Splitting Labor and Material On A Real Bid

[George Stolz]

Have you ever been required to split labor and materials on, say, an $80,000 bid for a GC? Those little hairs on the back of my neck are giving me fits on this one. What reason would cause a GC require all trades to submit a bid splitting their labor and materials?

We looked at another job for this GC, a small old house in need of some upgrades, and again he made it clear his company requires split bids. I asked him why, he said "It's what they require."

"Who?"

"My partners," referring to the other two guys in their three-man outfit. I didn't really see that as an answer. My proposed reply when we submit a normal bid is that we're required to submit a lump sum bid. Can't wait for that conversation to go the same way.

I just see it as an opportunity to leverage against us, IMO. Are my fears unfounded?

 

[topper]

Hard to know if you should be concerned. I typically would respond that we use unit pricing that includes material and labor and offer to give a break out that would be "approximate" and an explanation that my proposal includes all materials and labor to complete the project based on the plans, specs, etc. regardless of actual final material and labor costs.

Jim

 

[mcclary's electrical]

I always do what he did,,,,,,,blame it on somebody else. I always say I bid by Electrical Software, the software does not break down time and material. I actually, as I'm telling them this say I really wish my software had that option, but it is not calculated for that, and there is no way to do it. I'm really sorry:grin:

 

[cadpoint]

IMO

The third party wants to see your numbers like he works his numbers!

They either want to know your mark-up or know that their numbers of their own estimate are good or in the ball park... Or use your numbers to get another somebody in there.

 

[ceknight]

I just see it as an opportunity to leverage against us, IMO. Are my fears unfounded?

The more information you give, the more they can chisel away at it. And the more likely it is they'll use your numbers to chisel other bidders, too.

But yeah, you already know that.

 

[growler]

"My partners," referring to the other two guys in their three-man outfit.

I would worry more about dealing with a three man partnership than anything else.

I don't like partnerships I like to deal with one person that's in charge of a project. One person that's responsible. Partnerships often fall apart and when it's in the middle of a job that's not good.

On every job you have to make a decision if it's worth going after. No job is perfect, they all have some disadvantages. Distance, working conditions, risk, poor attitude of GC ( not easy to work with ).

Is this job worth going after? How far are you willing to go?

 

[hardworkingstiff]

I usually respond (verbally) to questions like this with "It usually works out to 50/50".

It's a game at this point and the rules are not explained to you. I agree with Growler, how bad do you want this job?

Did you get that other job you mentioned?

Are you waisting your time with this GC?

It's up to us to try to get the best customers we can, but alas, in this day and age, we can't be toooooo picky.

Good luck, let us know how it works out.

Edit: A lot of times a schedule of values is required after a job is awarded and before it starts so payment schedules are understood by all. It could be that they (the partners) are using some kind of modified weird thinking based on some experience with this. I would be careful about what you put in writing.

 

[gadfly56]

ST-8 or Equal?

ST-8 or Equal?

In New Jersey there is a sales tax exemption for the installation of capital improvements, available if the owner files a form ST-8. Tax is then collected only on the tangible property that is installed (materials). This is a possible reason for a labor and material breakout.

 

[Rockyd]

I agree with the others. How valuable is this GC? Do you think he might want to use your numbers to start a "buddy" of his, by using your numbers? That you have some very good contacts (material pricing), is none of his business how much you make (A good percentage hopefully ) - the part that is important is getting excepted, with a real bid.

 

[Sierrasparky]

There are only two reasons in my book for wanting a breakdown of Labor and material on a lump sum bid.
1) they want to know your prices so they can chisel you and maybe supply some parts.
2) know your pricing so they can use it for future reference , issue , under bid you ect.

 

[IrishRugger]

Be careful not to give this GC too much information if he doesn't use it against you now he will do it later. I have had GC's who consider themselves friends of mine that have pulled similar stunts. use the excuses about software and unit pricing they want to further themselves at your expense. Those GC's who ask me to break down labor and material or ask me questions that I feel uncomfortable answering at on my beware list.

 

[Sparky555]

I don't offer breakdowns. It's a tactic for negotiating. For a good GC that had to have a split I'd give a material number without tax and 20% under reality so they wouldn't purchase the materials. With the split I'd add language that the split is only an estimation and not legally binding.

 

[Sierrasparky]

ain't this contracting game great!

 

[petersonra]

There are some legit reasons for wanting a breakout this way. We get this kind of request pretty regularly.

One customer we have has a separate budget for outside engineering services so we break out the engineering cost from the labor and parts cost.

Sometimes there are sales or property tax issues involved.

Or it could just be a negotiating tactic.

I disagree with the idea that you should lie about it to your potential customer as has been suggested by some posters. If you do not want to give them a breakout price, just say so. If that is unacceptable to your potential customer, you can part ways with them, but you won't be a liar.

 

[stevenje]

Tell them it's 50/50. If they ask which ones labor, find another contractor!

 

[eric9822]

We try to get bids broken down by Labor and Material for tax purposes and internal accounting purposes. For awarding purposes I really don't care what the split is unless one contractors split is drastically different. In that case we usually inquire to ensure the scope of the job was clearly understood.

 

[cowboyjwc]

Tell them if they want the price broke down you'll do it T&M other wise the bid is the bid.

 

[okeefe]

They may want a breakdown so they can pick lowest contractor for each task and have a bunch of electrical contractors working on the same project.

 

[cadpoint]

They may want a breakdown so they can pick lowest contractor for each task and have a bunch of electrical contractors working on the same project.

That would be state dependant (IMO) and wouldn't work here, Per say... You can break out parts of this contract wise but the orginal EC has control.

Fire alarm, even control wire the dreaded 725 guys, might pull there own depending on scope and size of structure.

They might be Sub's like "F/A", but they have their own inspection and clearance of the work in my State.

I'll give you your statement of; a Permit for a Job, but not duplication.

 

[dmagyar]

When you send me the contract, I'll provide a schedule of values

When you send me the contract, I'll provide a schedule of values

Tell them if they want the price broke down you'll do it T&M other wise the bid is the bid.

Thats the only way a safe way a GC should get any infomation, with the schedule of values that you're going to billing percent complete by.