Your Estimates Are Wrong. Here's How Much It's Costing You.

You bid the job at 80 hours. It took 112. That 40% miss just ate $2,400 in profit — and you didn't even notice because you were already starting the next one.

Here's the uncomfortable truth: most contractors consistently underestimate labor hours by 15-25%. Not on one bad job — on nearly every job.

They don't track it. They don't compare estimated vs. actual. They just absorb the hit, job after job, year after year.

Let's do the math on what that actually costs.

The Math Nobody Does

Say you bid 10 jobs this year at an average of 100 hours each. Your effective rate is $75/hour.

$16,500 per year. Gone. Not because you did bad work. Not because the client didn't pay. Because your estimates were wrong and you never caught it.

Why Estimates Are Always Wrong

It's not because you're bad at your job. It's because of how the human brain works:

1. The "Best Case" Bias

When you picture a job, you imagine everything going right. The crew shows up on time. Materials are there. Weather cooperates. No surprises behind the walls. That never happens. But your estimate assumes it will.

2. Scope Creep Blindness

"While you're here, can you also..." Those words cost contractors thousands every year. The job was 80 hours, but the client added 15 hours of extras that never made it to the invoice. The estimate wasn't wrong — the scope changed. But the price didn't.

3. No Feedback Loop

Here's the real problem: most contractors never compare their estimates to reality. They finish a job, cash the check, and move on. There's no system that says "hey, you estimated 80 hours but it took 112. Again."

Without that feedback, you repeat the same mistakes on every bid.

4. Demo Day Underestimate

Across the industry, the most consistently underestimated task is demolition and prep work. Contractors estimate the "building" part accurately but chronically undercount tear-out, cleanup, and prep time. If this sounds familiar, add 30% to your demo estimates.

5. The Competitiveness Trap

You know the real number is higher. But you're afraid of losing the bid. So you shave 10% off "to be competitive." Congratulations — you won the job and lost money. That's not winning.

The Fix: Track, Compare, Adjust

The solution isn't complicated. It's just three things most contractors don't do:

Step 1: Track Actual Hours on Every Job

Not in your head. Not on Friday from memory. Every day, for every job. If crew members don't log their time the same day, it's fiction.

Step 2: Compare After Every Job

When a job wraps up, spend 5 minutes comparing your estimate to reality. Where was the gap? Labor? Materials? Scope creep? This is the feedback loop most contractors are missing.

Step 3: Adjust By Job Type

After 5-10 jobs, you'll see patterns. "I always underestimate kitchens by 25%. Bathrooms I'm pretty accurate on. Decks I'm consistently 15% over." Now you have data to fix your bids.

What This Looks Like in Practice

Meet Dave. Residential renovations in the GTA. Good contractor, busy schedule, never tracked estimates vs. actuals.

Dave started tracking for 3 months. Here's what he found:

Dave's kitchen and deck estimates were off by 30%. He'd been eating that cost for years without knowing. His basement estimates? Almost perfect.

With this data, Dave adjusted his kitchen bids up 25%. He didn't lose any jobs — his prices were still competitive. But now he actually makes money on kitchens instead of donating his time.

Why "Gut Feel" Doesn't Work

You've been doing this for 10, 15, 20 years. Your gut should be good by now, right?

Here's the thing: gut feel doesn't improve without feedback. If you never measure how your estimates compare to reality, your gut is just repeating the same assumptions forever. 20 years of experience can mean 20 years of the same blind spots.

Data fixes this. Not complicated data. Just: "I estimated X, it took Y, here's the difference."

The Spreadsheet Problem

Some contractors try spreadsheets. Most abandon them within a month. Why? Because after a 10-hour day on site, nobody wants to open Excel and manually type in hours.

The tracking system needs to be as effortless as talking. Which is why voice-based time tracking (like what JobHammers does through WhatsApp) works where spreadsheets fail. You just say "worked 8 hours on the kitchen reno today" and it's logged. No app to open. No fields to fill. Just talk.

Quick Wins to Improve Your Estimates Today

You don't need software to start. Here are 5 things you can do right now:

1. Add 20% to every labor estimate. If your estimates are consistently under (and they probably are), a flat buffer helps immediately.
2. Break jobs into phases. Don't estimate "kitchen reno = 120 hours." Break it down: demo (20h), rough-in (30h), drywall (15h), etc. You'll catch underestimates in specific phases.
3. Track demo/prep separately. This is where most underestimates hide. Track it as its own line item.
4. Log change orders the day they happen. Not Friday. Not next week. The moment a client says "can you also," write it down and price it. Use a voice note if you're on the tools.
5. Review your last 5 jobs. Right now. Do you remember how many hours they actually took vs. what you bid? If you can't answer, that's the problem.

The Bottom Line

Bad estimates aren't a character flaw. They're a data problem. And data problems have data solutions.

Track actual hours. Compare to estimates. Adjust by job type. Do this for 3 months and you'll know exactly where your money goes — and how to keep more of it.

Or keep guessing. But now you know what it costs.