T&M vesrus estimate

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mstrlucky74

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Which way do you feel you make more money pricing a change order, T&M(ticket work) or working up an estimate and why? Thanks.
 
mstrlucky74 said:
Which way do you feel you make more money pricing a change order, T&M(ticket work) or working up an estimate and why? Thanks.
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Flat rate estimate every time,You give the customer a grand total price only.

You sell the job as this what it will cost you with everything included.

You can make much more money by pricing the job on the spot and getting the contract signed and the same time.

Google "ES2 Flat Rate" and use the cost calculator you will be surprised what your labor is really worth.:thumbsup:

T&M is a negative because .

1) It allows your customer to view your hourly rate and it had better be less than what they get paid because it is likely that they are an employee and only make so much per hour,And to them it should be more than you .

2) If you are working for commercial customers and GC's that require you to expose your hourly rates,Then you are giving them and easy tool to shop around with because many EC's charge by the hour and are priced way too low to survive for too long in the business ,GC's want your profit and that is why they want T&M=Low hourly rate and all the stock at your cost,,,,Less the sales tax of course.
 
A lot depends on what you can get.

Virtually every standard contract with any GC that has half a brain covers how this is going to work and it is always T+M, with specified labor rates and material that typically only allows a 15% margin over cost.

If there is a large change in the works they may ask you to cost it up as a fixed price because most of the time they have limits to what they can do as change orders and they have to get it approved. Those are your chances to make some money.
 
petersonra said:
Virtually every standard contract with any GC that has half a brain covers how this is going to work and it is always T+M, with specified labor rates and material that typically only allows a 15% margin over cost.
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And this is a good reason to avoid GC's all together .
 
LEO2854 said:
And this is a good reason to avoid GC's all together .
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a lot of companies handle it the same way. it is written into a lot of purchase orders, although not always enforced.

it is sometimes unavoidable to do things on a T&M basis just because you do not have the time to go in and look closely enough at what is going on to get a feel for the actual cost.

We have never had a company turn down our work because of the T&M rates we proposed. Mostly they do not even bring it up at all. And we usually can get more than 15% on parts but not a lot more.

One thing we are very careful about on T&M work is to capture all of the costs. Many people tend to forget a lot of the costs associated with changes and those costs can add up.
 
mstrlucky74 said:
Which way do you feel you make more money pricing a change order, T&M(ticket work) or working up an estimate and why? Thanks.
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I consider an estimate to be T&M and a bid to be lump sum. When I do a change order, I like lump sum, it eliminates the need for signed time sheets and allows you to make more money
 
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