Determining the cost of a job accurately and efficiently can be challenging, overwhelming and fraught with risk. When you price a job right and win it, it can deliver instant improvements to your bottom line — but getting it wrong can be a very expensive mistake.

When estimating, there are a number of basic factors that need to be taken into account, from the type and scope of the project to potential risks and resources involved.

We’ve collated five tips to help you calculate an accurate estimate and secure your project’s success.

Look to the past

‘I reckon it’ll take about five hours’ is not a great way to start an accurate estimate. Tracking your time on a project and specific tasks within that project and creating a database of regular tasks will take a lot of the guesswork out of estimating.

If you know the exact amount of time and resources you’ve expended on a project in the past and can quantify it with real numbers, you can take the risk attached to ‘I reckon’ out of any estimate.

Don’t go too low

Winning work at any cost is a surefire way to bankruptcy. It can be extremely tempting to deliver a low estimate to stay within the client’s budget and secure their work. While that may work sometimes for special clients you want to maintain strong relationships with, it’s not sustainable as a whole-of-business strategy.

Most estimating is about balancing costs and price. If your client’s budget is set, it might be worth talking to them about the scope. If the scope is set, you need to set a realistic budget.

Contingencies are a must

Don’t fall into the trap of removing a contingency from an estimate because it looks more affordable. Contingencies are essential as they provide you with a safeguard against any unforeseen scenarios that could affect a project’s completion.

Anticipating risks to the project will ensure your company can successfully meet any challenges that may arise.

Use detailed descriptions

Make sure all tasks are broken down into as much detail as possible. Outline exactly what the deliverables are, how long they will take to complete, what resources will be needed and who in your team will be responsible.

Yes, your estimate may end up being more expensive, but it’s better for you and your client to have the same expectations.

Check everything, and then check again

So you think you have included all deliverables and tasks in your estimate? It might be wise to check again. It can be easy to forget activities such as client feedback and changes, which can impact greatly on the time you have allocated.

A great way might be to get your staff involved and get them to review your estimate. The people actually doing the work can sometimes provide great insight into where the real pricing risks are.