Some firms may attempt to overcome such an eventuality by adding a sizeable profit to the total estimated cost as a safeguard on quotations submitted to clients. This might be reassuring but it has its limitations. In a competitive environment and with a perceived need to obtain work, there is a considerable temptation to reduce prices (charges) in the belief that there is scope for a profit reduction to fill future capacity. This also assumes the estimated times are accurate and that these will be matched in actual production. Most firms would not wish to risk the future of their business on such a policy when accurate calculation of cost recovery rates should largely overcome such an outcome.

In a scenario where the use of cost recovery rates is subsequently found to be under recovering cost, the consequences of not correcting this can be considerable: printers cannot return to past clients and ask for a further sum! However, where an order deviates from that estimated, then some recovery is possible in certain circumstances; please see article ‘Maximise profits with an accurate specification’ on the Estimator Training website www.estimatortraining.com.

The scenario outlined above can be exacerbated where there is an overall impression that a printer is doing well as it has a full order book producing more profitable work (thus justifying a necessity to reduce the profit in the instance quoted above). A casual observation that everyone in the works appears to be fully engaged in production and running to full capacity, can imply costs are being recovered and profits secured when this may not entirely be the case: this outcome is less than desirable. What is needed is a simple means of forecasting, calculating cost recovery rates and constant monitoring of those costs so that the anticipated profit is found to be fact. It used to be the case - in the
UK printing industry at least - that the more extensive the procedure of cost control is in a firm, the more successful that firm was.

Some firms obtain unit cost rates and then apply these to calculate cost recovery rates by determining the cost of premises, capital, power and wage costs to various operations and machines in the business. The cost recovery rates are then used to estimate for new work and to determine the costs of work in production: these should be monitored.

This offers a measure of cost finding and control and is particularly useful if comparison is constantly made with the actual - ‘direct hours’ - (and other rates) recorded against jobs in production. Direct hours are those considered to be recoverable at the time of budgeting and should be used to determine cost recoverable rates: these are not to be confused with indirect hours or hours paid to employees. If overtime is paid in lieu of ordinary time this will result in an overall deficit whereas if overtime is on top of ordinary time, this should provide an over recovery of costs. This distinction is important, particularly where a firm provides the appearance of working to full capacity.

Multi-shift working on expensive machines should reduce hourly cost recovery rates, providing, of course, a constant volume of profitable work is obtainable. Management decisions on whether this is a viable option should be made on a detailed analysis of all costs (probably based on the absorption costing methods) where this is deemed to be suitable and incurred by a firm and not merely on the use of unit cost rates as outlined above.

All costing systems seek to relate costs of running a business to the work produced. In an industry where the unit of production is the same or similar this is not too difficult (for example, the production of electric light bulbs). However, the units of production in the
UK printing industry (at least) are likely to vary according to the requirements of each job and from different clients: no two hand or machine operations being the same in terms of work content. The only unit of production common to all jobs is ‘time’: the direct hour. Absorption costing has, for decades, met this requirement. This was particularly relevant where ‘origination’ was an indefinable variable of several parts. These were those many productive operations that took place for example, prior to making ready and obtaining the first printed sheet off a printing machine. Nowadays, many litho printers receive a client’s origination in digitised form with the claim that it is (almost!) ready for printing down. With some of the origination variables removed, there could be grounds for taking the ‘process’ or ‘marginal’ costing approach for print machining and print finishing operations. Although it has to be said that many years ago, such an approach often led to disastrous consequences.

While for costing uncertainties in cost recovery can arise and continue, for estimating, help is at hand. In the process of estimating for work – the accuracy of which is crucial for the success of a printing business – the requirement is for determining the cost of materials and times taken by the production processes in advance of the job being required. These aspects, amongst others, are comprehensively dealt with by Estimator Training on their Distance Learning course to be found at www.estimatortraining.com. This course has been offered to UK-based firms for many years and is now offered via the web using the advantages of the email in providing answers to questions that might be asked in class.

Because the printing industry is a service industry, a client usually only considers printed matter when its use is considered necessary in realising the client’s objectives in producing a product or service.

An enquiry from a client is usually received by the estimator who has the task of determining the total estimated cost of production and, from this, the price to be charged.  The quotation is then sent to the client.   However, this is only part of the estimator’s skills.   The ability to communicate effectively with the client is another skill where a good working relationship can benefit both client and printer.  

Although a printer’s sales person could be viewed by a client as someone who might try to generate increased turnover for obvious reasons, the estimator should be viewed as someone who is striving to exactly meet the client’s requirements, using the printer’s facilities that will in turn yield the required profit.   Client/estimator discussions can be a confidence-building exercise over time as the discussions could centre on technical matters relating to the enquiry and helping the client in a variety of ways that could include the generation of goodwill.  

New clients should soon recognise these qualities in an estimator and the relationship could commence when questions arise out of a new enquiry from the client.   The more an estimator is thought of as seeking to understand and willing to accommodate the client’s wishes in the production of work, the greater the potential for further business in the future.  

There are further advantages in arranging that the estimator continues a dialogue with the client, by being given the responsibilities of an account executive, whereby the successful and agreed quotation – now a job - is monitored in its passage through the works.   Departures from the quotation should be immediately identifiable and the cost determined and brought to the notice of the client (if necessary in writing) at the time (or preferably before) the departure occurs; this should eliminate or at least reduce aggravation when the completed job is charged to the client.

So how is such a climate encouraged?   To achieve this and to reduce complications during production and particularly at the time when the client receives the final invoice, the all-important specification or description of the proposed work (referred to above) has to be determined.  

The writer of this text, from practical experience in the UK printing industry, found that an incomplete or inaccurate specification has been the root cause of many unnecessary disputes and subsequent loss of profit because jobs have not been monitored sufficiently: what the client thought was wanted, differed considerably from that finally produced.   Most of these emanating in the origination processes.   It was for this reason that an easily identifiable ‘style’ for writing a specification was adopted.   The same style was later used in teaching estimating to printing management students from many parts of the world.  

This style was later adopted as a recommendation by the British Printing Industries Federation for their examination in Estimating and has been adopted by some printers in the

So how are misunderstandings minimised?   The core of a successful outcome commences with the accuracy and completeness of the (written) enquiry the estimator receives to prepare the specification for an estimate.  

Immediate contact with the client – perhaps with a query - can have many benefits, even if it results in a change of specification.   It is far better that the final job matches as far as possible that originally estimated and quoted, as complications can arise in communicating changes during the production process.  

This aspect is only one of the comprehensive aspects of litho estimating currently available from Estimator Training (www.estimatortraining.com).   Besides following a prescribed style in completing practical estimates with samples provided, the trainee should also understand how to widen the scope to apply to different scenarios in products manufactured in a printing firm.

It is heartening to read that the smaller printers in the UK are currently the most profitable; it is to be hoped that as a result of the consolidation taking place with larger firms, that the results of their endeavours will lead to greater profitability.   This will no doubt have an effect on the surplus capacity where there is a tendency – in the broadest of terms – of too many printers chasing too few (print) jobs.   How can this situation be contained?

Several months ago printers in the UK had to endure a sizeable increase in the costs of the material which can constitute, on average, 50% - 70% of their total costs of production: paper and board.   Printing ink costs have also increased and although this cost in quantity and value is generally a small proportion of total costs, it is nevertheless a cost that should be accurately estimated as far as possible.   Material costs, and other issues present printing firms with challenges.

These, for the most part do not seem to include the means of producing printed matter: new plant that includes the latest technology seems to be readily available, often with adequate finance to purchase this.   Nor does the need to produce the work on time (other than the jobs wanted ‘yesterday’ variety) seem to create much difficulty.

The greatest challenge, and one that has plagued the printing industry for very many years to varying degrees, is price: total estimated cost plus profit.

Thankfully, the days of the print rep giving a potential client an estimate ‘on the back of a fag packet’ are long gone (when will even writing on a cigarette packet in the UK be illegal?!).   The potential danger for printers today could lay in the need for speed.   Clients expect, and even demand, an almost instant response to a request for an estimate.   But in meeting this request in a computerised ‘instant’ age, printers could be doing themselves a disservice.

The cause could be: attitude.   While an enquiry might fit the ‘average’ specification that can be matched on the screen of a computer that perfectly satisfies the need for an instant quotation, this could act as a deterrent for a client whose enquiry might merit a more analytical approach, resulting in losing the client (particularly if new) to a printer who employs an estimator whose basic knowledge and experience allows a more detailed approach and hopefully a lower cost.  In other words, the estimator’s skills are a greater asset to that printer, than those of mainly keyboarding skills with little or no knowledge of estimating.

Acquiring estimating skills that address the problem of (for example) the increased material costs referred to earlier, is not at all difficult even though the subject is unfortunately declining in availability to study (particularly in the UK).  This is because ‘in-class-type’ study of litho estimating is available as a distance learning course.   Materials are studied in depth where the ability to ‘shave’ 3mm off the size of materials in certain situations, illustrate - and is example of - where competitive estimating must surely have increased success in a competitive environment.   As explained, a changed attitude that is different from that of mainly ‘push button’ keyboarding skills is not as fast for some ‘standard’ enquiries but be preferable for non-standard and larger enquiries.   The latter approach might benefit instances where there is a disparity in estimated and actual costs; an increase in the latter not always being recoverable or, if they are, tend to upset a valuable client.

The tutor for Estimator Training has twenty years’ experience of teaching the subject in class to students from many parts of the world with different backgrounds and ability and during the latter part (15 years) has successfully run correspondence (now distant learning) courses in the UK.   Now wishing to harness the potential of the Internet, the previous ‘question and answer’ facilities previously addressed ‘in class’ and successfully through the post in the UK are now available through the facility of the email.

To cater for the fact that not all printers throughout the world have the ‘push button’ technology and a further fact that it is not in the best interests of firms and trainees alike to confine study to such parameters, the distance learning course has a broad approach and the subject matter follows closely the requirements necessary for the former estimating examination before its demise, under the auspices of the British Printing Industries Federation where considerable success was achieved.   For details of this course, please visit: www.estimatortraining.com.

Lets be clear about this: estimating software packages have been a boon wherever they have been introduced but feedback from trainees indicate that where knowledge of the theory and practical aspects of manual estimating are not first understood, the full potential of packages are not fully realised.   Distance learning could well be the answer to lack of training but, like all worthwhile areas of study, it does require determination!

For many already employed in a works capacity the printing industry, or for those who had left for whatever reason and are considering returning, the job of litho estimator can offer a practical and rewarding alternative career route.

Most people want to better themselves, be it in a managerial capacity or perhaps by going into business in the industry. For either route, it makes sense to build on - and benefit from previous industrial experience in works or office - perhaps in a specialised area, by adding another string to their bow.

The view of many is that the important role of estimating offers advancement, with improved working conditions. Estimator Training has a wide experience of training people and building on an earlier career in printing. Some have studied the subject because of uncertainties in their current employment caused by technological change, but all recognise that their previous experience can be a definite advantage. Why should this be so?

The answer lies in the function of estimating. The litho estimator is concerned with forecasting the cost of materials to be used and the times taken by the various productive operations in producing printed matter, in advance of the order being placed: who better to undertake the job of estimating than a person who has first-hand experience in the industry?

The Distance Learning Course provided by Estimator Training recognises and builds upon these known skills to equip people for the managerial job of estimating. Please read the testimonials on the website: www.estimatortraining.com. Once enrolled, online help is available by email for those who have the need but past experience has shown that those with existing skills in production or office in the printing industry have few difficulties. So whether your particular need is training or re-training, a job in estimating is a role that can be an alternative career option and is often in short supply. Estimating is also an area that is necessary for account executives and useful for people selling print as both have daily contact with clients who appreciate that an intelligent understanding of costs in producing their work is to their advantage.

Some employers recognise the benefits of study to their firm and may be willing to encourage staff by offering financial assistance to their employees.

Another method of studying the subject is to attend a part-time one year course or as a subject or module in a full-time course. Unfortunately, these options are declining in availability but Estimator Training’s Distance Learning course originated in this mode and has 20 years experience in delivering the course by correspondence. Their latest change has been to revise procedures by harnessing the benefits of the Internet. However, the successful study of the subject does require – as in any worthwhile subject - perseverance.

Continuing support for our course trainees.

To assist our trainees in achieving success in studying Litho Estimating, we implement the course support that has proved to be very successful. This level of support may not apply in other distance learning courses.

1. On completion of enrolment, the Theory part of the course is despatched and the trainee is notified by email. The trainee is asked to acknowledge receipt of the course.

2. Following 7 – 10 days of study, the trainee is emailed (or telephoned if resident in the UK) to establish that no problems have arisen. From that point on, the trainees are encouraged to email ESTIMATOR TRAINING, should any difficulties arise. Even though the course has been modified over 15 years to take difficulties into account, it is reassuring that help is at hand if this is required.

3. On completion of the Theory part of the course, four pages of exercises included in the text, confirm successful understanding to date and are necessary to embark on the Practical part of the course. These should be attached to an email (or posted) to Estimator Training. This is then marked and returned with a copy of the correct solution. At this stage the Practical part of the course is despatched.

4. The Practical consists of a detailed study of a series of estimates with samples enclosed; these have been chosen as a means of illustrating certain aspects of estimating. “Working notes” together with an in-depth explanation, clearly show how each estimate compiled. Each estimate gradually requires more participation by the trainee but answers are to be found in the notes; this we have found increases understanding and provides confidence in the learning process. The essential information is then transferred to an estimate form, cost rates are used and the total estimated cost determined. Each completed estimate should be compared with the enclosed copy of the correct solution. If the answers raise queries, then these should be emailed to Estimator Training when a detailed response will be provided. The aim of the Practical part of the course is to make the trainee really familiar with manual estimating as practiced in the (UK) printing industry. On the successful completion of the final estimate, a certificate of study is awarded.