I’ve been going round and round with my Spreadsheet / Estimate, and I’d sure appreciate a critique of this one if ya don’t mind. I’m suddenly unsure about it again.<!—-> <!—->
I’ve been getting some private help from a few of the Big-time Estimators who hang around these Construction Forums, but I’d still like a little more reassurance that my SSheet is at least getting there.
For the first time, I showed my spreadsheet to the client, who is an Architect. Figured he’d understand the costs, so I showed him, and he’s questioning parts of it.
Client-
“Joe, as you prepare the estimate for the new design, I do have some questions/comments:
1. Can you clarify how you determine your mark-ups and overhead. I know this estimate was for the original design, but you show a 35% mark-up on materials ($2,395 above cost), 65% on labor ($8,435 above cost), $920 General Conditions, and $3,065 overhead. This totals approximately $14,815 above your material and labor costs for approximately 2 weeks work. I understand that you do have some overhead expenses that cut into this. But it seems like an awfully high number (approximately 42% of the overall project cost).
2. What costs make up the difference between your $24+ wages for labor and the $41.59 actual labor burden? As far as paying yourself the same as your help, I think it is really 65% higher.”
Now, so I can further refine my Estimates, I’d like you to tell me what you think about this estimate for the deck over the slope alone, not the upper deck, or the shade structure. Very difficult site, 34% slope, 5 yds concrete for footings alone. Decking is ipe, screwed and plugged, railing elements all meranti and all hand made. Everything sealed.
I’m probably under a bit on my Helps’ time. For my time, I took a look at everything else I was making!, and reduced my actual personal time way down for some reason.
I put all my Labor Burden (Comp in <!—-><!—-> <!—->Calif.<!—-><!—-> @ 27%, withholding etc) on to the hourly ($22/hr), which adds up to about $41.59 an hour.
I bill my personal hourly rate the same as I bill each for each employe.
He’s wondering about a 42% markup on overall Project costs (I keep hearing 65% Markup on everything) and I’m suddenly confused again.
Does it seem to you like I know what I’m doing with this Price ? <!—->
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Replies
What happened was, he found out this was in a Steep Hillside Review Area, and asked me to eliminate the hillside deck altogether because of restrictions and just focus on the flat yard area, so this is what I came up with.
I gave him the SSheet (for the old design) before I showed him this new Design, hoping that he'd get used to these Prices before I went ahead and worked up a price on the new Design, which will cost about the same, and maybe a little more with all the detail.
So, what do you think ? Am I really making what I Should be making, or do you think I should figure in there all my Actual hours, or tweak the other numbers, which will increase the cost even more ?
Why would you show the client your MARKUP on anything?
I do very detailed bids, but they ain't seeing what I paid, then how much I marked it up. They see their price of the materials, and the labor.
If you show them how much you are charging them above and beyond your actual costs of anything, they are gonna try to talk you down in price. You gave them figures to haggle with. Not a good thing.
Just my humble opinion...James DuHamel
He who dies with the most toys.... Still dies!
"For what will it profit a man if he gains the whole world, and loses his soul?" MARK 8:36
http://www.godsfreemusic.com
Yeah, I'm a bit confused as to why Joe would show a customer his markup. My guess is that the estimate is based loosely on "time and materials" with both being negotiable --- now there's an oxymoron.
Specific to the details of your estimate, Joe, are you really paying $4.24 LF for "5/4" X 6" - RL Ipe"? I pay about 20 cents more per LF than 1" X 6" ($1.89 in your estimate). I'm probably missing something here.
He's wondering about a 42% markup on overall Project costs (I keep hearing 65% Markup on everything) and I'm suddenly confused again.
I'm confused too, but probably for different reasons. Since you're already in the unfortunate position of your having to justify your numbers to your client, clarification will probably only result from a sitdown between you and your client, line item-by-line item.
Your renderings are nice. Bummer about eliminating the over-slope portion. Any chance of incorporating a cantilever design?
Good luck.
Dito on not showing a client your acutal numbers. Heck - I wouldn't even show it here at BT! When I was building decks, my bid would consist of a few numbers with a total, maybe some prices for options, and then a fair amount of text about the actual materials and scope of the job. I wouldn't even show the materials and labor as seperate line items.
On the other hand, what do I know... 80% of the time I was underbid by some jackleg who didn't know (or care) that electroplated galvanized nails were an inferior product.
joe... good move putting the redhead in to distract them..
too much information in your numbers... i don't think i'd show my brother my numbers..
open too many avenues of debate...
you want to sell the project, give them a price.... and close the deal
are you functioning as the estimator for the architect ? even if... don't let him see your breakdown.. he'll use it against you for the next 20 years...
those numbers are for your use... not your customer's
if he changes the scope... you change your price..
i sense thta the other problem you have, and another reason not to divulge.. is that you are getting help from some here on the board... AND.. you have not bought into the idea of the markups required...
since you haven't sold yourself.. you can't sell the client
45%... 65%.... 1000%... it doesn't matter... you have to arrive at numbers that will make the project profitable and contribute to helping to pay your overhead and profit... stop worrying about the terminolgy..
if you project this out... will you make a profit at the end of the year ?
also.. keep in mind...... risk / reward...... & quality work requires a larger investment which equals a higher cost... and a higher price
Mike Smith Rhode Island : Design / Build / Repair / Restore
Edited 1/29/2005 8:44 am ET by Mike Smith
Joe,I think what Mike says regarding belief in your numbers is right on. For myself, I almost always show my numbers. Not with a markup line next to each item, but with a material/subs/labor subtotal, and then two additional lines. One for overhead and one for profit.Those numbers don't come out of thin air. They represent what I have determined that I need to make to profitably build that job. Coming at it with that conviction, I have no problem justifying my price to an architect or anyone else.I have, in the past, been told that my markups were above average. However, when my numbers are stacked up side by side with similarly qualified, sized and reputable companies, there is not enough spread to make much note of.Other companies can pad costs a little, to show less OH & P, but I believe that the end number is what counts. On that, as I said, I am not usually far from the other guy.FWIW, I am a one man show, and do mostly larger scale projects (large additions, whole house remodels, etc.), both on a design build basis, and for outside architects. I have found that, on a large project, that loooooong list of components makes the case pretty easily for how costs get to be where they are. I also find that, because the costs listed are bare (not marked up), it is much easier in the planning stage, to do the value engineering that inevitable happens. It also avoids the question of "But I saw the same type of door at Home Depot(or wherever) for $XXX. Why is yours so expensive?"Bottom line for me is that I know how much I need to charge to make what I want to make. From your past posts, and pics of your work, it is clear that you've got a good thing going. You have nothing to apologize or feel uneasy about. Find out what you are worth and get it!BTW, thnks for being such an apostle of Sketchup in the past. I recently downloaded the demo and then was like a little crack baby when the time was up! I bought it and it has really changed how I make presentations to clients. But, that's another topic.Mike
I would be a little skeptical too if I knew you were making almost 15 grand above your salary and costs. Thats the problem, he knows! Keep those figures under your hat.
If you could make that every day thats over $350,000 a year on top of your salary for building decks! Hmmm... I just might give up the renovation biz
The only limitations I know about for charging a customer are what they are willing to pay.