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So, among the bidders with the highest payrolls, the lowest bidder wins?

Sounds yucky for the contractor. :mad:
 
LarryFine said:
So, among the bidders with the highest payrolls, the lowest bidder wins?

Sounds yucky for the contractor. :mad:
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Yes, it is. Everyone is on a level playing field when i comes to direct labor costs per man-hour with fringes and bennies. The prevailing wage rates are so high that it is unlikely anyone is going to bid "down to" the prevailing wage. The problem is that the certified payroll process is so onerous that there are a lot of "back office" costs that just sky-rocket. Lets say that you charge $100 per hour for your labor and direct labor costs (direct wages, fringes, medical, workmen's comp, SSI, SUI, SDI, etc) are $45/hr. The tech is getting paid somewhere in the neighborhood of $25. Other fixed and overhead costs run another $40-$45/hr. Well in Morris county NJ an electrical foreman (the rate I have to use for a single fire alarm tech on a job) is $70.86. You have to pop your rate $50 just to cover what the tech is paid. More to cover the direct labor costs such as SSI. So now you're looking at a labor rate north of $150 per hour without increasing your profit as a percentage of cost. Previously you were seeing 10-15 cents on the dollar, now it's 6-10 cents. If you try to shave your labor estimate and you cut it too close and can't recover costs through change orders you'll take a terrible beating because that certified payroll will force you to pay the prevailing wage even as the job tanks. And don't think you can just jack up your material estimates either. Your bid will probably break out labor and material.

We had thought that prevailing wage jobs could be a nice revenue stream for us. The sales may look good, but the profit margins reek even when the job goes well.
 
Cerified payroll isn't anything to be intimidated by. Call the local labor board and find out how much you are required to pay your guys per-hour. Or part of the bidding documents usualy have them attached. As an owner/operator myself, I have never "paid" myself. I just list my hours and report any draws (invoices) I recieved. You could bid the work for 1$ as long as you pay employees their scale. Don't be discouraged by the mounds of paper work required it's easy after the first few. And it brings competition to some of the EC's trenched in with municipal or federal jobs.
 
LarryFine said:
So, among the bidders with the highest payrolls, the lowest bidder wins?

Sounds yucky for the contractor. :mad:
Click to expand...

The bidder that manages well, makes the fewest time-consuming mistakes, is the winner along with the public that funded the job, that won't be forced to subsidize the working poor.
 
Scenario:
Boss to Employees:
Hey good news. We just landed a Prevailing Wage Job and we will have to pay you the minimum rate!
Bad news is, you make more than that rate already, so we're going to reduce your pay for this job.
 
gadfly56 said:
without increasing your profit as a percentage of cost. Previously you were seeing 10-15 cents on the dollar, now it's 6-10 cents.
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Without increasing your profit as a percentage of cost in comparison to what you're used to on a non-Davis Bacon job. You could bid higher, but then risk not being the lowest bidder, meaning your competititors are OK with it, and that's the point.
 
ty said:
Scenario:
Boss to Employees:
Hey good news. We just landed a Prevailing Wage Job and we will have to pay you the minimum rate!
Bad news is, you make more than that rate already, so we're going to reduce your pay for this job.
Click to expand...


It doesn't work that way.
 
ty said:
Scenario:
Boss to Employees:
Hey good news. We just landed a Prevailing Wage Job and we will have to pay you the minimum rate!
Bad news is, you make more than that rate already, so we're going to reduce your pay for this job.
Click to expand...

That's an interesting and vexing, however unlikely senerio. I know there are a few small pockets in the country where the PW actually is lower than the "going rate" but they're few and far between.
 
220wire said:
Maybe if you pay your guys less you can afford to pull a GEC?:D
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Sure, and if someone drops a dime on you it's $2,500 per occurance per pay period. Hope you have LOTS of money burning a hole in your pocket!
 
lakee911 said:
You must still account for it in your bid. If you own your own company and don't pay yourself (you take draws, for example) you can't bid your work with free labor.
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Checked into this some more ... if you're a one many company, you do have to pay yourself that wage otherwise you are given an unfair advantage. Certified payroll would have to show it.
 
lakee911 said:
Checked into this some more ... if you're a one many company, you do have to pay yourself that wage otherwise you are given an unfair advantage. Certified payroll would have to show it.
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That would be a change then as many family shops do use that advantage.
 
iwire said:
That would be a change then as many family shops do use that advantage.
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From New Jersey's website on prevailing wage work:

Q. Do owner/operators who perform covered work have to be included on certified payrolls?

A. Yes. The information required for owner/operators is the same as for employees, with no exceptions.

I suppose you could plow the money back into the company somehow, but you still pay all the taxes!!
 
gadfly56 said:
From New Jersey's website on prevailing wage work:

Q. Do owner/operators who perform covered work have to be included on certified payrolls?

A. Yes. The information required for owner/operators is the same as for employees, with no exceptions.

I suppose you could plow the money back into the company somehow, but you still pay all the taxes!!
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I was thinking that myself ... keep recycling that $1 ... but you'd tax yourself more than you have.
 
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