Getting the chance to bid on a project can be a freelancer’s dream. But putting together an estimate that can win you the job is not always easy.
Incorrect estimates can lead to misunderstandings, lost opportunities, and unnecessarily high pricing. That’s why it’s important to understand the basics of freelance estimating.
Getting Started
For most new freelancers, the first time a potential client asks for an estimate can turn excitement into anxiety. They know they need to provide an accurate project cost and timeline, but they don’t know how much it will take them or what the client expects. Pricing is a bit of an art, and creating estimates requires experience.
The good news is that there are simple steps that can help any freelancer get started with estimating projects more effectively. First, they need to understand what an estimate is and how it’s used.
A simple explanation is that an estimate provides a potential client with the expected work you will do to complete a project. Estimates typically include information about the project scope, timeline, costs and payment terms.
It’s important to define your rates, based on your skill set, geographic location and the value you will bring to each project. Keeping a list of typical materials and equipment expenses can also be helpful when estimating.
It’s also a good idea to establish a standard structure for your estimates, which may include a header, an estimate number, and your business contact information. You can also include a brief description of the work and a note that you have reviewed your previous invoices. This will give your clients confidence that you are providing accurate and professional estimates.
Time Commitment
Whether it’s a full-time project or simply a one-time estimate, it’s important for freelance estimators to carefully consider their time commitment. This can be a complicated process, as it involves identifying any non-billable elements of the project (such as research, software licenses, stock resources, third-party services, travel expenses, and hardware) and determining the total amount of hours required to complete the project.
For a freelancer who charges by the hour, careful budgeting of their time is essential to maintaining a healthy cash flow. It’s also a critical factor for a fixed price project, as the pricing structure needs to be clearly defined and communicated to the client.
While it may not be as fun or exciting as tweaking a jQuery plugin to work just right, estimating time for web projects is crucial for sustaining freelance and small web agencies. While it’s certainly tempting to estimate low, doing so could potentially derail a project and leave you in the red.
For smaller construction companies or startups without the resources to invest in expensive construction estimating software and hire a full-time estimator, freelance takeoff services are a cost-effective solution that provides greater accuracy and reliability. Additionally, a freelance contractor can provide an objective perspective to resolve disputes that often erupt between different teams working on the same project.
Variance
Variance is a statistical measure of the spread between numbers in a data set. It is calculated by squaring the differences between each of these numbers and the mean, or average, of the set. It can be calculated with software programs, and it is often used to determine volatility in investments to help investors understand how consistent returns are over time. Variance is also a key metric in performance evaluations, and the square root of variance is called standard deviation (sigma).
When freelance estimators are working on a project, they should clearly explain how their estimates will be priced to clients so that there are no surprises. If a client expects the estimate to take a certain number of hours, the estimator should charge by the hour. This allows for flexibility if work takes less or more time than expected.
Some smaller contractors and startups can’t afford to hire a full-time estimating department, but they still need to create construction estimates. In these cases, they can outsource their estimation services to freelance estimators who provide accurate and reliable bids. This saves them money and allows them to focus on other aspects of the business. In addition, the freelancers can help them avoid disputes by performing a detailed bid analysis to uncover any reasons for the disputed numbers or ranges.
Scope Creep
There are many different factors that can lead to scope creep, but one of the biggest is a client changing their mind or adding more work that wasn’t initially discussed. Sometimes this change is so minor it doesn’t affect the overall project, but other times it can significantly impact the final deliverable and pricing. It is important for electrical estimators to set clear boundaries early on with clients and communicate those clearly.
One of the easiest ways to prevent this is by having a clear procedure for change requests in place. This ensures that everyone knows what is in scope and what needs to be quoted separately. This will also help deter clients from making frivolous changes that impact the overall profitability of a project.
Another way to prevent scope creep is by tracking time and expenses on all projects. This will provide a strong financial incentive for clients to stick to the original plan. It can also help with budgeting for future projects and ensuring that you have the resources to complete all your work.
Scope creep is a common problem for freelancers, but it can be avoided with the right planning and procedures in place. By being aware of the risk and taking steps to mitigate it, electrical estimators can focus on delivering quality results to their clients.