Cost estimates must be prepared to: (1) determine the budget; (2) make economic comparisons of alternatives; and to (3) see whether the proposed work is feasible. An accurate estimate requires experience and consideration of each cost element. The basic cost elements are:
Materials - A complete list of material taken by an accurate job survey or a detailed take-off from electrical drawings.
Labor - Experienced estimators rely upon schedules of labor data accumulated from past experience for each item of material and each labor operation. The dollar cost is arrived at by applying the labor rate per hour to the man-hours required. The number of man-hours required to complete a specific installation is subject to: (1) complexity of the job and the quality of the layout drawings, (2) the experience and availability of the workers and supervision, (3) efficiency or productivity of the workers, (4) availability of the right type and quantity of materials, (5) working space - clear or cluttered, (6) construction and design of the building, (7) completion deadlines, and (8) work schedule restrictions.
Direct Job Expenses - These are the other cost items besides material and labor that must be paid because the work is being done. Included are: (1) labor payroll extras (Social Security Tax, vacation, etc.), (2) permits and inspection fees, (3) engineering and drawings, (4) general supervision, (5) freight expense, and (6) tool and equipment expense.
Overhead - A cost factor covering plant overhead and administrative expense should be included in all estimates.
Profit and Other Costs - When determining the total cost, it may be necessary to consider the service charges made by the contractor or other costs incurred by using the in-plant work force.
