROI.