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Entrepreneurs Need To Produce A Costing Model To Assist You In Estimating Or Bidding?
Written by: Lee ListerArticle Overview: Estimating is a very important part of business. It is also one of the hardest things to do. You also need to cost bids and proposals. Estimating and costing is made much easier with a Costing Model. So how do you set one up.
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Entrepreneurs Need To Produce A Costing Model To Assist You In Estimating Or Bidding?
Estimating is a very important part of business. It is also one of the hardest things to
do. You also need to cost bids and
proposals. Estimating and costing is
made much easier with a Costing Model.
So how do you set one up.
Costing and estimating are sometimes the “win or lose” activity.
Without a solid, correct, Costing Model you could be losing business and
profit. Your Costing Modelshould be used to define and manage your costs
during an proposal or when you are asked for an estimate for a project. Using this method, you have a fair chance of
winning and making a profit. There are many mediums you can use including
a pen and paper for the simpler jobs. Most companies use a spreadsheet based software
programme. Your Costing Model should
include:
-
All you
cost elements. As you produce your proposal
make a note of all the costs that make up your bid. If you are producing an
estimate then make sure that all the components of the work to be done are
included in the model. Include costs of borrowing money whilst you are waiting
for your payments to be made.
-
Calculation
of your costs. Using a spreadsheet makes this easier. You should use your
Costing Model to calculate such costs as: your hourly costs by hourly rates,
material costs by amount and processing costs by time.
-
Uplifts
for profit:
Decide what percentage/amount you want to charge for project and do not forget
to include costs or managing your sub contractors.
-
Uplifts
for risk: Decide how
much each increment of risk you will be undertaking will increase your costs
and include this. This is an area that
many people forget.
-
Adjust to
win: Use your understanding of your potential client to make the
appropriate adjustments to that you so not price yourself out of the market.
-
Add
extras: Such as Taxes, Delivery, Insurance etc. This are best itemised separately in any
proposal.
You should remember that if you are estimating for a lengthy
period you should use NPV (net present value) calculations to take into account
inflation. If you are working in more
than one currency, you should take hedging against major currency value shifts
into account.
Lastly check it over more than once to ensure that all your
calculations are correct and reasonable.
You want to use this Costing Model more than once after all!
Good luck.
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About the Author: Lee Lister RSS for Lee's articles - Visit Lee's website  From an early age she began an unparalleled journey through business consulting that continues to span across the UK, USA, Europe and Asia. She has consulted for a considerable number of companies all over the world. Specialising in business change management, start up consultancy and trouble shooting. Lee's experience in marketing and internet marketing is also keenly sought after. She is a prolific published writer of books, ebooks and articles and can easily be found on major search engine and Amazon. Her books include: FastTrack Bid Management, Proposal Writing For Smaller Businesses, How Much Does It Cost To Start A Business, Entrepreneur's Apprentice and a series of Start My New Business books that do as they say in the title! Her major web sites are: Click here to visit Lee's website   How Much Does It Cost To Start An Internet Business Entrepreneurs Increase Your Sales With Just A Little Extra Effort Entrepreneurs What Can You Expect In A Business Life Cycle Article Writing for the Nervous Hard Working Entrepreneurs Are Your Staff Efficient |
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