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How to Work with Estimates in QuickBooks for Contractors

Many businesses think estimating is useful to only construction companies.  But any company that produces estimates, quotes, bids, and proposals can use QuickBooks to get a handle on their job costing.  The accuracy of your estimating process can make or break your project success. It is critical because if your estimate is too high you might lose the job, while estimates that are too low can reduce your profits or even make you lose money on a job.

However, you can reduce your risk and increase profits by using QuickBooks for estimating.  Even if you don't provide your clients with estimates, you need to enter them in order to get the most out of the QuickBooks job costing reports.  These reports, especially the Job Estimates vs. Actuals reports, are the key to making sure your existing job budgets are on track.  They are also important when evaluating the accuracy of your estimates so you can make adjustments for future projects.  They are also required if you want to do progress invoicing.

This is the second of a four-part series about how to use QuickBooks for job costing.  Intuit, the creators of QuickBooks, has also asked me to present a series of free Small Business Town Hall covering the same topics every Tuesday this month.  This is your chance to get your job costing questions answered live.  Here's more information about our QuickBooks training.


Setting Up Estimates

1. Turn on the Estimate function at Preferences > Jobs & Estimates.

2. Create service items that match your project phases at Lists > Item List.  You might also want to create sub-categories for materials and labor for tracking purposes, and use groups (see below) so they don't show up separately on your estimates and invoices.

3. Create group items for items that you often sell together, this speeds up data entry and also allows you to hide details on estimates and invoices.  For example, you could make an "Cabinets" group by grouping the items for all the materials and labor used.  Each item in the Cabiets group has its own cost and selling price. When you choose an item for your estimate or invoice, you simply have to enter a quantity to get the total price for cabinets.  You can also choose to not include the detail on your estiates and invoices by not checking the "Print items in group" box.

4. Customize your estimates by clicking on the Customize button at the top of the Estimate form, then selecting Additional Customization.

5. You can create multiple estimate forms for different needs and manage them at Lists > Templates.

6. You can also memorize completed estimates that you use that you use frequently by going to Edit > Memorize Estimate.  You can also duplicate estimates at Edit > Duplicate Invoice.

7. You can download free customized estimate templates from Intuit at:  http://community.intuit.com/library/forms.


Entering Data

1.  In order to get detailed estimate vs. actual job costing reports, enter both estimated costs and revenue.

2.  You can either enter a $ or % markup to determine revenue, or you can enter revenue to determine the markup.

3.  If you want one line item for all revenue, enter $0 in the revenue column and add an additional item line for the revenue with no cost entered.

Change Orders

1.  A change order function is built into the contractors editions of QuickBooks.

2.  If you don't have the contractors edition, you can create new estimates for change orders, but this requires separate invoices.

3.  A better option is to create estimate & change order subtotal items and add change order items as separate line items on the original estimate.

Linking Transactions

1. You can create invoices directly from the estimate by clicking on the Create Invoice button.  You can invoice for the entire project or select progress invoicing.  For progress invoicing, first turn on the function at Preferences > Jobs & Estimates. Then QuickBooks will give you the option of invoicing either for a fixed percentage of the entire estimate, or for different percentages of each line item on the estimate.

2. You can also create purchase orders directly from the estimate.  First turn on the function at Preferences > Items & Inventory.  Once you do, the purchase order button will be hiding under the Create Invoice button (click the down arrow to the right of it to see your options)

3. You can also create sales orders directly from the estimate.  First turn on the function at Preferences > Sales & Customers.  Once you do, the purchase order button will be hiding under the Create Invoice button (click the down arrow to the right of it to see your options)


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This article is provided for informational purposes and is not intended to be construed as legal, accounting, or other professional advice. For further information, please consult appropriate professional advice from your attorney and certified public accountant.

Ruth Perryman - QuickBooks Specialist Written by +Ruth Perryman

Ruth is the an Intuit Premier Reseller that offers great deals on QuickBooks POS and QuickBooks Enterprise. She has provided expert QuickBooks help to thousands of businesses all over the world since 1996.

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36 Responses to How to Work with Estimates in QuickBooks for Contractors

  • Amina says:

    Can I create another line in the estimate to add the change order? I need one line for orginal contract, another for change order and a total. I don’t like to add the change order at the bottom
    Thanks

  • Kevin Townsend says:

    Any way to create a Estimate without having Item list.

  • David says:

    Is there a way for you to occasionally separate or hide Estimates from Actual Jobs so they don’t overwhelm your Customer Center? Is a project that I have worked on but received payment for no longer Active?

    • Hi David,

      You have to manually inactivate your customers and/or jobs. One way to do it is to right-click on the name and select “Make Customer:Job Inactive”, but if you have a lot it’s quicker if you select All Customers from the dropdown menu above the customer lists. Once you do, you’ll see a X column to the left of your names. Just click on that column next to the names you want to inactivate.

  • Arletta Vanhoof says:

    Can you separate your line items in a estimate? For example, can you use a highlight color to separate every other line so they do not look like they are running together?

  • Jennifer says:

    I have QB Premier Contractors edition 2013 – trying to customize an estimate. I have added data fields to the header section for various other info that we need. When entering the info for the estimate, I cannot figure out how to access that field so I can input the data. These particular data fields are not from the header items list. I added them while in layout designer. Any help would be appreciated.