We are using a new electrical estimating software program that has a calculation that I do not understand. Simply put the summary page exist of (1) material cost total (2) material markup total (3) labor cost total (4) labor markup total (5) overhead total in percentage (6) job profit in percentage. The overhead total is a percent of items 1 - 4. The job profit total is a percent of items 1 - 5. The bid price is items 1 - 5 plus item 6. What I do not understand is why there is a job profit calculation on top of and in addition to a material markup and labor markup. It would seem as though profit margins had already been considered in the markup of material and labor. Would you know what the purpose of or reason for a job profit calculation is? Regards, Gary
bidding software terminology
- Thread starter GEA
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- Chapel Hill, NC
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- Retired Electrical Contractor
I presume everyone bids differently. Some may put a low markup on materials with a job profit at the end while others have a higher markup that includes their profit.
bidding software terminology
Dennis,
Thank you for taking the time to consider my question. My interest is not in the math of the formula, I understand proportional percentages can be allocated to multiple markups at different stages of the form. I can do the math and obtain the margin of profit I wish on the bid. The question is simply why multiple stages of markup? I thought perhaps a professional estimator might consider my question and offer a logical explanation of why an estimating software program is setup this way. What is the advantage or purpose? I wish to obtain knowledge of estimating from a professional estimator. My experience is more technical than estimating, thus this multi-staged markup does not make sense to me.
Regards, Gary
Dennis,
Thank you for taking the time to consider my question. My interest is not in the math of the formula, I understand proportional percentages can be allocated to multiple markups at different stages of the form. I can do the math and obtain the margin of profit I wish on the bid. The question is simply why multiple stages of markup? I thought perhaps a professional estimator might consider my question and offer a logical explanation of why an estimating software program is setup this way. What is the advantage or purpose? I wish to obtain knowledge of estimating from a professional estimator. My experience is more technical than estimating, thus this multi-staged markup does not make sense to me.
Regards, Gary
fridaymean
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- Location
- Illinois
Which software are you using?
It may just be set up that way so you could mark-up the different components of the job as you see fit. Maybe you want 10% on material, but you include mark-up in your hourly rate....the software does not know how you figure out the information you put in, so it asks.
I don't specifically apply "mark-up." Our hourly rate has a bit added to it, before it is entered into the software. Then we apply OH, and sometimes P.
It may just be set up that way so you could mark-up the different components of the job as you see fit. Maybe you want 10% on material, but you include mark-up in your hourly rate....the software does not know how you figure out the information you put in, so it asks.
I don't specifically apply "mark-up." Our hourly rate has a bit added to it, before it is entered into the software. Then we apply OH, and sometimes P.
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