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Discussion Forum

Estimates

Craigabooey | Posted in Business on May 21, 2003 04:35am

I am a remodeling contractor in the Long Island, New York area, who is just starting out. Word is getting out that I do nice work so I am starting to go on alot of estimates. The problem is I am terrible at doing them! I am always underbidding myself either because I don’t want to offend people and lose the job or because I just don’t realize all the little things that come up during the course of a project. Just about every job lately I’ve done I’ve walked away thinking “man I should have charged them more money!” Anyway that is my question, how do you tell a customer one price and when something comes up, (like that wall that is all rotted when you’re just supposed to resheetrock it) you tell them “hey it’s going to cost more now!” My customers always are pretty annoyed at this. Also what are some of the factors you use when pricing a job? Please realize I am a small home improvement contractor starting out, I am not a home builder. This magazine is great by the way….

                                                                  Thanks,

                                                                      Craig

                                                                               

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  1. BobKovacs | May 21, 2003 05:47am | #1

    Craig-

    Regarding hidden conditions, you start by including a clause in your proposal that states EXACTLY what you will ne doing, and more importantly, what you will NOT be doing.  Your clause also explains that you are not responsible for any conditions that aren't readily visible (such as the rotted wall, etc), and that if any such conditions are encountered, they will be covered via a change order prior to proceeding with the extra work.

    As far as covering all the "little things" that seem to crop up, you should create a checklist for the various items that are in your typical job, and refer to it often to ensure that you don't miss anything.  It's really easy to suck up a hundred bucks on nails, shims, caulk, etc., if you forget to add in for them.  I've been estimating for over 15 years now, and my list still grows constantly- everytime I do an estimate, something seems to get added to it, and incorporated into the next estimate.

    Best of luck,

    Bob

  2. Turtleneck | May 21, 2003 07:06am | #2

    Estimating renovations. If you ever figure out how to nail it let me know, the variables are enormous. I renovated for years on the Canadian East Coast and only came up with one solution which was the "either-or" estimate. Worst case senario cost vs the work at hand.

    You said that you're just starting out and I wish you success. Estimates will come easier with time and eventually you will reach a point where you will be able to estimate on the spot what a job will cost. If you are good, don't sell yourself short.

     Turtleneck

     

  3. Schelling | May 21, 2003 01:30pm | #3

    It sounds like you have two separate problems.

    The first is hidden conditions. This should be handled as Bob said. Lay it out in your proposal and communicate problems immediately with the homeowner with an update on what the increase will be. It helps a lot if you have previously pointed out the potential trouble spots.

    The second is that you are not charging enough.  You are not doing charity work. Any customer you want expects to pay you a fair amount and any customer that is trying to get the work done as cheaply as possible regardless of quality and without consideration for the people doing the work, is not a customer you want.

    You need to improve your estimating skills and you will with experience. But more importantly you need to include an amount in your overhead that will cover at least some of the overages, warranty work, estimating time, tool maintainence, and on and on.  This is before your profit.  Don't be afraid to lose jobs. Sometimes (always) people want more than they can afford and need to be forced to make decisions. A realistic estimate will help them do that.  Good luck with you business.

    1. NotChuck | May 22, 2003 06:20am | #6

      Good advice ,

       If I knew then what I know now, it would go something like this:

      1. Make a universal project check list for yourself (which you constantly add to)

      with sub categories for each phase. (kind of an outline you can use on every estimate)

      2. "Simply" state what you are going to do for the price in detail.

      3. Have a "hidden conditions clause".

      4. Note that any changes in #2 will be accomplished with change orders which you both must agree to.

      Most people respond well to a clearly stated, detailed, catagorized, estimate, it gives them the confidence you know your business.

      Above all, as has been stated previously, don't sell your self short, overhead and profit are not evil.

      Good LuckSUGARLOAF WOODWORKING

      Architectural Woodworking & Quality Restoration of Older Homes

      "Anything is Possible"

       

  4. skipj | May 22, 2003 05:22am | #4

    Craigabooey,

    Next time you bid a job. Add 30%. Quote the price verbally:

    You: "Well I'll need $8,000..."

    Customer: "Great, you have the job!"

    You: "Down payment..."

    Never regretted losing a job because of a high quote. Always regretted getting a job because of a low quote. Every f***** time.

    Start that crappy job because you need the work and:

    Cell Phone: " Ring"

    You: " Hello? Oh! Mr. Bigbucks, how are you? Really? You've decided to go ahead with that really lucrative project that I quoted 3 months ago? And you're mailing me a check?Right now?! When can I start? Well, I'm a little busy (losing money) for the next few weeks. Oh, that won't work with Mrs. Bigbucks massage schedule? Well, I'm really sorry."

    Don't undervalue yourself. We have architects and decorators who will do that for you.

    Be proud of what you do.

    skipj

  5. User avater
    dieselpig | May 22, 2003 05:50am | #5

    Craig,  I am in a similar situation myself.  Still trying to learn the ropes of the bidding process.  Best piece of advice I recieved so far was the...."Contractor's Legal Aid Kit".  It is a book with companion software that has a great set of contracts that cover all that stuff that we "green bidders" tend to forget.  Everything from change orders to matching existing finishes to warranties (or lack their of) of owner supplies materials.  The contracts were an awesome place to get started for me and the companion software makes it very easy to customize them to your company and your specific jobs.  It was only about $65...I personally guarantee you will not regret spending the money.  I bought mine at the JLC Live show, so I would imagine you could get it over at the JLC Bookstore on their website.  You'll thank yourself.  You still have to bid the work you plan on doing correctly of course, but at least it saves you from getting stuck doing something that the homeowner assumed you would do while you were assuming you wouldn't be responsible for it.  It just sort of lays all the cards on the table for everybody.  Big insurance for short money.

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