A construction job estimator is simply the tool you use to work out what a job will cost you and what you need to charge for it. It can be a spreadsheet, a bit of software or a template your QS built years ago. What matters is that it forces you to price every cost line (materials with waste, labour, plant, subbies, prelims, overheads, contingency and profit) every single time, and that you check it against what the job really cost once it is finished.
Most of the underpriced jobs we see were not priced badly on purpose. They were priced in a hurry, on the back of a site visit, with half the cost lines living in someone's head. The estimator fixes that. It will not make you a better builder, but it will stop you forgetting the skip.
What a construction job estimator has to include
Whatever format you use, these are the lines that should appear on every estimate, even if some of them are zero on a small job. A blank line is a decision. A missing line is a mistake.
Materials, with a waste allowance
Take quantities from the drawings, price them from current supplier quotes (not last year's invoice) and add a waste factor. Blocks get broken, timber gets cut short, plasterboard gets damaged in the rain. Set the waste percentage per material type, and base it on your own past jobs rather than a figure you read somewhere. Delivery charges and any minimum order surcharges belong here too.
Labour
Labour is where most estimates go wrong, because people price at the wage rate rather than the true cost. An operative on £17.50 an hour costs you a good deal more than that once you add employer National Insurance, pension, holidays and the days nobody can work. We have a separate guide on working out a proper labour rate, but for now the rule is: estimate hours per task, multiply by a fully loaded rate, and be honest about how fast your team works on this kind of job.
Plant and hire
Mini digger, dumper, mixer, scaffold tower, breakers, the lot. Price it for realistic hire periods, including the day it sits on site because the weather turned. If you own the kit, charge the job a rate for it anyway, otherwise the cost of the machine never gets recovered from anyone.
Subcontractors
Get written prices from your electrician, plumber, plasterer and roofer, and check what each price actually includes. A sparky's price that excludes first fix materials is a very different number. Remember that CIS deductions do not change the cost to you; you still pay the full gross, part of it just goes to HMRC. CIS deductions explained →
Preliminaries
Prelims are the costs of running the site rather than building the thing: skips, welfare unit, site toilet, temporary fencing, parking, protection, small tools, setting out, and the time you spend on site management. On small domestic jobs these often get left off completely, which is why a £40,000 extension can quietly lose £2,000 before a brick is laid.
Overheads
Your van on HP, insurance, the yard, phones, software, your own salary if you are not on the tools, your accountant. None of these belong to one job, but every job has to pay its share. The simple way is an overhead recovery rate: take your expected overheads for the year, divide by expected turnover, and apply that percentage to each price.
Contingency
This is for the unknowns that are really unknown: ground conditions, what is behind the plaster on an old house, a price rise on steel. It is not a slush fund for things you forgot to measure. Keep it as a separate line so you can see later whether you used it.
Profit
Last, and separate from overheads. If you roll overheads and profit into one "add 20%" figure, you will never know which one you are short of. And be clear whether your percentage is a markup on cost or a margin on price, because they are not the same number.
Worked example: a single storey rear extension (illustrative figures only)
| £ | |
|---|---|
| Materials (£18,000 plus 5% waste allowance) | 18,900 |
| Labour (hours x fully loaded rate) | 14,000 |
| Plant and hire | 1,500 |
| Subcontractors (electrical, plumbing, plastering) | 9,000 |
| Preliminaries | 2,100 |
| Contingency | 2,500 |
| Direct cost total | 48,000 |
| Overhead recovery (10% of price) | 6,000 |
| Profit (10% of price) | 6,000 |
| Price before VAT | 60,000 |
In this example the overhead rate comes from a firm expecting £90,000 of overheads on £900,000 of turnover, so 10% of each price. Profit of £6,000 on a £60,000 price is a 10% margin, which is an 11.1% markup on the £54,000 total cost. These are example numbers to show the structure, not a benchmark for your prices.
Spreadsheet or estimating software?
A well built spreadsheet is fine for most small and medium contractors. It is cheap, you control it, and you can make it match the way you think about a job. The weaknesses are predictable: formulas get overwritten, someone saves a copy called "FINAL v3", and supplier prices go stale because nobody updates the rates tab.
Dedicated construction estimating software earns its keep when you price a lot of similar work, need take-offs from drawings, or have more than one person pricing. It holds a library of rates, keeps versions under control and often links to job costing, so the estimate becomes the budget the job is tracked against. The downside is cost and setup time, and the fact that a library of rates is only as good as whoever maintains it.
Our view: the tool matters less than the discipline. A disciplined contractor with a spreadsheet will out-price a disorganised one with expensive software every time. If you are moving the rest of the office onto cloud systems anyway, it can make sense to pick an estimating tool that talks to your accounts. Why it is time to ditch the shoebox of receipts →
Rules that keep a job estimating tool honest
- Lock the formulas. Only the input cells should be editable. Most spreadsheet disasters are a typed number sitting on top of a formula.
- Date every rate. If your labour rate was set before the April pay rise, it is wrong.
- Record assumptions next to the numbers. "Assumes access for 3 tonne digger" saves an argument later when it turns out there is no access.
- Keep inclusions and exclusions in the estimate, not in your head. They go straight onto the quote the customer sees.
- Price variations with the same tool. Extras priced on the back of an envelope are where margin leaks out mid job.
Feed the actual costs back into the estimator
This is the step almost everyone skips, and it is the one that makes your construction estimating better year on year. When a job finishes, pull the actual costs by the same cost lines you estimated: materials, labour hours, plant, subbies, prelims. Compare line by line. If labour on loft conversions has come in 15% over estimate three jobs running, your labour allowance for loft conversions is wrong, and the estimator should change.
For that to work your bookkeeping has to code costs to jobs as they come in: every supplier invoice, every subbie payment, every timesheet. If purchases land in one big "materials" pot in the accounts, you cannot compare anything. It is the same information that tells you which jobs are actually making you money →, so it is worth setting up properly once.
If you want the wider picture on setting prices, including how to decide what work to chase in the first place, our guide on how to price and estimate jobs to actually make money → covers the commercial side. The estimator is the engine underneath it.
Frequently asked questions
What should a construction job estimator include?
At minimum: materials with a waste allowance, labour at a fully loaded rate, plant and hire, subcontractor prices, preliminaries, an overhead recovery, a contingency and profit. Each should be a separate line so you can compare it with the actual cost later.
Is a spreadsheet good enough for construction estimating?
For most small and medium contractors, yes, provided formulas are locked, rates are dated and kept current, and actual costs are fed back after each job. Software helps when several people price work or you need drawing take-offs.
How do I work out overheads for an estimate?
Add up the overheads you expect for the year and divide by the turnover you expect. That percentage is your overhead recovery rate, which each job's price should carry on top of its direct costs.
How much contingency should I add to a job estimate?
It depends on the risk in the job, so there is no single right figure. Keep it as its own line, base it on how much uncertainty the job really has, and check after the job whether you used it.
Want your estimates and job costs to line up?
Book a free, no-obligation discovery call. We will look at how you price work now and how to set up your books so every job can be checked against its estimate.
Schedule a CallThis article is general guidance for building contractors, not advice for your specific situation. Always review your own circumstances with your accountant before acting.
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