Principles of Estimating

Have you ever heard the phrase…

“It’s not the job you lose that puts you out of business, it’s the job you won.”

I know you’re nodding your head in agreement. We all have taken on a job that we shouldn’t have and it cost our company dearly from a time, team morale, equipment or profit standpoint. Many times, all four of those items suffer and our company regresses.

The importance of proper job estimating in the tree care industry is undeniable. In order to become and remain successful, your company must be proficient at providing accurate estimates to win profitable jobs. When your team begins to feel confident with their estimating skills it is easier for them to walk away from a job that won’t meet your profitability numbers. I wrote an article on the power of saying no to certain jobs in November of 2018. You can read it here: The Power of Walking Away.

So what goes into job estimating? How can you get your sales team to produce profitable jobs for your company? Let’s begin by looking at the steps in the estimating process.

Steps to job estimating for the tree care industry:

Discussion with Property Owner – Obviously, everything begins with setting clear expectations with the property owner for the work that is desired. This also means specifically describing what will not be done during this job. When discussing what they want you to do, dig into the emotion of their request. Why are they asking to have those services performed? When done properly, the sales conversation changes and a relationship is born, one that usually produces additional work as well. Read one of my prior articles titled, The Most Important Question to Ask Customers for a simple way to help your sales team connect immediately with the customer.
Assign Number of Hours – Once you have a clear description of the work to be done, you can start to assign the number of work hours necessary for each task to complete the job. Make notes regarding, drive time, site/equipment set up, completing the work, and cleanup. By doing this you can show the property owner everything that goes into performing the job safely and efficiently without damaging anything. Be sure to also include notes on any special equipment necessary for the job.
Signing the Work Order – Once the property owner has chosen your company, get their signature on the work order approving the specific work to be done, the cost for each service (either in time or dollars) and the payment terms agreed upon. This agreement is vital to ensuring both parties know what to expect. As you know, many times the property owner wants to make slight changes or additions to the work once the crew is on-site, so having the initial cost and job specs outlined will help you accurately account for any additional work so you can appropriately bill for the addition.
Job Completion Analysis – Looking back at completed jobs can be difficult to do. Most companies feel they do not have the time to get each job done, much less enough time to analyze how each job went. However, if you do not take the time to look at how your jobs are performing, how do you know if your estimating practices are solid? To do this, simply have the crew foreman complete a post-job analysis that looks at each of the factors from #2 above to see how close the job estimation was to reality. These post-job forms should be brief, but must be completed at the jobsite before the crew drives away. Any jobs that have a large discrepancy on any of the factors need to be looked at further by the management team.
Lastly, if you are not using an integrated proposal building software like Arborgold, ServicePro or SingleOps, get one today. Being able to produce professional looking proposals in the field that automatically sync up with your customer database is invaluable for a tree service. While the software may come with a large price, ask any owner who has made the switch from paper proposals to one of these and you will quickly see the efficiencies that you gain make you much more profitable even with the additional software cost. The software will also help you analyze your estimating process, thereby allowing your team to continually better their proposals and win more profitable jobs.

Don’t let poor estimating practices put your business at risk for failure. Work only on jobs that will produce a positive outcome for your company and you will see your business reach its goals.