ECN Forum Forums General Topics of the Trade Business Related Discussion Question about bidding

hey guys new to the forums but not the field. my father owns a company and i recently joined him as an employee (electrician/estimator/etc). we're trying to expand and grow. most of our bid jobs seem to be from couple thousand to 50k.

my question is: how do you guys do it? what's your method? i've come across two ways.

OptionA:
once i find out how many hours the job will take i multiply that by a "rate" comprised of overhead (for the time of job)/wage/tax/profit (i think 5%) then take material and then over the total place a blanket mark-up 5-10%.

OptionB:
once i find out how many hours the job will take i multiply that by the highest paid employee's wage. ontop of that add tax on top of that add overhead for the time frame. ontop of that add the materials. then take the total and blanket it with a larger profit% (10-25%)

we've been pretty close using the first technique, but i think all the larger companies in the area use the latter of the 2. or somthing similar to it. just trying to get as competitive as possible.

also another question how do you guys handle estimating a prevailing wage job?

I've been bashing away at this for a couple decades, detubbs. It looks like you're on the right track. I've been reading about this for a few days now on a plumbing and mecchanical page that someone has posted here.

I'm no accountant, but I'm willing to learn to build a better business. From what I've read I think your Option A is low, and Option B is what will give you the profit to grow and earn a decent living.

Dave

We do more like A. We break the job down into pieces. Like this many switches. The switch price would have labor and material and MU in it. We have a different labor rate for projects. At the end I will recheck th number by estomating days labor and a quick material amount.

A 5-10% mark up seems low. Where do you figure in for material waist and loss. On a 500' spool of wire the last 25' is normily scrap for us. That's 5% there. On pipe I think I read figure 10% waist. We don't waist much pipe bit we will have a box of shorties at the end. Maybe 5 wire nuts in 100 get lost. Mabe a few trim plates in 100 get dammaged. We replace maybe 20% type A light bulbs because they are dammaged ot taken. What about left over material. It may get used but your still may be spending more on material than your taking in.

Tom

Your option B looks like the best approach. I hope that you're not forgetting workers comp, unemployment insurance, your SSI & Medicare contribution & any other benefits in that hourly wage rate.

Prevailing wage rate jobs are bid the same way. Usually, the prevaiiling wage rates are given out as part of the bid package & the GC should be able to furnish them to you. Keep in mind that you may have to furnish a certified payroll, and never pay anyone an apprentice wage unless that person is enrolled in a state approved apprenticeship program (this one can really get you burned).

Tom

yeah i included the SSI/Workers comp/etc. under taxes, previously i'ved figured that around 60% of what teh employee makes (IE.employee makes 10$/hr we figure 6$ additional to cover taxes/workers comp/ssi/etc. so that sum would be 16$)

if i went with option B what would you figure to be a decent blanket % we've never put up many bids using option B but i was thinking about a 15%-20% general blanket. we're not in a large city (pittsburgh/NYC/Phila) or anything so our blanket may be a little lower than the bigger city guys.

You should really be looking at the thread about mark up on this forum.

As I stated there, unless you know what your overhead is, there is no way to come up with a realistic markup. It would be very easy to use too low of a percentage & lose money or be too high & lose work. Talk to your accountant, he can help you get a handle on this.

As far as blanket markup is concerned, if you get the labor and material markup right & you do a correct takeoff, you don't need a blanket markup. This markup just looks like another place to make a mistake.

Once you start bidding a lot of jobs, you'll learn who your competition is & you should be able to get a good feel for how they bid their jobs. Make sure that you always find out the outcome of any bids you submit. That way you can compare your pricing to others. There is no reason for a GC not to give you this info after he awards the sub-contract. If he doesn't want to give out this info, don't bother biddiing his work.

Tom