First of all, I’m new to the forum: Hello!
I’m facing my first “big” job.. an addition expected to cost around $150,000 (that’s what the clients are pre-approved for).
My question involves cost estimating techniques– How do the pros come up with their numbers? Books? Software? Seat-of-their-pants best guess + a percentage?
I’m interested particularly in software. Could anyone recommend a real professional program (not the $29.99 homeowner’s special at WalMart).
This work is for a family of attorneys (!) and while I feel confident in my building abilities, I feel like I’m jumping in to swim with the sharks on the business aspect and am a little nervous… Thanks in advance for any suggestions!
EDIT: I should add, this is not a competitive bid. I just need to give them an accurate estimate (for their bank as much as anything). And also, mostly, protect myself from taking a bath on the job… I’d like to make a little money…not end up working for nothing, or hard feelings, etc.
Edited 5/2/2003 6:58:30 PM ET by Catspaw
Replies
Well, as far as estimating software is concerned, there a number of decent programs- Hometech, WinEst LT, Timberline, National Construction Estimator, etc.
The problem is, they're all loaded with their own rates and costs, which may or may not reflect what it's actually going to cost you to build this project. Alos, it'll take a while to really become proficient with any of them- you're not going to bang out an accurate estimate straight out of the box.
If you don't know what your costs are based on past experience and/or subcontractor quotes, be prepared to lose your #### on this project. Unless you're entering into a cost plus agreement, and are just looking for a budget estimate (as you noted), this may not be the best "first big project"- especially for a family of lawyers (could it get any worse??? lol). On a $150k project, you could easily miss $10-20k using an estimating program that you aren't familiar with, or by underestimating the true cost by using the pre-set costs. Now you're working for free.
What sort of contract will you be using? Self-performing or subbing? What's the general scope of work?
Bob
There are people who refuse to work for lawyers.
I'm on my fourth lawyer client and doing OK so far.
But the one thing that I find painfull is that they examine every detail on paper excruciatingly. That means that the more you put on paper for them, the more they are like to have to use against you. With each one of them, they wanted to hold finall payument untill a sit-down "chat" equivalent to an IRS Audit.
The best way to avoid this is to be as non-specific as to costs up front, but more specific at billing. Here's what I mean, If you are doing this at a time and materials billing, and you estimate ten dollars a foot for wood floors, ten dollars for tile floors, and six dollars for carpet on floors and then you come in with bills for nine on wood, eleven on tile, and five on carpet, they will ignore or gloss over the unders but grill you to death on the tile.
Time and materials biling is simpler and safer for you with little estimating but you have to be clear with them up front about the definition of an estimate. They might understand estimate as FIRM BID.
Any documentation from me that mentions prices, unless it is a contract proposal that I am sure is going to make me money, includes the statement, that this is an estimate only - not a bid- and actuall costs may vary.
Excellence is its own reward!
This is all great advice! Thank you both for your time!
The job is a two level entryway/master bed/master bath addition to a log home (the addition will not be log). I'm not sure of our working relationship... If I will be acting as a sub to them or in a General capacity... how would I define this?
Not only are they lawyers, but they are my next door neighbors!! I REALLY DO NOT want to mess this up! I almost thought better of taking the job but how could I pass up a (otherwise) great job right next door?
I think that's good advice on the software... may not be the best time to exercise my learning curve on how to use it.
What I hear you saying is to make up a loosey-goosey estimate for the sake of the bank (?just work backwards from pre-approved amount would work?), then deal with them on a cost plus basis. Still, I would not be suprised to see this job run in excess of the pre-approved amount.. for one thing, what job doesn't. For another, they have high-end tastes. How do I keep on top of that? I know with a bid/contract situation it would be documented with change orders... same with cost plus? How could I show that costs were running over because of their decisions, not my slow work(for example)?
Like I said, I feel comfortable that I can give them a nice product. But as you can see, I'm a business greenhorn!
Thanks again- Josh
You could do the estimate with "Allowances" for various catagories. But you'll have to be carefull how you separate those catagories because you'll have to track job costs accordingly.
For instance, My electrician can bid the wiring based on code requirements and my drawings for roughin and trims but with no fixtures because he doesn't know whether they will choose $39 lights or $490 lights. I might have senmse of their level of taste and put in an "allowance" of say $300/fixture for eight fixtures. Then, when they go shopping, they know that they have up to 2400 to spend on lights, dimmers and any other options they may want to add on.
Kitchens, I may give them an allowance of say $12,000 for cabs and another $3000 for tops in the estimating phase. If they want to go with granite or Corian, they need to come up with more money.
I've been using Hometech for some things like what you describe.
http://www.costestimator.com
I have used the craftsman national estimator in the past but I find it dificult to work with.
Either one of them will not cover things like extra difficulty for tying the addition into the log walls with spoecial notching, flashings, slip joints etc. You have to make your own best guess on that.
Remember to figure something for dust protection and cleanup on the rest of the home. Since you live next door, expect to spend a couple nights working late.
Good luck
PS don't run right off on my say so on any of this. There are as many ways to estimate as there are to go bankrupt or to make a smalll fortune. I'm sure you'll hear from others with more experience at it than I. Bob does this professionally so let your ears perk up at what he has to say..
Excellence is its own reward!
Thanks for the shameless plug Piffin....lol.
Bob
It would be shameless if you had said it.
I was just reporting the facts - as always.
Excellence is its own reward!
It would be cumbersome for you but if you were to use two different methods to estimate this, it might point out to you where errors might be. .
Excellence is its own reward!
I see you are new here.
Welcome.
You could also read some of the other threads on this subject in the business folder. Lot has been said already.
click on the business title bar at the left of your screen to see all of them.
Excellence is its own reward!
I use Excel. It comes free on most computers. Fancy software is not always the answer. The software cant replace the knowledge of the contractor.
If you are going to do a time and material contract, check your state tax laws. Some states will require you to collect and remit sales tax on materials. This does not mean you pay the tax at the lumberyard. Check it out.
WAHD
I run a small renovation business and I have found estimating to be one of the harder aspects of the biz. I have steered clear of software for the simple fact that I live in a vacation area, where both materials and labor prices are elevated. I break the job down into each phase, framing, plumbing, finish, etc., and price all materials from the place where they will be bought. I then break down labor times for each phase and usually cushion labor rates to allow for overage in the end. Ad 10-15% for misc. and there you have it. Don't forget the most important part: "This is just an estimate, job will be done at cost plus 10%". Yesterday morning I awoke to an irate customer who could not believe that she was being billed for 3 extra days work on a beautiful custom cedar deck. The argument ended quickly when I asked her to look at the top right corner of her estimate. "I'll pay your bill."------ I don't like unhappy customers, but I like staying in business.
Thank you all for your time and great advice!
CCR, you are wise to make very clear the *ESTIMATE* wording. I have not been burned on this yet but my partner has time and time again... Several times he has had to work for days to finish the job after the money quit flowing... he should've just picked up his tools and left but he's too nice of a guy-- Interestingly, it always seems to be with Gov employees who have no point of reference to comprehend the *VALUE* of services preformed. One was bitter because he was "making more than I am" (per hourly wage. No consideration of their benefits, paid holidays, retirement, lack of liability, etc. etc. etc...)
There is something strange about that statement anyway-- To be indignant because I'm "making more than you are"... So? I guess Gummint job wages should be adjusted to where they all "make more" than a builder.
I've digressed.... Big time.
Though it is wise of ccr to carefully define what he means by estimate, this is a very dangerous trap. It doesn't matter what you call it, because the estimate is the number that the customer will remember and make all her plans around. If you are more than that number he will not be happy and may not pay more. They may not be able to pay more. Sometimes the changes in the scope of the project will make the estimate an impossible target and making this clear to the customer is obviously the only option. Otherwise make the estimate high and the final bill lower.
At this stage in your business you should use the stick method, counting every stick of material and every hour of labor, building the project in your head. Get firm prices from any subs. Most importantly for your future business, keep careful track of the actual costs and how they relate to the phases of the job as you have estimated them. This will give you the data for future estimates and a system for checking and updating those estimates.