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#43821 - 10/22/04 10:05 AM Sq. Ft. pricing  
MONOLITH  Offline
Member
Joined: Jan 2003
Posts: 45
Pennsylvania, USA
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.


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#43822 - 10/22/04 11:08 AM Re: Sq. Ft. pricing  
BuggabooBren  Offline
Member
Joined: Nov 2001
Posts: 328
NM
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.


#43823 - 10/22/04 07:44 PM Re: Sq. Ft. pricing  
Peter  Offline
Member
Joined: Jun 2004
Posts: 92
San Diego
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


#43824 - 10/22/04 09:43 PM Re: Sq. Ft. pricing  
MONOLITH  Offline
Member
Joined: Jan 2003
Posts: 45
Pennsylvania, USA
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).]


#43825 - 10/22/04 10:30 PM Re: Sq. Ft. pricing  
Electric Eagle  Offline
Member
Joined: Apr 2002
Posts: 914
Alpharetta, GA
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.


#43826 - 10/22/04 10:41 PM Re: Sq. Ft. pricing  
MONOLITH  Offline
Member
Joined: Jan 2003
Posts: 45
Pennsylvania, USA
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?


#43827 - 10/31/04 11:24 PM Re: Sq. Ft. pricing  
BigB  Offline
Member
Joined: Mar 2004
Posts: 719
Tucson, AZ USA
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.


#43828 - 11/01/04 01:14 AM Re: Sq. Ft. pricing  
LK  Offline
Member
Joined: Jan 2003
Posts: 1,429
New Jersey
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.


#43829 - 11/01/04 07:53 AM Re: Sq. Ft. pricing  
Dave55  Offline
Member
Joined: May 2004
Posts: 697
Crystal Lake, Illinois, USA
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


#43830 - 11/01/04 07:59 PM Re: Sq. Ft. pricing  
chi spark  Offline
Member
Joined: Jan 2004
Posts: 105
Chicago IL USA
Does anyone still use $$/opening + panel&homerun + service riser + permitting?


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