Job Estimate Template to Determine Project Costs
A job estimate is a vital tool businesses use to provide clients with approximate project or service costs.
This calculated projection helps both parties understand the scope of work, required resources, and financial commitment.
Project managers use them to create an accurate and transparent job estimate, help manage business expectations, foster client trust, and streamline project planning.
Properly executed estimates also aid in decision-making and budget allocation, ensuring successful project completion and client satisfaction.
Want to learn more about job estimate templates? Keep reading!
Job Estimate Template to Determine Project Costs
What is a Job Estimate Template?
The job estimate template is created for a specific job or project to estimate labor costs, timeframe, conditions, payment terms, and the final price of developing something.
It helps stakeholders understand the resources needed and have an overview to control their expectations.
Before starting the project, the job estimate is sent to a client so they know the associated costs and decide if they want to proceed with it.
As a business owner or salesperson, you can use this in multiple industries, such as:
- Construction
- Engineering
- Software Development
You can save time, money, and effort with an accurate estimate.
Elements of a Work Estimate Template
Job estimate documents include key information involving the client and the business.
These are:
Date of estimate form
Company information
Customer information
Material costs
Project Timeline
Project description
Overall project costs
Suppliers' and contractors' information
Estimated start and completion dates.
After getting all the data, you can send it to the customer so they return with doubts or accept project development.
Why Should You Use Estimation On Your Business?
Job estimation is used to manage client expectations and deliver estimated costs of the work and materials required for a project.
But those aren’t the only reasons why you should use this tool.
Enhances Client Relationship
Strong relations are built through trust and transparency. When you show a potential client the project phases and itemized costs, you express you don’t have anything to hide and assure the client that they won’t be charged for something they don’t want.
As your client sees the job estimate, they’re less likely to argue and will be happier with you. Hence, it helps to boost efficiency.
Improves the Project’s Understanding
Job estimation provides better project understanding for all people involved.
This document lets your client quickly identify what they’re getting and paying for, along with the cost of materials. This last part is crucial for small businesses.
On the other hand, you get deeper insights into your resources, effort, and total costs after checking your project's detailed breakdown.
You also get next-step information, the independent contractors you may need, and more.
Gives a Detailed Quote to Know If the Project is Profitable
Let’s be honest here; you work for profits. And so do businesses.
The job estimation allows you to identify profitable projects and avoid those that need extensive resources.
You can also use it to compare similar projects and select which one to start and which not.
Allocates Project’s Resources
Your company resources are scarce, and they include money and people. So, when estimating a deliverable's total cost, you must understand how many assets you’ll need as the project progresses.
The estimation also allows you to go to funding rounds and find potential investors in case you don’t have enough money to cover your project.
Gives Potential Customers an ETA
The Estimated Time of Arrival gives you an idea of when to expect a project. When you develop it, you get a realistic timeline that prevents your business from using more resources than needed.
Deliverables will take longer depending on the project’s scope, but still, you can use the document to enhance stakeholders’ satisfaction and control expectations.
Project Estimation Methods
You can follow a few methods to make multiple estimates according to your project.
Let’s break them down:
Top-Down
The top-down estimation considers the project’s delivery time and separates them into phases, each with a unit cost.
This strategy follows a WBS (Work Breakdown Structure) that allows the project to complete stages in less time.
As an example, suppose a construction company creates a job estimation using the top-down method. They would separate the project into smaller stages to progressively complete it.
A few milestones could be: lifting walls, preparing a construction plan, hiring workers, etc.
Bottom-Up
Bottom-Up estimates go from considering smaller tasks and combining them into larger ones to having a more accurate assessment of your project.
It considers every single task you must do to generate an approximate cost.
Continuing with the construction example, let’s say you have tasks that can start and finish simultaneously. So, instead of accounting for them as separate activities, you can integrate them and prepare your job estimate with more accurate potential costs.
Three-Point
The three-point estimation considers three timeline variations to come up with accurate records. These include:
- Optimistic variation
- Pessimistic variation
- Most likely variation
After having all, you can prepare your work estimates and get a relative cost for your project.
So, let’s say you have an automotive repairs small business, and you get a client that wants their vehicle fixed.
You prepare three outcomes: 10 days, 15 days, and 25 days. The average would be 17 days to deliver their fully functional car.
Analogous
A job estimate using analogous methodology helps identify between old projects and applies them to new ones. This reduces time in cost, scope, and time estimations.
The best example is when your team must rebrand a client’s corporate image. You can look at older estimations and consider that a starting point.
Parametric
Parametric estimations combine analogous results with experience to come up with better results.
Just as in the previous method, you consider relevant details such as:
- Resources
- Budget
- Timeline
- Independent contractor (if any)
Let’s use the above’s rebranding example. Since you’ve already done the process and know that a rebranding process could take two to five days, you can estimate accurately without an estimate software.
Expertise-Based
Compared to other methodologies, only experienced project managers can develop this one, as it’s entirely based on experience.
Whether a professional independent contractor or an in-house project manager, you can use your experience to prepare detailed estimates for a specific project. It may be less accurate due to external factors like inflation, but timelines remain the same.
If you hire a project manager with 20 years of experience, they can know how long a project will take to complete with more accuracy than a manager with less experience.
How to Craft a Project Estimation
When crafting your project estimation, there are six things you must consider.
Let’s break them down:
Consider the Project’s Scope
Before writing a project job estimate, you must consider the project’s scope. Understand what your customer prefers to do, and ask questions that minimize human error that involve getting more information, such as:
- The services they need
- What they expect of your performance
- If they need an estimated total of your work
Speak with your client to get the customer’s contact details and other information you may need to prepare suggestions.
Establish a Timeline
After talking with your client and learning their needs, prepare a timeline with deliverables and information while stipulating how much you will charge.
Ensure you let your client know that this first timeline is high-level, especially with potential changes before closing the deal. Managing clients’ expectations is essential.
Also, consider delays and other projects you may work on.
Hire Subcontractors
As a product or service provider, you need to know your limits. You can’t develop all the project’s tasks on your own. That’s why you need to hire subcontractors.
Be realistic about it. If you need extra help to meet deadlines, include it as other costs and inform your customer about it.
So, for example, if you’re building a website for your client, you may need a web developer and a copywriter. For construction jobs, you will need construction workers.
Set Up Material Costs
Before setting up your job estimate, you must also ensure you know how much your materials and equipment will cost. If you can’t establish a fixed price, research them and prepare an estimate.
Consider renting instead of buying if you're using them once. However, you could also purchase them and deduct their cost from your sales tax.
Materials will also give you insights about the project’s profitability before starting it, which you can decline if it’s not worth it.
Let’s give an example:
A company hires you as a graphic designer, so you purchase a new computer and deduct it from your taxes instead of charging it to the client.
Compare Your Project With Competitors
Lastly, research and see how much your competitors charge for the same products/services before preparing your job estimate.
It’s a matter of doing a Google search and seeing their prices. Now, here’s the thing when pricing specific tasks:
- You don’t want to charge higher than others.
- You don’t want to charge lower prices.
You must find a fixed price that gives you profits and makes sense for clients.
Also, you don’t want to charge pennies because potential customers won’t trust your skills.
So, following the above example, let’s say you’re quoting a potential customer for a $100 project. You must ensure that the price covers your work and is also profitable. So, you search online and see that competitors charge between $200 and $300. Now you know you’re underpricing your work and can fix it.
Use Free Estimate Templates to Prepare the Document
Now that you have everything you need, from customer details to their requirements, you can use Microsoft Excel or Microsoft Word to prepare your work estimate templates.
You can purchase a Microsoft Office 2021 license to access all the suite’s software. After this, you can open a fresh Word document and prepare your written estimate.
Use them to prepare a legally binding contract with your client and send them directly to your customer.
Working with Job Estimate Templates
Now, to speed up the delivery of your estimates, you can use free work estimate templates. Let’s see a few examples:
Template #1
Contractor Estimate Template - Contractors can use this template to create accurate estimations - Download Link
Template #2
Bid Tabulation Template. To manage itemized job estimates - Download Link
Tips for Creating a Job Estimate Document
When creating your job estimate, consider the following tips to make your estimates more accurate:
- Take advantage of your team’s expertise.
- Use your project manager’s experience to convince the customer.
- Ask the right questions to gather additional information to make accurate estimates.
- Consider 4 or 5 competitors to price your services correctly.
- Write clear terms and conditions in your contract.
A Good Job Estimate Helps Managing Expectations
Job estimates are crucial in building strong client relationships and ensuring project success.
It will help you correctly outline the project’s scope and define the required resources and estimated costs. Businesses can foster transparency and trust while clients make informed decisions and allocate budgets appropriately.
As both parties work together to refine the estimate and execute the project, they can expect to achieve mutual satisfaction and continued collaboration, driving business growth and fostering long-term partnerships.