Your job: realizing ambitious visions and bringing dreams to life. All in a day’s work for home industry professionals. But it’s not just your eye for design, your ability to see a space and envision a transformation, your technical skill with tools of the trade, or the artistry of your lines that dictate success. Running a profitable business also depends on accurate and effective estimating and scheduling.
Why Estimating and Scheduling Is Essential for Profitable Business Operations
We run project-based businesses; we have clients with goals, and we need to ensure that we have the right supplies and materials and the right people to execute the work at the right times in order to ensure that those goals are met on-time and on-budget. Strategic estimating and scheduling is vital to the success of the project at hand – and to our businesses’ future. When we get it right, we:
- Increase efficiency
- Contain costs
- Decrease “wasted time” or downtime on jobs
- Boost profitability
- Enhance client satisfaction
- Improve relationships with internal teams, external subcontractors, and vendors
- Set ourselves up to hit the ground running on the next project by minimizing (or, ideally, eliminating!) bottlenecks and delays
Unfortunately, it is all too easy to get it wrong. In fact, some 80% of project costs and schedules are underestimated during the planning stages. Whether you blame it on the “planning fallacy” or the “optimism bias,” the point is that we tend to be overly hopeful, if you will, when it comes to project timeline and cost predictions. And this costs us – a lot. Ineffective estimating and scheduling has a real bottom line impact, and it can also negatively affect our reputation among clients, potential clients, and other professionals on whom we rely to execute projects.
Grow Profitability with Effective Estimating and Scheduling
Time is money. And money is… well, money. You need to use yours strategically in order to build and maintain a profitable business. Some tips for better estimating and scheduling:
- Avoid “Optimism Bias.” We mentioned that many of us fall into the trap of being too optimistic about cost projects and/or scheduling. In the excitement of a new project, it is easy to overestimate capacity and productivity – not to mention downplay potential delays and change orders. But the odds of a wrench being thrown into the works, whether it’s terrible weather, hidden surprises in the walls, or unanticipated supply issues, are relatively high. Build these factors into your estimates and schedules.
- Manage Expectations. If you, your crew, subs, inspectors, and others all work at 100% productivity 100% of the time, yes, you can be assured of a smooth, streamlined project. Unfortunately, this just isn’t reality. You need to account for everything from the weather forecast to which crew members or other professionals you need on multiple projects simultaneously. Be sure to communicate with clients and manage expectations. They need to have a realistic idea of what’s coming. And if you under promise and overdeliver? Even better!
- Use the Past (and its data). Unless this is your very first project, and the very first project of everyone on your team, you have some insight into estimating and scheduling. Take a look at comparable projects. On those estimates and schedules, did you fall victim to optimism bias? What gaps do you see, and how can you apply those lessons learned to the project on deck.
- Get Help. Estimating and scheduling is complex (to say the least!). Lucky for us there are solid, effective solutions that make these critical areas much more manageable. BuilderTrend, for example, offers a host of robust features for homebuilders, contractors, remodelers, and other home industry professionals. Among these are estimating and scheduling functions. As a terrific value add, BuilderTrend also offers a user-friendly client portal. Your clients can track their projects, see current progress, view and approve change orders, message you, track spending, receive important alerts/updates, message you, and view and share customized photo galleries. In addition to all its other benefits, it is also a tool you can leverage to manage expectations.
- Ask the Experts! We can’t stress it enough: estimating and scheduling is complex! You don’t have to reinvent the wheel, though, or figure it out on your own. Ask other home industry professionals for their best practices and insights. Ask what has worked for them, what’s failed, what you can do to avoid common pitfalls, and how you can create and implement an effective system.
Home Artisans of Indiana is a community of like-minded home industry professionals; when you join, one of the biggest benefits is being able to connect with these folks – and pick their brains! We build better businesses together, and your peers are here to help you hone your skills. When you are up against challenges, such as figuring out estimating and scheduling for more profitable business operations, you can find feedback and solutions here.
To learn more about our diverse professional community, and how you can access the best and brightest in the industry, visit Home Artisans of Indiana.