The One-Hour Estimate Review Before Your Next Tender

Before you submit your next tender, spend one hour comparing what you estimated on your last comparable job against what it actually cost, line by line: labour, materials, plant and subcontractors. Most building businesses never do this. They price the next job on gut feel and the last number they remember, and the same estimating mistakes get repeated job after job. One focused hour with the right two reports in front of you is often enough to spot them.

Why builders skip it

It isn't that builders don't care. It's that the information is hard to put side by side:

• The estimate lives in an estimating tool or spreadsheet with its own categories.
• The actual costs live in Xero or MYOB, often coded to the job but not broken down the same way.
• Variations, back-charges and late invoices keep changing the "final" number for months after handover.
• By the time the job is truly finished, everyone has moved on to the next three.

So the comparison never happens, and the estimating team never gets feedback on how accurate they were.

The patterns that show up

When builders do compare estimates with actuals across several recent projects, the gaps are rarely random. They tend to be the same few things repeated:

• Labour on particular trades or stages consistently taking longer than allowed.
• Plant and scaffolding hire running longer than planned on almost every job.
• Preliminaries and supervision underestimated, especially on jobs that run late.
• Wet weather and access delays not allowed for on longer projects.
• Small materials and consumables that never make it into the estimate.

These are systematic errors. Once you can see them, you can fix them in the next estimate.

The one-hour review, step by step

Pick the most recent completed job that is similar to the one you're about to price. Then:

1. Put the original estimate and the final job cost report side by side. If the cost categories don't match, map them roughly into labour, materials, plant, subcontractors and preliminaries.
2. Compare each category. Note the estimate, the actual and the difference.
3. Mark the categories that went well over. These are your blind spots. Ask why: was it the quantity, the rate, the duration or something unplanned?
4. Check variations separately. Make sure approved variations are excluded from the comparison or you'll think you estimated worse than you did. It's also worth checking whether every variation was actually billed.
5. Adjust the estimate you're working on. Apply what you've learned to the matching line items now, not "next time".
6. Write one line down. Keep a simple estimating notes file so the lessons build up over time.

This single practice, done consistently, can improve estimating accuracy more than buying new software. The data is already in your completed job files.

Making the review easier each time

The first review is the hardest because the data is messy. A few changes make every later review faster:

• Use the same cost codes in estimates and in the accounts. If the estimate has a line for formwork labour, the timesheets and bills should be coded to formwork labour too.
• Code supplier bills and timesheets to jobs as they're entered, not at month end.
• Raise purchase orders against cost codes so committed costs line up with the estimate.
• Build a standard estimate-versus-actual report so it can be run in minutes rather than assembled by hand.

For example, if your estimates are in a spreadsheet and your actuals are in MYOB, a small integration can bring both into one report automatically. That's the kind of thing we set up as part of construction job costing and WIP reporting work. Once that's in place, you can watch estimate versus actual while the job is still running, not just after it finishes.

From one hour to a habit

The aim is a routine, not a one-off:

• Run the one-hour review before every significant tender.
• Run a post-completion review on every job, while the project manager still remembers what happened.
• Share the findings with estimators and supervisors so the feedback reaches the people who can act on it.

Over time your estimates start to reflect how your business really performs rather than how you hope it performs. If you want to see what a live view of job costs looks like, have a look at our construction financial visibility page.

Frequently asked questions

How do I compare an estimate to actual job costs?

Put the original estimate next to the final job cost report, group both into the same categories (labour, materials, plant, subcontractors, preliminaries), and compare each one. Exclude approved variations so you're comparing like with like.

What if my accounting system doesn't break costs down by category?

Then start coding supplier bills and timesheets to cost codes that match your estimate. For past jobs you may need to group transactions by hand the first time. For future jobs, matching codes make the review quick.

How often should builders review estimates against actuals?

Before every significant tender, and after every completed job. Reviewing while the job is still running is even better, because you can still act on what you find.

Is there software that does this automatically?

Many job costing and construction management tools have estimate-versus-actual reports, but they only work if the estimate, purchase orders and accounting data are linked to the same jobs and cost codes. Connecting those systems is usually the real task.

If your estimates and actuals live in different places and you'd like them in one report, book a free initial chat. If you want a written review of how your systems and job costing fit together, our $5,000 Process & Systems Audit covers that.