Average Labor Rate And Adjusting Markup

[electriciansnet]

Can someone pleas explain the concept of how an average labor rate is used for bidding. I have been using the same software to bid with for several years but i still have not been able to fine tune my recap page. Lately I have had an avg labor rate set to 20 because it panned out well on one of my wins but my win ratio has been horrible!
Yes I learned back in elementary school that the average of 3,6,9 = 18 and I understand that the average labor rate is used because the hourly rate for a crew is dynamic (i.e. men don't show, show late, get a raise etc.) but I've never fully understood how the software applies it to the labor cost.
I will give you an example on a job we are working but let me explain how my software (Quantum) lays it out.
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Recap Page:
There is a line for foreman and its set to 18.5 (Quantum Default 14) but # of foreman is 0 in this case and most cases because I have a hard time controlling this static and usually astronomical number in the medium-size market we work in and the foreman is always a working foreman. I can plug in any percentage of a foreman I want but it will apply that rate to every hour of the job.
I have the avg. rate set to $20 (Quantum Default 14)
Taxes & Insurance on wages is set to 20% (probably a little high)
Overhead on labor 4%
Overhead on material 10%
Profit on labor 8%
Profit on material 5%
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Okay so after building this job and including all the material needed for this 12000 sqft. 4 week job the following report was generated:
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Quantum Bid Summary:
423.38 Hours @ 20 average labor rate = 8467.60
Taxes and Insurance @ 20% = 1693.52
Total Labor Cost 10161.12

Material 8643.21
Tax @ 7% 605.02
Contractor Cost 19409.35

Overhead 6% Composite (why?) 1237.16
Cost with Overhead 20646.51
Profit 6% Composite (why 6%?) 1319.10
Total with OH/Profit 21965.61
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Quantum Man Load Report:
Man Days 53
Work Days 20
Man Load 2.65
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The job was awarded to us for $23500 all said and done.
Week 1: Foreman and 1 helper 18+10 = 28 Hr
Week 2-3: Foreman and 2 helper (18+10+10)/3 = 12.67
Week 3-present: Foreman and 2 hlp, 2 labr (18+10+10+8+8)/5 = 10.8
Today only: 2 Foreman and 2 hlp, 3 labr (18+18+10+10+8+8+8)/7 = 11.42
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Based on the above figures what should my average rate be set at?
How do I set the rate for the extra men?
I was very aggressive with this sale but my stats have dropped to 1:14 bids. I realize you don't know my overhead but aside from the rate, does anything else seems out of line?

 

[cdslotz]

Several points here:
1) Based on the man loading you show there, your average rate is tracking at $15.72 on the entire job. That's good.
2) Your foreman (foremen) are working foremen, so they are part of the estimated total of 423 m/h being burned as well as your helpers. So far so good
3) The line item for foreman in the summary is where you would apply time (at the foreman rate of 18.50) for his time where he would be non-productive. Let me clarify that our "foreman" is the guy running the entire job, in which a portion of his time will productive, and part will be non-productive.This probably doesn't apply on a small job like your example.
An example where it would apply would be on a job say, 6 months, we would add non-productive time to that line in the summary. This is time to fill out time cards, go to meetings, safety meetings, etc. So say we think he will spend 4 hrs/wk as non-prod, then 6 mo = 25 weeks x 4 hrs/wk = 100 hrs @ 18.5 =$1850.00.
3) The $20 average shop rate sound right to me. Ours run 19.50 to 20. So if you bid the job at an average of $20, you're tracking just fine at $15.72.
At that rate you are picking up $4.28/hr. At that pace, if your man hrs go OVER 21% you will still hit the labor estimate!

 

[shockin]

Yes I learned back in elementary school that the average of 3,6,9 = 18

I hate to be THAT guy but...

3,6,9 = an average of 6 not 18.

 

[electriciansnet]

shockin- yeah what a ding-a-ling oversight...Particularly embarrassing given the elementary school comment HAHA!

cdslotz- thank you for the good info! So, I'm right to stay away from the foreman line-item on these small/ medium-size jobs but I'm thinking it would be a good place to put my estimating hours if I could ever find a way to get paid for those.
Can you explain how the rate tracks to 15.72? And, I appreciate the importance of the bid security but 21% ? Couldn't this be one of the factors that is causing me to lose so many bids? Also, I have taxes and insurance set at 20% but another 4% of overhead on labor.
Finally, I may be close with these figures but that is only after many lost bids and a lot of tweaking to the recap page. What I really need is to get my head wrapped around the whole concept so that I know that I'm applying the correct numbers to the recap page. Can you help me to understand these items a little better? For example, 3 men at $20/her would also be an average rate of 20 but that would certainly sink the job. Also, if I have overhead on material at 10% and labor 4% how does it figure at 6% composite? Dumb this damn thing down for me can you LOL?