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#42209 09/18/04 02:13 PM
Joined: May 2004
Posts: 697
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Dave55 Offline OP
Member
I think you might be missing out on the fine art of negotiating, guys. You've all got parts of it. Of course if you don't really want the job, you're not going to budge, or if they're going to be a pain in the patootie you're going to make them pay for it.

The part I'm talking about also is when you want the job, but also negotiate with them. You get the job and the money, they talked you out of a little, and everybody's happy.

If you're interested, you should really check out some books on it. I'll bash at it a bit to give you an idea.

First, it's a contract, so they don't know what portion is labor and what's materials. If they're negotiating they'll probable ask you to break it down for them. It's called unbundling. Don't unbundle. They supposedly know the material cost by walking down the eisles of Home Depot. I may say something like "I didn't figure it at T&M, but at per outlet" & "All outlets are a different rate, depending on the type", or sometimes "I figured the materials at cost & labor at a discount".

There are a lot of things to say other than "That's my price, take it or leave it". A recent example is a job that I figured up and the guy called and asked for a few hundred off the price AND some extra outlets. He's a very nice guy and I wanted the job, and now I knew we were negotiating.

I said something like "Gee guy, I figured this pretty close, and those extra outlets are going to require an additional circuit, I'll refigure it." Now since we were negotiating I figure the extra plus a little for the next negotiation. He asked for several hundred off the new price and I gave him a few hundred off the price. We had a change and I got it back. I also gave him some extra work without a change order & repeatedly told him I wanted him happy with the job. If he'd been a jerk I probably would have limited any comments like that.

I gave a little without giving away the profit and also got the job, which is the point after all. Also as a new customer, it's always good to give them something. If they're nice people they'll know you gave it to them , or just say, "I thought it needed an extra outlet there, but I'm not charging you for it". That gets references and repeat business. The repeat business is where you can get that money back, if you want to. I get most of this work without competative bids. With a lot of people price isn't the most important issue, it's that they trust me to be there on time, do a good job and not try to gouge them in the middle of it.

Dave

[This message has been edited by Dave55 (edited 09-18-2004).]

#42210 09/18/04 04:47 PM
Joined: Mar 2004
Posts: 98
O
Member
Sounds like he must have been a car salesman.
I would explain that in this line of work,its time and materials. He is paying for your " years " of experience as a professional.You do quality work. He can be assured that he can sleep at night knowing that his house wont burn down.
Would he want to negotiate on his brain surgeon?

#42211 09/18/04 05:03 PM
Joined: Jan 2003
Posts: 4,391
I
Moderator
From talking to our PMs I think we negotiate all our jobs.

By the same token I have seen us negotiate the stock purchases.

A PM had a Square D guy in one conference room and a GE guy in another, he had them battling each other to get the lowest price for all the panels and transformers.

They do the same for lighting, cable, fire alarm systems.


Bob Badger
Construction & Maintenance Electrician
Massachusetts
#42212 09/18/04 07:55 PM
Joined: Sep 2004
Posts: 35
C
CJS Offline
Member
That's different though....
AFTER you have the job (which was NOT negotiated) you then negotiate your costs with different suppliers. But even then you aren't really "negotiating" it, you're just price shopping. It the same thing customers do.

Negotiated jobs are somewhat seldom done. We do some with a major U.S. chain but it is the only "negotiated" work we do. In other words, these stores don't go out for bids; we do all of them (they're retrofits). We tell them a price and then they usually take it. Sometimes I find I was too low because I don't get to go out to all of them so then I make it up on the next one and they fully understand and are happy to pay. That is "negotiated" work.
I have 2 guys who do nothing but these stores. They travel the state and stay in hotel rooms. We Over-night their checks every other week to wherever they are. The GC pays for the room and it is the GC we negotiate our price with.
They fax me the amount of work to be done at the particular store and I just sort of throw a figure at it based upon the 50+ we have already done. If I find (through my guys) that we were too low, I tell Clay (the GC) and we make it up on the next one by charging more extra's. This way Clay has an EC for all of his stores and I get a steady cash flow from Clay.
No bids, no competition, no headaches.
They pay 50% deposit/expenses and the balance due upon completion (so he can get a signed lien release so he can get paid). It's a beautiful thing.
This is the only truly "negotiated" work we do. Everything else is either Bid, Quoted, or T&M.

:~)

#42213 09/18/04 08:22 PM
Joined: Jan 2003
Posts: 4,391
I
Moderator
I would guess it depends on local practices and the size of the jobs.

From what I have been told our PMs and VPs sit down at a table with the GC and negotiate price and scope.

Items like cutting, patching, excavation we try to negotiate out of our scope. Temp lighting and power we try to negotiate to T&M. Most times we end up doing the basic temps under the contract but maintaining and adding to them is T&M.

Bob


Bob Badger
Construction & Maintenance Electrician
Massachusetts
#42214 09/19/04 11:27 AM
Joined: Sep 2004
Posts: 35
C
CJS Offline
Member
That's pretty interesting...

On some bigger work I guess it may be standard practice but not usual (to my experience anyway).

If the job is a "BID", you cannot negotiate anything with anyone; that is illegal! It's called Bid-rigging. But, I suppose once you have the job you could try to work out deals with your GC...or maybe it never went out for bids on AGC or Dodge but was instead just given to you guys (that happens).

The biggest job I have ever been on was a 26 Million dollar (electrical!) hospital on Fort Bragg in North Carolina. We were subs under Centex. I was one of three Electrical Superintendants responsible for my parts of the project and my subs (we subed out alot of the work like the fire alarm, the nurse call, lightning protection, etc.).

We got the job by being low bidder. BUT ----afterwards you negotiate extra's and other aspects as well (the PM's usually do).
I was one of only 5 licensed electrican's on that job (LOL, believe it or not!) and we had over 100 people doing electrical work on that hospital! That's the way it is in North Carolina. It's a "right-to-work" state.

My present company is much smaller than the one I describe above (it's just me and 5 others in the field and 2 office girls). I am the only license holder and I am the only one required to be in the state of North Carolina. It is MUCH DIFFERENT than my Boston, Mass. days where I first started in this trade.

But, anyway, I guess we could say that some aspects are always negotiated in a way, BUT, a BID or a QUOTE is seldom subject to change except of course if they add more work.

:~)

#42215 09/19/04 12:07 PM
Joined: Nov 2001
Posts: 328
B
Member
One thing I don't think I've seen throughout this thread but is common on almost any job: change orders.

Regardless of whether you've quoted, bid, or negotiated a custom deal on a job, you should always have a section which deals with change orders. The changes requested after the 'final' design and contract are in place, even on government jobs where profit caps are in place, is often the most highly profitable part of the total job.

I'd say 1.5 x your regular rate for construction phase changes is a reasonable start. Having a good 'change control' process:

1) documenting any request (date it was requested, by whom, scope of change noting what was originally designed, etc.);

2) quote for cost of change

3) schedule of change. Even if it doesn't change your schedule, include a comment stating that it won't impact the schedule. Be careful though, if you're taking time out to do doc prep, design modifications, or such, you could be impacting your schedule. Many, many contractors avoid liquidated damages based on the change orders impacting the schedule and it's perfectly legitimate.

3) Submit the change request you've documented, the cost quote and the modified schedule to the person or office that has the authority to authorize the change. Do not do any work until it's signed and added officially to your scope of work or you could be giving the additional T&M away.

This is valid for small jobs as well as large jobs and even if you 'give' the additional work away as a favor or to garner repeat business or referrals, it's might be a good idea to document that change and document it as an "n/c" item, either in your own file or with the customer's statement.

You might end up being surprised at how much you're giving away if you begin to track the changes which occur.

#42216 09/19/04 04:27 PM
Joined: Feb 2004
Posts: 494
M
Member
Dave,
You should have gotten a 10% BONUS/TIP for doing such a small job..

If the electricians out there would stick to their guns, maybe we could make a buck or two. It is possible to lose a bid over $75.

Bid the job so you can make a PROFIT. If you don't then why are you contracting?

If your client doesnt accept your proposal...your better off because if you go down or cut your wages you are short changing yourself..DO NOT LET GUILT RUN YOUR BUSINESS.

Set an hourly rate for each type of work...have a trip charge fee, make 10-15% off parts...YOUR TIME IS WHOW YOU GET PAID!

-regards

Mustang

[This message has been edited by mustangelectric (edited 09-19-2004).]

#42217 09/19/04 06:29 PM
Joined: Sep 2004
Posts: 91
S
Member
My previous employer ran into a problem with change orders. The superintendant of the construction company that hired us, the man on the jobsite running the whole rodeo, had NO problem signing all of our change orders. He would sign his name and then write " Verified work only " He said that is the way his employer wanted him to sign tickets.

After the project was complete and everyone sat down to figure out add-ons, deletions, etc. the owner of the construction company said, " The superintendant in the field is NOT authorized to sign change orders, therefore, we are not liable to pay them. "

Well, he then offered to settle for pennies on the dollar. I don't know the exact figures but I do know my employer was very unhappy. Still do not know what the final outcome was....



[This message has been edited by sparky 134 (edited 09-19-2004).]

#42218 09/19/04 07:35 PM
Joined: Sep 2004
Posts: 35
C
CJS Offline
Member
Sparky:
That's when you take 'em to court!
And you will get your money and then some! They do not have a legal leg to stand on! A verbal contract is almost as good as a written one in court and what the hell did they think you were doing it for; to suck up to them!? LOL!
I must say though that sometimes employers will spin the truth to let you think that they're getting screwed so you don't ask for that raise or expect a bonus or anything....(EC's are known to cry poor-mouth every now and again)....

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