• A sales rep can bid correctly on a project, rather than lose money by underbidding or lose the project by overbidding.
• A sales rep can accurately explain the bid to the customer, and perhaps be the only bidder able to do so.
• A project manager can use that budget to plan and manage projects profitably.
• Crews can order from the bill of materials in the estimate, to keep work flowing without stockpiling costly materials “just in case.”
• The company can manage cash flow much better. And cash flow is the lifeblood of every company.

Incorrect estimates can easily cause failed bids, failed projects, and cash flow crunches. A failed bid means you don’t get the work. A failed project means you got the work, but lost money on the job and perhaps lost future business with that customer. A cash flow crunch can kill your company.

Estimating is a way of seeing, in advance, what you need to correctly complete a given project profitably. The costs include time, labor, and materials. If you know those costs and they are figured into your bid and price, then you can do with job itself correctly and profitably. You won’t face the choice between cutting corners and breaking even. Instead, you’ll be able to do the project to the quality standards you promised and your customer expects.

In some cases, the estimate can reveal that your company shouldn’t even take on this project. You can pass the disaster on to a competitor. You can’t do every possible job that comes along, nor would you want to. With accurate estimates, you can bid on those projects that are the best fit for your company’s resources and expertise and those projects that are the most profitable.

An accurate estimate helps you present the customer with an accurate bid. Bidding is a separate discipline, but it begins with an accurate estimate. You can win a bidding contest with an accurate bid, even if your bid isn’t the lowest and in some cases even if it is the highest.

Many bids are based on guesswork or the prices competitors charge, rather than on the actual costs plus profit. If you can show a customer why your bid is accurate, the confidence in your bid and your ability to deliver the project without cost overruns goes up. That may not guarantee you’ll get the job, but it does guarantee you’ll know what you’re getting into. And that is just one of the big benefits of making accurate estimates.