T&M Pricing?

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kencoel

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I was asked to do a job for Time & Materials. Wondering if there is a standard on how to reach this amount. T&M plus overhead and profit added on?
 
kencoel said:
I was asked to do a job for Time & Materials. Wondering if there is a standard on how to reach this amount. T&M plus overhead and profit added on?
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What kind of job is this for? Is it commercial service? residential? new commercial? you get the idea. Depending which markets T+M can be ok. I found it ok for commercial service calls, and govt. projects where we were able to breakout every last minute detail of the whole operation and add all factors in before adding profit.
 
kencoel said:
I was asked to do a job for Time & Materials. Wondering if there is a standard on how to reach this amount. T&M plus overhead and profit added on?
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Labor rate+Benefits package+overhead+profit. If this is a true cost plus situation and you have to show costs to owner/contractor, raise your overhead markup to gain the extra profit margin.
 
ben alot of jobs i've done where i would a made more if i had been charging t&m instead of my bid price. not that my bid was low every time, just either it was too low: i was too slow, or my material cost more than i thought. i figure there was more than a couple jobs i made less than $50/hr on, i am shooting for $75, and eating the travel time mostly
 
also take into account the number of men and man hours on the project...

for example: total package per man is $40/hr....you bill out at $60/hr...so theoretically, that man works 8 hrs a day, and you bill 8 hours a day...earning yourself $160 before paying overhead...

if you a one man operation, and you pay yourself as well as you would an employee, you'll lose money at this rate after paying your overhead....

if you have 10 men on site, you will earn $1600/day before overhead...you'll probably make a little money...not much more overhead here than the one man shop...assuming you don't have each man in a separate company truck...

but have 50 men on site, and now you are earning good money, $8,000 a day before overhead...


so it's all a numbers game...
 
bullheimer said:
ben alot of jobs i've done where i would a made more if i had been charging t&m instead of my bid price. not that my bid was low every time, just either it was too low: i was too slow, or my material cost more than i thought. i figure there was more than a couple jobs i made less than $50/hr on, i am shooting for $75, and eating the travel time mostly
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A good estimating program might help until you have more history to look back at.
 
I've found T&M is the only way to go where there are no prints or plans to bid off of, or in some commercial work where the GC doesn't quite know where equipment will all end up. I tell them since it's a "moving target" there's really no way to give even an estimate. I've found that even if you tell them a verbal estimate, they tend to try to hold you to that figure. That's why on my last two big T&M jobs, I didn't even give an estimate, just gave them a fair labor rate. At least they can't come back on me and say "I thought you could do all this for x amount"...

As far as what that rate is, the other posts make it clear that overhead & profit better be figured in to your labor rate... I have a hard time getting much for mark-up these days for materials, so I've just about stopped trying, & to incorporate that into my labor rate...
 
Rewire said:
A good estimating program might help until you have more history to look back at.
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Another thing is you have to actually believe the numbers that the estimating program comes up with.

When I first started using a good estimating program I would look at the hours and think they sounded too high so I would lower them to what I really thought they should be.
I always think I can do things faster than I actually can.

Turns out I was wrong.
 
Kdog76 said:
That's why on my last two big T&M jobs, I didn't even give an estimate, just gave them a fair labor rate. At least they can't come back on me and say "I thought you could do all this for x amount"...
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True.
They just come back and complain that it shouldn't have taken you so long to complete the project. You weren't as efficient as you should have been.

Then they go ask some other electrician how long they think it should have taken. He agrees with the GC that it should not have take so long even though they've never seen the job. Then they proceed to tell him they would have done in less time and for $5 an hour less. :)
 
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