There is an old saying in construction: “Any contractor can win a bid. It takes a professional to make money on one.”
We often talk to General Contractors who are frustrated by their win rate. They feel they are constantly undercut by “low-ball” competitors, or conversely, they win projects only to realize halfway through that they are doing the job for free.
The culprit is rarely the market; it is usually the methodology.
Far too many builders rely on “Guesstimating”—using loose “Rule of Thumb” numbers (like Square Foot pricing) rather than building a bottom-up estimate. While this saves time during the bidding phase, it destroys accuracy.
Here are the three specific ways “Guesstimating” is sabotaging your business.
The most dangerous number in residential construction is the “Price Per Square Foot.”
A client asks, “How much to add a master suite?” and the GC replies, “About $350 a square foot.”
Why this fails: A square foot is a unit of area, not a unit of complexity.
Both are 400 sq ft. Scenario B costs 3x more than Scenario A. If you apply a historical “average” of $350/sqft to the bathroom project, you will win the bid immediately—and lose $40,000 executing it.
The Fix: Stop using Square Foot pricing for anything other than a sanity check at the very end. Build the estimate by Assembly (e.g., Count the fixtures, measure the linear feet of wall, calculate the tile yardage).
When guesstimating labor, many GCs simply multiply Hours x Wage.
Why this fails: This math ignores Labor Burden. Your true cost for that employee includes:
The Fix: You must calculate your “Burdened Rate.” That $35/hour carpenter likely costs the company $52/hour. If you bid him at $35, you are literally paying $17/hour for the privilege of having him work for you.
In a “napkin estimate,” contractors list the trades: Lumber, Concrete, Plumbing, Electric. Then they add their markup.
To avoid these gaps, we recommend using a structured Construction Budget Template to track every cost-to-complete.
Why this fails: They forget the cost of running the job site. These are the General Conditions, and they are “silent killers” of profit.
If you treat these as “overhead” to be covered by your profit margin, you are eroding your own take-home pay. These are job costs and must be line items in the bid.
The transition from a “Guesstimating” contractor to a “Professional Estimator” requires a shift in how you handle data.
Stop reinventing the wheel. Every time you complete a project, perform a Post-Mortem Analysis.
If you get a plumbing number that looks low, don’t just high-five your team and plug it in. A low number is a risk.
Manual estimating encourages “Guesstimating” because doing it the hard way (counting every stick of lumber) takes too long.
Bid Bench is designed to give you the speed of a guesstimate with the accuracy of a detailed takeoff.
Stop guessing. Start knowing.
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