Hello guys.

I'm about to turn in two bids for residential work, one a remodel, one a complete new home.

My process is to create a price by itemizing the exact materials and estimated labor hours, then I like to compare it to a $ per square foot number to check myself.

I was wondering if anyone could give some input as to what they consider is a reasonable sq. ft. number they use.

My understanding is anywhere between $2.25 to $3.00 per sq. ft. was standard, but I'm feeling the $3.00 is taking a gamble at being too high and losing the work.

Any thoughts?

Thanks.

Monolith, I've been learning a lot about estimating recently. One of the things that the 'pros' use (project in excess of $1M) is to get both the low end and high end rates or estimates per sq. ft. and then, as my project leader says, "Go 2/3rd's to the high side."

If I remember correctly, this is a simplification of a Monte Carlo method of probability.


Low end point $2.25
High end point $3.00
Delta between end points $0.75
Delta divided by 3 $0.25
High end point -1 delta $2.75
Then add contingency:
Contingency of X% $0.14 5% in this example
(based on confidence of estimate and/or raw data,or likelihood of error or historical data;often the contingency starts between 5 - 10%)
Total for estimate $2.89

Don't forget to state your rate for change orders and track any change requests meticulously as this is where the highest costs can often be incurred. If the service provider hasn't been diligent in both stating the terms & conditions for changes once a bid or stated price has been accepted and establishing changes once that acceptance is in place, you can be the one footing the bill for work done that was added to the scope which quickly adds up.

Whenever I hear "square foot" pricing, I think stupidity.
What really matters is the total cost of the job or bid. Sure you can divide the cost of the job by square feet and get the $/'^2 but that's just a meaningless number. You have to make a profit. If you lose the job, that is better than working for nothing.
For remodeling jobs, go for time and materials.
~Peter

Whenever I hear "square foot" pricing, I think stupidity.

Oh, that's pleasant. Thanks.

Actually, since all contractors come within a certain margin with their pricing, an average square foot number is actually derived.

No one said it was the preferred or ultimate method.

All I said was that it was a good way to check yourself after you did an item by item estimate, to double check that you didn't price yourself out of the acceptable range.

A lot of people do it. It's a good self check tool, which to me seems more like intelligence, than stupidity.

I understand your point about T&M reality outweighing a generic sq ft number. But you also need to consider the environment where it's being applied.

I was a foreman/superintendent for large commercial projects for years. 15 story medical office buildings, hospitals, nursing homes, 18 screen movie theaters, etc. In that environment, the difference in values of various materials and equipment, along with the wide varience in labor logistics, make it not only impossible to arrive at some sq ft average, but it would stupid to do so. As you said.

But I'm talking about a house here. If you go to price a housing development, with a few models, it's not very hard to arrive at a sq ft number since your talking about a pretty standardized layout of the usual stuff..plastic boxes, rolls of romex, and a couple of days hammering staples.

Of course this excludes any oddities or special requests by homeowners. But those can easily be added in.

I know a lot of contractors who do exactly what I said...A detailed itemized estimate. box by box, wire by wire, hour by hour. But then after, there's nothing stupid about double checking your price against the average sq ft price for house wiring in your area.

If you know the average price for house wiring in your area is $2.50/ft', but the price you're about to give worked out to $5/ft', when there's nothing unusual in the house, you better figure you did something wrong.

I don't really see how double checking yourself that way could be considered 'stupid'. The people I know that do it, are actually pretty intelligent and successful.



[This message has been edited by MONOLITH (edited 10-23-2004).]

We use a square foot method for some of our new work. I would never use it for remodel work. We only use the square foot price to figure the basics, then add in for other items. Every job has a service but this needs to be seperate from the square foot because it is a fixed cost that doesn't vary much based on square footage. A 2500 sqft bldg will need the same basic service that a 3500 sqft bldg will, so you wouldn't want that in the variable price. Basically the sq ft method only gives use a base price for the basics, then we add extras.

So in reference to the original question, what do you consider a valid Sq ft number for house wiring, that is acceptable to the average GC?

I am bringing this back up to hopefully see some more input, as I could use some help myself on bidding new construction. Of course geography will play a role, as I see the original poster is in PA. while I am in the west.

quote:
"If I remember correctly, this is a simplification of a Monte Carlo method of probability."
_________________________________________

Bren,

Many EC's try to use a sq ft method, for bidding production work, and if the job has been estimated using take-off sheets, from a set of plans, and all material costs are known, along with a list of actuals for labor, then they stand a pretty good chance of developing a job for profit.

After all the cost are known, add your profit, then take that figure and develop a sq ft price, if that price is to high for the GC, then maybe you are the winner, because most GC's we did production work for never paid anyway.

I think LK has really nailed this one. The GCs motivation is getting the subs to work for less so he can put more money in his pocket.

You start out with the real cost as LK describes, then the GC looks for someone that's hungry enough to do it without profit, then someone else who will do it for less labor. It becomes a downward spiral of shortcuts and starvation. Don't be part of it.

Dave

Does anyone still use $$/opening + panel&homerun + service riser + permitting?

Don't forget that just because the other guy can do it for that price, doesn't always mean that you can too. Just because one EC can squeek a small profit out at ($3??) per ft2, doesn't mean that at the same price you want the job to have a stab at turning a profit. You need to figure out what things cost you. Your labor, your materials, the brand cans you use, the fact that you terminate you phones to 66 block, the brand panel you put in. There are a lot of ways to cut corners on material.

Also many ways to cut corners on labor; don't pay overtime, use install methods that are quicker, yell "hurry" throughout the day, pay your men less, pay your men under the table, don't pay taxes, hire illegal aliens.

But the only way to really know if you will make a profit is if you know what your costs are. Your competition just may have a competative edge over you and be able to provide quality service and product at a price that yields a small profit for them that you would break even or lose money on. Or they may use methods that eventually catch up with them. I have watched these companies rise and fall, and now they no longer compete.

[This message has been edited by Jps1006 (edited 11-01-2004).]

OK I just finished a bid for a custom home. The total living area is 2850 then theres a 2 car garage and a motorhome garage. Total sq ft with garages is 5135. It's got a Whirlpool tub, 4 bathrooms, 4 bdrms, Kitchen island(slab floor), 1 floor receptacle, 13 hi hats, 28 GFCI protected receps, lots of 3 and 4 way switching, 11 ceiling fan outlets, 2 A/C units and 2 air handlers. The service is 200 AMP.
I used RS Means pricing and came up with $13,639, and $11,593 after applying my location factor of 85%.
This would put a sq ft avg at 4.06 on the living area, or 2.25 if I figured the total area, not including porches.
With the $13,639 figure the avgs are 4.78 and 2.65 respectively.
My post is not to prove anything but rather to gain insight from those more experienced in estimating.
All comments are welcomed.
B

BigB could you explain your RS Means pricing and location factor of 85%. I'm new at the bid game. I do reconize that it could be a cut throat world in the bid department. But I do not want to work for peanuts either. I feel that if I provide a fair market price, with good workmanlike manners, that my best calling card would be word of mouth by the homeowners.

"Does anyone still use $$/opening + panel&homerun + service riser + permitting?"

Yes, +HVAC

It's been so long since we did a house I'd have to go back and see what our price per opening would be. Somewhere in the $25-$30 range I'd guess. We are in a remote rural location and everything here runs less than average and way below the meto areas.

I price new home by the opening+service. Keep in mind I only do custom homes and rarely am bidding against anyone. Per opening price is $30.00 with NM boxes and $35.00 using steel boxes. 200A service w/o disconnect is $1200.00 w/disconnect is $1450.00. 320A service is $1600.00 using meter/main and MLO panels. All tin plated copper bus equipment(GE), no conductor smaller than #12, P&S CBR5352 recepts, spec grade switches. Zero call backs.

Bert,

RS Means makes books and software for the construction trades, including estimating products. They use a national average, then they provide adjustment factors for different localities. Try going to www.rsmeans.com

I do very little residential construction. I'd like to think that it has more to do with the greed of general contractors than my failure as an estimator (after all, if I was a failure as an estimator I would have starved a long time ago).

I didn't care for an estimating book that gave labor units for every connector, box, ring, wire, etc. Very tedious. I don't know if this one is similar, but I'd love to see a different format. They never allow for the manufacturer defects.

Some things I think about are:

Distance from job to truck...are you at the front door, or fifth truck to the job, halfway down the block?

How many other trades on top of you? "Hey Sparky, our saws tripped the breaker again!"...and laborers who don't watch where they're going & will hurt you as much as themselves.

Is it a five-day-to-rough job and the general wants it done in three days, so some OT is involved?

Just a few things to think about. Good Luck.

Dave

edited for spelling...again

[This message has been edited by Dave55 (edited 11-03-2004).]

Hi,
I have found that it is difficult to charge more than what the majority of ec's are charging.

One way to find out is to make a few phone calls and see if you can get some prices.

The market in your area dictates what you can charge. The home owner will undoubtedly hear of someone who will do it cheaper...i hear that a lot of times..

I have bid jobs every way known to man..the best are the ones for a sq. ft. price not by the hour or opening.. you can figure that anyway you want..by the opening, by the sq. ft. or by take off..but here is what will happen unless it is a spec house..there will be changes and additions to the job. You have to be a little flexible and include a minimum amount of phone cable and three ways..I have never seen a job that went off as planned..this is where the extra money is at...get a written contract/proposal that clearly states who can authorize changes.and what the hourly rate is for changes or a list of fees per opening extra switch etc....when they are requested submit a change order request and have them sign it then bill them after the final inspection if there is one.

I have seen $5K jobs go to $10K by doing good work, by suggesting items when the homeowner asks such as additional panels, service upgrades, recessed lights, outdoor lighting, etc.

a lot of money can be made in room additions and remodels.

I sometimes estimate the number of hours I think that I will spend on doing ANY WORK RELATED TO A JOB then estimate the materials..if I pay myself $45 an hour and the materials are $1000 and I spend 40 hours on the job then I can see doing that job will yield $1800 plus a grand in materials...now ask yourself is the work worth that $1800? If you can do a house in less than 40 hours for EVERY HOUR SPENT WORKING ON THAT JOB then you could see more dollars..I find it hard to think that you would actually spend 40 hours depending on the size of the home..if it is an average 2000 sq ft then $2 a sq. ft. will be $4K so that would be over twice as much money! I can sell $2 a sq. ft. better than $45 per hour...but if there is extra work then you can glean more hours from the job..

I try to stick with what the majority is doing.X DOLLARS PER SQ. FT. is the BEST WAY TO DO IT...most any general contractor will be glad to tell you what he's used to paying for spec or custom homes etc.

I have seen as low as $1.25 sq. ft. and as high as $4 per sq. ft..me I am in the middle..I have seen $35 an opening up to $50 an opening..

get as much as you can is the goal..as long as it is honest..do NOT pay under the table and do not fail to pay taxes..you will get away with it for a little while but it will catch up with you..

remember..the man who enriches others shall so too be enriched..

hope this helps..

-regards

Mustang



[This message has been edited by mustangelectric (edited 11-03-2004).]