How to Properly Bid Jobs

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J

JMV 6 Electric

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Arizona
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electrician
Hello All,

I just recently passed my CR-11 licenseing exams am trying to find the best methods/ practices to competitively bid jobs. Any suggestions or recommendations would be greatly appreciated. Thank in advance!
 
I don't have an across
JMV 6 Electric said:
I'm located in Arizona and am currently bidding new builds, remodels, spa runs, and swimming pools. Typically what % do you do on material?
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I don't have an across-the-board material markup. When I first started working for myself, I did service work, and charged by the hour for labor + double retail for materials.

It didn't take long to figure out that doesn't work in a lot of scenarios.

I rarely charge T & M anymore, because most people want a firm price before I start. So I charge per opening on most of the stuff I do. I can give it to you short on new construction and remodel wiring.

New construction, my total price works out to about triple the cost of materials : 1 part material, 2 parts labor. I get there by charging $30 per opening for labor, then adding the materials cost for each type of opening.

Or you can simplify it by just charging $45 per opening across the board. Count every opening separately, including doorbell button + chime, garage door lo-vo, each 240v receptacle, hood, etc. Everything you run a wire to counts as an opening. Then count every breaker space as an opening. Then you don't add anything for the service.

That gets me in the "above average" price range for most homes.

For residential remodel, my total price is about 5x the cost of materials. I break down each opening a bit different, but similar concept
 
James L said:
I don't have an across I don't have an across-the-board material markup. When I first started working for myself, I did service work, and charged by the hour for labor + double retail for materials.

It didn't take long to figure out that doesn't work in a lot of scenarios.

I rarely charge T & M anymore, because most people want a firm price before I start. So I charge per opening on most of the stuff I do. I can give it to you short on new construction and remodel wiring.

New construction, my total price works out to about triple the cost of materials : 1 part material, 2 parts labor. I get there by charging $30 per opening for labor, then adding the materials cost for each type of opening.

Or you can simplify it by just charging $45 per opening across the board. Count every opening separately, including doorbell button + chime, garage door lo-vo, each 240v receptacle, hood, etc. Everything you run a wire to counts as an opening. Then count every breaker space as an opening. Then you don't add anything for the service.

That gets me in the "above average" price range for most homes.

For residential remodel, my total price is about 5x the cost of materials. I break down each opening a bit different, but similar concept
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Thank you for the information! I really appreciated it!!!
 
For something like a hot tub, with pretty expensive materials compared to the labor, I'll usually figure time and materials separately.

Figure the hours, and add 25%
Add 30% to retail price of materials.
Same with electric car chargers, etc
 
James L said:
For something like a hot tub, with pretty expensive materials compared to the labor, I'll usually figure time and materials separately.

Figure the hours, and add 25%
Add 30% to retail price of materials.
Same with electric car chargers, etc
Click to expand...
Thank you James. I appreciate the information! I just got my license 6 months ago. I'm currently working at a Solar Power Plant but have put my two weeks notice in. I can no longer juggle between both. I currently have 28 jobs for my company. I took electrical wiring as a junior in high school 18 years ago and have been working in the Electrical field since graduating. I really don't have much experience in bidding jobs other than mapping out the work, determining the hours it would take me, then itemizing a material list down to the screw and electrical tape. I value any and all input. Thank you.
 
JMV 6 Electric said:
Thank you James. I appreciate the information! I just got my license 6 months ago. I'm currently working at a Solar Power Plant but have put my two weeks notice in. I can no longer juggle between both. I currently have 28 jobs for my company. I took electrical wiring as a junior in high school 18 years ago and have been working in the Electrical field since graduating. I really don't have much experience in bidding jobs other than mapping out the work, determining the hours it would take me, then itemizing a material list down to the screw and electrical tape. I value any and all input. Thank you.
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Here's one piece of input....BEWARE of yourself.

Something that has happened to EVERY person I've ever known who works for himself. You reach a point where you become over-confident in your ability to size up a job and shoot from the hip on a price.

As soon as you do that, you will see your take-home money become less and less.

Right now, you're crossing all your t's and dotting all your i's because you're afraid to lose money. Don't EVER lose that fear of losing money, because that's one of the biggest causes of losing money
 
James L said:
Here's one piece of input....BEWARE of yourself.

Something that has happened to EVERY person I've ever known who works for himself. You reach a point where you become over-confident in your ability to size up a job and shoot from the hip on a price.

As soon as you do that, you will see your take-home money become less and less.

Right now, you're crossing all your t's and dotting all your i's because you're afraid to lose money. Don't EVER lose that fear of losing money, because that's one of the biggest causes of losing money
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Thank you for that advice. I itemize every single job I do. By doing that it also serves as my material list if I get the job. I have a GC that sent me prints to a new build a couple days ago and am trying to figure out the best method of bidding it. I'm going to try the $45 per opening method yiu suggested and see what that total is. I do that for all lights as well correct? Does that cover the fixture/ can light price as well?
 
JMV 6 Electric said:
Thank you for that advice. I itemize every single job I do. By doing that it also serves as my material list if I get the job. I have a GC that sent me prints to a new build a couple days ago and am trying to figure out the best method of bidding it. I'm going to try the $45 per opening method yiu suggested and see what that total is. I do that for all lights as well correct? Does that cover the fixture/ can light price as well?
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I use that price for every opening, and it includes all "materials" even can lights and trims, bath fans, keyless lampholders....it makes for very expensive receptacles, but very cheap can lights. It's a trade-off.

It does not cover the purchase of "customer selected" light fixtures.

One afterthought...wire prices have gone up a lot lately, to the point that I'm looking at adding about $3.00 per opening. Last house I wired had 280 openings. That'll add almost a thousand bucks.

Next one I price, I'll be looking at that 2 to 1 ratio closely.
 
James L said:
I use that price for every opening, and it includes all "materials" even can lights and trims, bath fans, keyless lampholders....it makes for very expensive receptacles, but very cheap can lights. It's a trade-off.

It does not cover the purchase of "customer selected" light fixtures.

One afterthought...wire prices have gone up a lot lately, to the point that I'm looking at adding about $3.00 per opening. Last house I wired had 280 openings. That'll add almost a thousand bucks.

Next one I price, I'll be looking at that 2 to 1 ratio closely.
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Thanks again James for the advice and assistance!
 
NECA can be a friend or foe, but if used properly it can get your bids (at least labor) competitive. Going to be hard pressed to compete on material costs against the bigger high volume EC. Until you can build a track record for yourself as to how long you need to do different tasks bidding will be sometimes sketchy overshooting and loosing bid or under shooting and loose your shirt.
Mike has a nice program that can help your learning process on this:
www.mikeholt.com

Mike Holt Enterprises - The Leader in Electrical Training.

Electrical jobs
www.mikeholt.com
 
Step 1 is to figure out what your actual costs are. Go buy all the Ellen Rohr books to start with.

Step 2 is to learn assembly based pricing. There are books out their on electrical estimating; buy one and learn it.

If I were starting over, knowing what I do now, i would’ve went straight to a software estimating program for new construction, and a flat-rate book for service. Although, I would still have picked up an estimating book and learned how to do it on pen and paper before using the software.

You’ve got to have a firm grasp as to what all of those numbers mean to be confident in your bids, and to not lose your shirt.

In my experience, when first starting out, I had to be the lowest price to get the job. But you’ve got to know exactly how low you can be without going in the hole. Once you’re established you can work on reputation.

I would also recommend you engross yourself in sales training tools. From 9/yrs old and up my dad was always giving me Zig Zigler tapes to listen to, and books to read on sales and finance. I wasn’t really interested back then but it stuck, and it’s paid off.

There’s a lot of work out there right now and as long as you keep your head above water this first year or two, you can be successful.


Sent from my iPhone using Tapatalk
 
You have to make sure you are charging enough to run your company and have the extra coming in to grow it as well. Don’t worry about the other companies some of those guys are under cutting so bad that they are barely getting by and wandering why they can’t get ahead. When you do quality work and have great customer service you will have an abundance of work. I have come to learn not every customer is right for my company and my company is not right for every customer.
What I did was added up all my expenses for the quarter, insurance, car note, any overhead that I had for the business. Then I knew I wanted to make a salary of 100k a year. I need To make 25k per quarter for salary and added my overhead per quarter. There are around 62 working days per quarter on average . So what you do multiply 62 x 8 hours a day, that equals 496 hours. Then you take your quarter expenses example 31,500 divided by 496 hour, equals 63.50. Then you multiply 63.50 x 3, because on average you should be billing at least 3 sold hours a day. Then you take that number 190.52 and divid it by .50 which equals 381.04 . The reason why you want to double the 190.52 is that you want to make as close as you can to a 50% gross profit. Thats how you get an hourly rate of $381.04. Then I mark all material up 25%.
I’m flat rate so take the average time it takes to change a breaker say 15 minutes = 95.26+ my breaker cost+ mark up 25%
95.26+(54/.75)= $167.26 To change an Afci/gfci breaker.
Make sure that you have a clear scope of work for each job and if there is anything that changes or is not in that scope charge for it.
Make sure you get 30% down on a job if it is a large one, then you get 30% halfway through, and then you get final payment when job is finished.
Don’t let a builder or contractor keep you behind in payments if they don’t pay stop all jobs with them until they do.


There is a guy on YouTube you might want to check out his channel is The contractor fight and he has a lot of great information.
I wish you the best of luck.
 
Rdcowart said:
..The reason why you want to double the 190.52 is that you want to make as close as you can to a 50% gross profit. Thats how you get an hourly rate of $381.04. Then I mark all material up 25%.
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With such subjective bid practices, imagine how confusing it is for anyone to choose a builder, much less a sub-contractor.

My state license board web site recommends a minimum of 3 bids, before filtering out the 99% lacking workman's Comp.

License board advice for project management cleans up the leftovers, by recommending an escrow payment service based on lien releases tied to each project phase, among other things.

I would add to that short list, an armchair investigation for reports at glassdoor.com, corporate name changes, license & credit history, with criminal or civil background checks.
 
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