It seems like there is alot of ways of doing an estimate, coming up with acceptable markup, covering costs, and all the rest of it.
So much remains unclear to me though about the process. I’ve bought R S Means estimating books, tried figuring by square foot, done the wag (wild ass guess) dance and now do estimates by breaking it down to every job involved on a given project. This final approach leaves me feeling the most safe that I won’t be installing the trim at the end of the job for 10 cents per hour, but obviously takes the most time.
I propose we all do an estimate. I have a commercial bathroom site coming up; the problem is that I don’t have a digital camera as of yet. But perhaps one of you guys who has one and an upcoming project on the smaller side could take pictures of existing conditions, proposed plans, and we could all work out an estimate explaining along the way the steps to get there.
Pricing will of course be different depending on the client and their expectations, but maybe we can help each other out by clarifying some aspects of basic estimating.
Any jobs or ideas would be greatly appreciated… Thanks in advance.
Replies
I do small jobs and a few bath remodels so mine are pretty simple. My rules of thumb are 40% for materials, 20% for subs, 100% for material if the order is under $50, $40 an hour labor for me and $20 an hour labor for help. Hours involved are my estimate by looking at the actual job and meeting the owners. I think who the owners are and their demeaner means as much as the job itself as to the hours needed to complete the task. I couldn't bid a job by pictures personally although some others might. Oh, and if I bid the job instead of T&M I bid $55 an hour. DanT
Dan, that's an interesting thought. having one labor rate for T&M and another for fixed bid. kinda builds a CYA factor into the fixed rate.Steve
S.J.MERRETTE Carpentry & Construction • Robesonia, PA
Nothing is impossible...It just hasn't been done yet.
If you are charging the same for fixed price versus T&M, you are unclear on the concept. If you are really going to stick to the fixed bid (and not weasel out of it or skip town), you are essentially selling them an insurance policy against a supplier failing, a sub screwing up, bad weather, weird stuff inside the walls, etc. If you don't charge more when you take on that risk, you are giving the insurance policy for free.
For some jobs we've charged 3 (yes, three) times more for a guaranteed fixed price. Admittedly environmental cleanups have more and bigger unknowns than a kitchen remodel, but the principle is the same. And explained in those terms - that you are taking on the risk - a reasonable customer is cool with it. They may even prefer it, having heard of or experienced various cost-overrun horror stories.
David Thomas Overlooking Cook Inlet in Kenai, Alaska
Steve,
I'm surprised you're surprised by different rates for hard bid vs. T&M. Those are 2 entirely different kinds of transactions. T&M is relatively safe for the contractor because all the unknowns are pretty much covered, but it's a little risky for the contractee because if there are a lot of unknowns, it's a little tough to budget for a project and he's reliant more than ever on the professionalism and honesty of the builder. Sometimes, T&M's are written on a "not-to-exceed" basis to protect the client a little more.
In a hard bid, there is a CYA factor, but it's appropriate to factor in your profit margin and contingiencies...even the lending institutions expect you to build in a profit. If you give a hard bid with a T&M mentality,especially on larger projects, you're never going to make "good" money and you could get tipped over on a single project.
For me, I do T&M's on some smaller jobs if I suspect there's going to be a lot of add-ons or changes toward the end of the project and if I feel OK about the customer. For example, If the prospective job is replacing siding and windows, I always forewarn that they'll probably be wanting to replace their entry door, their porchlight and their doorbell button before I'm done and I'll offer to do those things onT&M once they decide it's necessary and they've chosen their new components.
Though I'm intrigued by this notion of doing make-believe bids, there are too many variables to make it a valid experiment: Like stated in an earlier post, I would NEVER bid a project without visiting the site; how far, how steep, is there room to get a truck in, is there enough juice to run my compressor, does the client work swingshift and so I can't start my day 'till 10AM when he gets up, local codes, is the inspector a butt, and so on...Measure it with a micrometer, mark it with a piece of chalk and cut it with an axe.
Notchman, I'm still in my first year and learning every step of the way. I usually just used my regular rate and added a healthy fudge factor of extra hours to cover any unforseens. It's kind of the same, instead of 2+2=4 I used 1+3=4. I haven't been bit yet but like I said I'm still new at the game.
As for profit do you figure that as a part of your hourly rate or does your hourly only cover overhead then you tack on a profit based on a percentage of the project total price?Steve
S.J.MERRETTE Carpentry & Construction • Robesonia, PA
Nothing is impossible...It just hasn't been done yet.
Dan,
Lets take a look at my upcoming job for a moment. Its a commercial bathroom, the client is a biz / property owner who seems to want things done right. The bathroom has one sink, one toilet, FRP board (plastic sheeting) around the walls and all walls need to be framed. Bathroom is on side wall of huge warehouse. 8 feet x 7 feet with ceiling at 8 feet
I'll do it by hours, which seems more important to me than price per hour; we may be able to agree more quickly on that.
I bid
3 person days framing (24 hours)
2 person days sheetrock
1/2 day 1 person plywood on ceiliing
4 person days for install door, handles, casing, FRP, grab bars, ADA signs, bathroom mirror, blocking for sink, grab bars
1 person day for prime and paint
Materials came to 800.,
15% overhead, profit on top
subs to do electrical tile and plumbing plus 20%
This again is fine. the jobs breakdown is small. But this is not our average type of bid. Normally we estimate for additions which take around 10 hours before even getting subs involved to get that kind of scale. I never know what a job will come in at until I do such a break down and will not give wild ass guesses any more because of the experience more than once of clients badgering over and over that figure that I guessed in haste.
For example; one addition we were looking at had 13 built in bookcases, a room with stained vertical grain doug fir everywhere and 5,000 worth of tile in this bathroom that was only 6x8 feet. (architect specified the most expensive tile i've ever heard of). If I was to ballpark this job, I would originally have said $200 a square foot; It ended up being more like 300. I got $35 an hour for the estimate and the clients seem to be very happy that I did a similar break down on my estimate as I did above, but god what a waste of time! They'll probably go with a scaled back version with our company but the pain hardly seems worth the gain.
I did have their budget and both they and myself knew from the onset that we wouldn't be able to finish the architects project on their house. Should I just see the writing on the wall and run from architects like this? How do you, if you like the architect, get around such an issue? How much for an estimate? Sorry for being so wordy.
These clients were both real estate lawyers but seemed nice thoughtful and willing to listen to reason and sign my contract without crossing any provision out.
No mark up on materials? I would add 40%. I failed to mention I add 20% profit to the bottom line on a bid also. Any large job bids I do I figure everything in 1/2 day increments. Looks like you do too. Again, I can't comment on anything as complex as you describe as I turn them down. I had one offered to me 2 weeks ago that I declined. My personality is of an immediate nature and I am somewhat ADD. So I am suited for small jobs and rarely look at something that will last longer than 3 weeks, unless I can sub a good deal of it out.
Steve, yep two different rates. I tell the customers as much too. But some prefer bids to T&M so that is what they get. DanT
JimSlim I think the "lets all do an estimate" idea is an excellent
one. Of all the subjects covered here and in the other online forums I've visited
over the years I think the art & science of estimating has been largely
ignored or avoided and it probably is one of the most important skill sets that
a builder or remodeler can have. Last August in another discussion here regarding
estimating I said:
Beyond all the debate of what kind of markups to charge it's never been really
explained just what are the various ways to breakdown a project and look at
it from an estimators point of view. While I am sure all the more experienced
builders have taught aspiring carpenters how to use a framing square or how
to layout a curved stair but have they ever really been able to pass on their
expertise at estimating to an up and coming tradesperson in their company. It
seems to me that when talking to other contractors that their estimating techniques
were largely self taught and they are usually at a loss about how to describe
them so that they can be passed on and handed down to the next generation of
contractor. Each new generation seems to reinvent the wheel over and over again.
CabinetMaker Magazine ran a similar project survey in their October 2001 issue
and the results were very interesting.Click
to take a look at the bid package that was used for the survey and click
to view the PDF
file of the article summarizing the results.
Unfortunately I don't have a simple bathroom or kitchen that would make a good
comparison project for us to all work on right now. While I do take extensive
photos of the venues for the projects we do I think since we do mostly stairs
and railing that may be out of the scope of work that most general users here
are used too. I look through my older files though and see what I have that
might work out for creating an interesting estimating package. I'll look at
the warehouse project you've described and try and produce a generic estimate
for it however.
Regarding T&M projects I do every thing I can to avoid them. While a client
may be willing to pay $4400 for the fabrication and installation of wreath turn
like this:
View Image
They might not be so inclined to pay $220 per hour T&M for the same thing.
(20 man-hours @ $220 for the wreath the rest of the project was figured at rates
between $48 per hour sanding & fairing to $85 for general fabrication and
installation). In the new
JLC Markup & Profit forum there are a couple of discussions going on
regarding the plusses and minuses of T&M and you all may find this web page
interesting too
22 Reasons Why You Should Never Do Cost Plus (C+) or Time & Material
(T & M) Contracts or Billing for construction projects. I use different
rates but they are based more on the skill level of the work being performed.
"Do not go where the path may lead, go
instead where there is no path and
leave a trail."-- Ralph Waldo Emerson
Jerrald,
Thanks for getting to the meat of my problem. Its really hard for me to estimate larger projects accurately and everyone seems to start out with this rebuilding the wheel problem. I gave the bathroom example just because it was simple and somewhat straightforward Any project that we can look at and generally grasp will answer my questions just the same. (I've already got that bathroom job and they added 700 sq ft of offices).
Another point about my estimating currently -
I've found the best way of figuring it out is to break it down into the following categories
1.demolition
2. framing
3. insulation
4. sheetrock
5. finishes.
6. paint
6. materials.
at this point i'll have it added all up, including materials and then add usually 20% above that.
Next there is the subs page which for me includes electricians, plumbers, any decorative ironwork, tilesetting, heating.
Then add 20% on to that and add the top cost and b ottom cost together.
We get about 95% of our jobs, which usually are referrals.
Last year we did a time and materials job. The architect had a new substance for us to use for every piece of the project, which wasn't ever discussed on the plans. We worked hard and tried learning all these new pieces but god did our hours add up. We got paid but felt rather bad about the outcome of the whole thing. It seems to go well until the finishes stage, where the hours start adding up and little is getting done, especially when you don't know whats next.
Your 220 per hour for instance works great for such a stairway. It looks like a beautiful piece of work by the way.
Thanks for all the replies.
Mike Butler
Berkeley Craftsmen Builders.
Berkeley CA
Mike, just quickly since I'm about to hit the sack a couple of other "categories" I thought of to consider in producing your estimate that you didn't mention:
1. Project Set-up
2. Project Management ( planning, scheduling etc. it may be minimal for the size project you are describing but a dollar is a dollar)
3. Material Delivery ( is it being picked up? How many MHrs for that or is it being delivered? Does someone need to meet the delivery truck and stow the materials etc?
4. Project Take-down
Talk to ya tomorrow
"Do not go where the path may lead, go
instead where there is no path and
leave a trail."-- Ralph Waldo Emerson
Anyone use the CSI format?
Jerrald,
I guess I consider the project set up included in demolition. What do you usually add to an estimate for that?
Project management is in my 20% overall fee on everything including subs
Material delivery usually goes into daily costs for work. When figuring my labor hours, I project what we can actually get done in a day including a trip on the way to the lumber yard. There are two good yards within 5 minutes of my house; It is good to think of this for jobs that aren't so close to home though. . . I may add an overall percentage to an upcoming job for trips to the yard.
The other point on materials is in my estimatesI give an allowance for each of the categories. I will probably just have materials delivered on jobs out of my general area and include the cost in with the materials. How do you deal with delivery on a bigger job?
Project take down and punch list items are probably my weakest point on my current estimates. It always takes two days to a week to get through this ending of the job and pulling everything out. Maybe I can't let go until everything is perfect , beyond even the clients expectations; Does anyone have any advice on getting out of the job and covering for all those last minute costs?
I am really looking for a way to deal with the bigger job. We keep moving to larger and larger scale projects in which these costs can really kill you.
When I do a smaller job it generally feels like I have a handle on costs. We seem to come in about equally with other quality contractors in our field. With the bigger jobs though I price in a similar way and seem to always come in high. I'm not adding in costs like project set-up or take-down, hardly dealing with management pricing and going strictly by my subs then adding 20% at the bottom.
I generally have come up with a per foot framing charge of 1.5 hours/foot, .25 hour for baseboards; does this seem high?
Another question, we recently bought a bosch jackhammer and want to charge for its use on jobs to pay it off. Do people generally charge more per hour to recover such costs? I think the average client would have a fit seeing a tool rental charge on a bill then our name on the tool when they see it at their job.
In the end I want to feel good about working for nice people and building them something beautiful that lasts. I expect to be paid well for this because it seems such a rareity these days. I charge 60/hour for me and my guys and we seem to generally be in the ballpark.
Mike Butler,
Berkeley Craftsmen Builders