estimating a commercial warehouse help

[wireperson]

what are considered construction rates and service rates?
would you use service or construction rates for remodeling a kitchen , a bathroom , adding a room . . .

 

[macmikeman]

what are considered construction rates and service rates?
would you use service or construction rates for remodeling a kitchen , a bathroom , adding a room . . .

I use remodel rates for remodeling. Between new const and service calls. Most remodels run the full 8 but if you bid like new construction you will loose money cause of obstructions, furniture, cats, dogs, kids, owners, cleanup, all the other goody's and now last but not least--- lead paint...

 

[hardworkingstiff]

I use remodel rates for remodeling. Between new const and service calls. Most remodels run the full 8 but if you bid like new construction you will loose money cause of obstructions, furniture, cats, dogs, kids, owners, cleanup, all the other goody's and now last but not least--- lead paint...

I'm curious as to why you wouldn't use the same rate and figure more hours rather than a modified rate with fewer hours. I know the end game would be the same, but it seems odd to increase your rate because of items that extend the amount of time on a job instead of increasing the number of hours.

 

[cdslotz]

Is that 39.27 per man (/man hour) or 39.27 for both men/Hr?

Per man/hr

Those prices must of been from a few decades back, today you would not be able to keep the lights on with those rates.

Our lights have been on since 1980.
It's the way you price and compete in the commercial market.
Once you establish what COST is, it's the markup structure that makes or breaks you.
So if I have a job where the owner is furnishing fixtures, or gear, etc, it becomes an all labor job, therefore my risk goes up, therefore the markup goes up.
If I have a job that has tons of material/subs, and the material/labor ratio is say, 3 to 1, or better, my labor risk goes down, and I can live with a lower markup and stay competitive.

Finish pricing your job and look at your margin $ (profit) per man/hr ratio.
If it's below say $18, that's a pretty cheap, risky job. You should be around $22 to $25 or better.

 

[macmikeman]

I'm curious as to why you wouldn't use the same rate and figure more hours rather than a modified rate with fewer hours. I know the end game would be the same, but it seems odd to increase your rate because of items that extend the amount of time on a job instead of increasing the number of hours.

Lou, I learned this high precision method at the University of Hard Knocks... Helps in that I do a lot of repeat business with same gc's who have learned how to reverse engineer into square foot. After some training they get the hang of it- my prices for a small new addition with new receptacles and lights will be less than my price to remodel the same size area of a dwelling with equal amount of lights and receptacle outlets to be wired. It does all boil down to time but I don't generally discuss time or materials charges, just finished product costs.

 

[Rewire]

Per man/hr



Our lights have been on since 1980.
It's the way you price and compete in the commercial market.
Once you establish what COST is, it's the markup structure that makes or breaks you.
So if I have a job where the owner is furnishing fixtures, or gear, etc, it becomes an all labor job, therefore my risk goes up, therefore the markup goes up.
If I have a job that has tons of material/subs, and the material/labor ratio is say, 3 to 1, or better, my labor risk goes down, and I can live with a lower markup and stay competitive.

Finish pricing your job and look at your margin $ (profit) per man/hr ratio.
If it's below say $18, that's a pretty cheap, risky job. You should be around $22 to $25 or better.

Margin or profit margin is the difference between what you earn and the cost of production. A 10% margin translates that for every dollar you earned it cost you 90 cents.
labor burden on a 15.00/hr employee breaks down like this FICA 7.60% or 1.15 ,fed/state unemployment tax 7.2% or 1.08,workmans comp 11% or 1.65 so $3.88 burden so a $15.00 employee cost you closer to $20.00 so if you are charging 39.27 you now have 19.27 to cover your overhead take 2.27 for fuel and you now have 17.00 lets take 1.50 for van mantenance down to 16.50 another 2.00 to replace the van down to 14.50 got to insure the van 1.50 down to 13.00 need tools 1.50 down to 11.50 need liability ins 1.50 down to 10.00 telephone 1.50 down to 8.5 utilities 1.50 down to 7.00 advertising 2.00 down to 5 office supplies 1.50 down to $3.50 and out of this you must also pay yourself.Me I dont want to work for $3.50/hr.

 

[satcom]

Margin or profit margin is the difference between what you earn and the cost of production. A 10% margin translates that for every dollar you earned it cost you 90 cents.
labor burden on a 15.00/hr employee breaks down like this FICA 7.60% or 1.15 ,fed/state unemployment tax 7.2% or 1.08,workmans comp 11% or 1.65 so $3.88 burden so a $15.00 employee cost you closer to $20.00 so if you are charging 39.27 you now have 19.27 to cover your overhead take 2.27 for fuel and you now have 17.00 lets take 1.50 for van mantenance down to 16.50 another 2.00 to replace the van down to 14.50 got to insure the van 1.50 down to 13.00 need tools 1.50 down to 11.50 need liability ins 1.50 down to 10.00 telephone 1.50 down to 8.5 utilities 1.50 down to 7.00 advertising 2.00 down to 5 office supplies 1.50 down to $3.50 and out of this you must also pay yourself.Me I dont want to work for $3.50/hr.

No one does, that is why I said he was decades behind times.

 

[cdslotz]

Margin or profit margin is the difference between what you earn and the cost of production. A 10% margin translates that for every dollar you earned it cost you 90 cents.
labor burden on a 15.00/hr employee breaks down like this FICA 7.60% or 1.15 ,fed/state unemployment tax 7.2% or 1.08,workmans comp 11% or 1.65 so $3.88 burden so a $15.00 employee cost you closer to $20.00 so if you are charging 39.27 you now have 19.27 to cover your overhead take 2.27 for fuel and you now have 17.00 lets take 1.50 for van mantenance down to 16.50 another 2.00 to replace the van down to 14.50 got to insure the van 1.50 down to 13.00 need tools 1.50 down to 11.50 need liability ins 1.50 down to 10.00 telephone 1.50 down to 8.5 utilities 1.50 down to 7.00 advertising 2.00 down to 5 office supplies 1.50 down to $3.50 and out of this you must also pay yourself.Me I dont want to work for $3.50/hr.

We all figure burden differently. What you show there comes out to 16.45% burden.
Our runs 35% plus 15% if it's worked out of a van and not a mobilized jobsite.
Also, I'm charging average shop rate of appox $20/hr for a $15 helper.
Again, these are construction rates, where I might have 5000 to 20,000 man/hrs.
We look at the return of margin $/man hr.
My return usually runs between $18 and $25 per man/hr on every job we do.

 

[cdslotz]

FWIW, our service rate on commercial is $85/hr journeyman and $45 helper

 

[Rewire]

We all figure burden differently. What you show there comes out to 16.45% burden.
Our runs 35% plus 15% if it's worked out of a van and not a mobilized jobsite.
Also, I'm charging average shop rate of appox $20/hr for a $15 helper.
Again, these are construction rates, where I might have 5000 to 20,000 man/hrs.
We look at the return of margin $/man hr.
My return usually runs between $18 and $25 per man/hr on every job we do.

so you pay 20/hr + 8.75 (35%) =28.75 , 39.27 - 28.75 =10.75
if you pay15/hr + 5.25(35%) = 25.25 , 39.27 - 25.25=14.02
how do you get 18-25 return at the rate you charge?

 

[cdslotz]

I don't look at just the margin on labor. I look at the overall job structure. Then I mark up accordingly.
Here's one I just bid (rough numbers)
This will be a design/assist job so design time is incl

Misc Mat $20,083
Quoted Mat $124,000
Subs $23,535
DJC $1902
Equip $4300

Direct Labor 1777.13hrs @19.50 x 1.35 = $46,782
Indirect Labor
PM 120hrs @ $39.00 x 1.20 = $5616.00
Supt 80 hrs @ $27.00 x 1.35 = $2916.00
Design fee 16 hr @ 35 x 1.35 = $756.00

Total COST = $230,245.00
15% OH = $ 34,537.00
0% Profit
Bid Price = $264,782.00

Now, since this is a high Mat/Subs to labor ratio job (3.58 to 1), I can bid this at 0% profit and still make $19.43 margin $/MH ($34,537/1777hrs).
It's an OK job, but good in today's market.
Let's suppose the owner was furnishing the fixtures (worth $103,500)
That brings my margin $/MH down to $10.70. I would then add a profit markup of say, 10% to get the margin $/MH to 18.90

I know that's confusing, but it's all about risk on labor. The more material $'s are there, the safer we are.
And this really doesn't apply to the original situation, where he had $3500 in mat and $12000 in labor, but if this was my ratio and the owner was buying 20-25K of fixtures, it would apply.

 

[Rewire]

I don't look at just the margin on labor. I look at the overall job structure. Then I mark up accordingly.
Here's one I just bid (rough numbers)
This will be a design/assist job so design time is incl

Misc Mat $20,083
Quoted Mat $124,000
Subs $23,535
DJC $1902
Equip $4300

Direct Labor 1777.13hrs @19.50 x 1.35 = $46,782
Indirect Labor
PM 120hrs @ $39.00 x 1.20 = $5616.00
Supt 80 hrs @ $27.00 x 1.35 = $2916.00
Design fee 16 hr @ 35 x 1.35 = $756.00

Total COST = $230,245.00
15% OH = $ 34,537.00
0% Profit
Bid Price = $264,782.00

Now, since this is a high Mat/Subs to labor ratio job (3.58 to 1), I can bid this at 0% profit and still make $19.43 margin $/MH ($34,537/1777hrs).
It's an OK job, but good in today's market.
Let's suppose the owner was furnishing the fixtures (worth $103,500)
That brings my margin $/MH down to $10.70. I would then add a profit markup of say, 10% to get the margin $/MH to 18.90

I know that's confusing, but it's all about risk on labor. The more material $'s are there, the safer we are.
And this really doesn't apply to the original situation, where he had $3500 in mat and $12000 in labor, but if this was my ratio and the owner was buying 20-25K of fixtures, it would apply.

is the 11% $/MH you will need for workmans comp figured in the overhead or is it deducted from the 19.43 along with FICA and the 7.2% for unemployment insurance?

 

[cdslotz]

is the 11% $/MH you will need for workmans comp figured in the overhead or is it deducted from the 19.43 along with FICA and the 7.2% for unemployment insurance?

It's in the 35% burden on direct labor cost.
Margin has nothing to do with labor cost. Margin $/man hr is just a ratio we look at to determine what margin we have to get.