Estimating first decent sized job

A

Allegiantelectrical

Member
Location
Menifee
Occupation
Contractor
Hello all i'm estimating my first decent sized commercial job. Probably in the 150-300k range, I'm wondering how much do you guys markup material, and is there any pro/con to doing that? Also do you guys markup by adding material + labor + overhead and then multiply that by your markup percentage? New to the game and would appreciate any feedback!
 
Are you using software to do takeoff? Have you done a takeoff to come up with total material $.... total estimated man/hrs.... total non-productive labor man/hrs.... total job expense items? Have you sent out counts for fixtures, gear, Fire alarm and other subs?
Let's start there......
 
May be a good time to bring up Celtic's rule from about 20 years ago here on the forum, which is don't bid anything larger than twice you most expensive contract to date. (if not the exact wording, that was the point) I only bring it up because you say it's your first decent sized commercial job.
 
Sent material takeoffs to wholesale houses, counted man hours I know based off experience it would take to do the job, added all items together and multiplied by markup percentage
 
Allegiantelectrical said:
Sent material takeoffs to wholesale houses, counted man hours I know based off experience it would take to do the job, added all items together and multiplied by markup percentage
Click to expand...
So it's a "no" on what I mentioned......I will tell you this as a 100% certainty....your competition will do exactly as I described
 
First, markup is meaningless until you determine what it is used for, and what is being marked up.

Some contractors, who perform many jobs that are nearly identical, will total up cost and then add a percentage that will then cover overhead and profit.

Using that method when you perform jobs of varying sizes and types can get you in deep deep trouble, though. As I explain in the following threads, a time-based method for overhead is usually more accurate for the vast number of contractors.

Using markup on materials to recover overhead is a quick trip to being out of business. Here is an example: Last week a I did a service call on a non functioning circuit. I found a broken wire and replaced it. Took about 4 hours and I used maybe $40 in materials.

Next week I have a home standby generator to install. These typically take me 3 days. Materials for the generator, pad, battery, ATS, wiring, gas piping, and permit, is around $10,000.

My overhead is roughly $375/day.

If I markup the materials on the half day service call to cover my OH, I mark it up 468%. If I use the same figure for the generator job, it will be a $50,000 job, and no one ever will pay that.

If I markup the generator 10% and the supplies 20%, it maybe $2,000, which is fine.

If I markup the service call materials 20%, I recovered $16 towards the $187 that I actually needed, so I won’t be in business for long.

I markup materials for several reasons, but none of them is to recover overhead. I markup for inevitable extra trip to the supply house because something is on back order. I markup for the fact that I will never account for every screw, nut washer, and strip of tape I will use. I markup because I have years of knowledge and experience that enables me to purchase the proper items. And I markup for the possibility that something may be damaged, maybe by me or my crew, or maybe on site it’s discovered that that part won’t actually work and I need to get something different.

At the end of the day, you will have to KNOW YOUR OWN NUMBERS before you can develop ANY system for pricing. Because until you know what it cost you and your business, to be in business, and do a certain job, any method of sf ft numbers, or pricing by the opening, or hourly with “markup” on something, is like throwing darts upside down and blindfolded. And it probably won’t last long.

Please take a moment to read the two threads linked below.



 
You must log in or register to reply here.
Top