Okay my question of the day is:
Are the processes, procedures, and approach for estimating project work you plan to have done by sub-contractors any different than estimating the work that you plan to do using your own in-house personnel.
(My answers is Yes they are different but I want to hear what everyone else thinks and why they think that way)
Replies
Nope- they're the same- I just guess- whether it's self-performed or subbed......lol.
Just trying to add a little levity to an incredibly hectic day....
Bob
BobKovacs-"Nope- they're the same- " I think your really saying that just to taunt and antagonize me aren't you? Given that, I hope your day stays hectic and you have to work late!
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I think your really saying that just to taunt and antagonize me aren't you?
Absolutely!! What are friends for, right?
Given that, I hope your day stays hectic and you have to work late!
Please- don't get me started- it went from bad to worse after I made that post, and there's no sign of it letting up before probably 8pm. I guess that's what I get for taunting you (or is that "Tauntoning" you???)
Bob
If I need a sub price that will stick, I have the sub (or more than one) come out, walk through the job, take a set of plans, and fax me a quote. If I'm in the ballparking stage, sometimes I'll go for it myself, if it's simple--electrical per location, plumbing per fixture, roofing per square, etc. More often than not, if I do that, double it, add 80%, and double it again, I'm safe. Just kidding... sort of. A lot of times a detailed phone conversation with the sub will get me pretty close, but inevitably they're better at seeing things on the job that pertain to their trade than I am. I add a healthy contingency to everything but a firm written quote, and I sometimes add to those too, depending on the sub and their history of either sticking with a price or creeping it as the job progresses.
David- "If I need a sub price that will stick, I have the sub (or more than one) come out, walk through the job, take a set of plans, and fax me a quote." That sounds like real good practice to me. But moving on to where you say "If I'm in the ballparking stage, sometimes I'll go for it myself, if it's simple--electrical per location, plumbing per fixture, roofing per square, etc." brings me to one of the things I was hoping to get at find out how other contractors handle it. I started this very same topic in another forum so I'm going to re-phrase slightly what I just wrote there to get at one of the issues I'm interested in finding out about.
I'm a lump sum bidder and prefer things that way. That is perhaps one of the reasons I liked what you mentioned above regarding having me out to the job to look at things and then faxing you a quote. But therein lies a potential problem for GCs. Let's say a GCs want to get a lump sum bid from us to finish the interior of a house (you may or may not sub out carpentry but since that's what we do lets at that as an example). Your going to get that one Price Quote figure from us for that project and yet if you look at my estimate worksheet for that project there are maybe 44 line items we the subs have looked at and considered separately to build that estimate.
Hanging the doors was done by the single unit and we might have had three different kinds of doors we were considering. One group of doors were big heavy 7' architectural doors that had to be hung as slabs in separate jambs and then there were a bunch of 6'-8' pre-hung architectural for the second floor along with some double doors for some of the closets. Hanging those jambs we might figure on either a Linear Foot basis or on a Per Opening Basis. Hanging the pre-hungs was figured on a Per Piece basis as were the double pre-hungs but the price for hanging a prehung double is not the same as hanging a single times two.
The trim is different in the various rooms. Some rooms have crown, some don't. Some rooms have a three piece built-up base some are a just a standard base. The trim work is quantified and priced generally by the Linear Foot.
One or two rooms are going to have the walls paneled in T&G cedar and that's figured by us on the basis of the Square Foot of Surface Area to be covered.
While I know there are a lot of General Contractors that solicit bids for interior finish contractor based on a square foot cost and there are a lot of subs that give bids based on a square foot cost. I THINK THAT'S INSANE! A project like that cannot possibly be priced accurately base on the Square Foot of the living space or footprint of the house. There is way too much variation for that to relate to a single SF price,
So one of my points ( I have more than one point or question that I'm interested in finding out what people think) is that....
.... if I, the Sub Contractor, estimate based on all those line items of quantities and prices how does the General Contractor estimate based on historical data if I gave him a single Lump Sum price?
Part two of the question is (that I didn't ask yet on that other forum) is let's say you do carpentry work in house so you have your own unit cost estimating system too for all those things I just mentioned. But because you have lots of work backing up you want to sub the carpentry work for this particular project out. How do you estimate and compare what it costs for your troops to do the work with what it would cost to hire us.
Do you see a problem there? Do you see a potential disparity? For instance lets say you charge $65 to hang a door. So do I. So if I charge you $65 to hang a door how can you make any money?Or are we really not comparing the right Price? Do you get what I mean? I think it's an intersting connumdrum .
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"Do you see a problem there? Do you see a potential disparity? For instance lets say you charge $65 to hang a door. So do I. So if I charge you $65 to hang a door how can you make any money?Or are we really not comparing the right Price? Do you get what I mean? I think it's an intersting connumdrum ."
If I sub anything, I have to mark it up. If you can hang a door for $65 I probably can too. If I hire you to do it, it will cost the customer more than if I do it myself, by the amount of the markup. That can usually only be justified by scheduling, i.e. I am too busy to hang the door so if they want it done this decade then you will have to do it.
I had that come up recently. Needed a semi-complex roof framed and could not spring the right guys within the company to do it. Hired a framing sub whose labor rates were identical to ours. Client accepted that this particular piece of work would be handled by the sub and would cost more than if we handled it in-house, because winter was coming and said roof needed to be on there now. Fast track was the client's idea, they knew we were swamped and we tried to postpone their job until next year. In that case it can work out.
Running commercial construction jobs for the past 4 years has given me a good idea of the unit pricing or labor rates used by various plumbers/electricians, I find that alot of these trades seem to figure their bids as just an extension of T&M , service-style work. You'll quickly get an idea of what things are costing you say per water-heater, per sink, per washer/dryer hookup, per recessed light. HVAC and trim carpentry seem to prefer to give a lump sum and it is often more difficult to ballpark what something will cost without having them look at it; my best advice would be to just keep documenting things and after a few years you'll have enough data to rely on to ballpark most HVAC estimates at least. Trim carpentry varies far too much it seems to ever get an idea of what the trimwork will cost unless they are cookie cutter McMansions/tract houses, your experience in trimwork eliminates this hurdle though.
From reading this forum it seems most of the guys GCing either remodels or new construction are supplying all materials, personally I hate doing this. It always annoys me as a sub because things tend not to be exactly as described(or I have the same door/trim/glass sitting in my shop that I'd rather use and get paid for) and it always seems I have to hear subs bitching about they'd rather use this/already had that/etc.. if I am trying to provide their materials. Among the negatives to this are the income downside, if your the GC, and also the estimating downside as you then have to be familiar with a far larger range of materials costs.
-Ray
hey ray, i'm with you.. i want my subs to furnish everything involved with their part of the action.. and then i want them to stand behind it..Mike Smith Rhode Island : Design / Build / Repair / Restore
At times we will put in an "allowance". Be specific about what that entails. If there are changes or additions the price changes accordingly.
Hammer real good point regarding using "allowances"Â . Years ago I started out on my own as a GC but the company I started gradually evolved into a finishing sub-contractor. This winter I'm planning on spinning off a company do approach projects as a GC again and using Allowances is an important part of the plan especially for the elements of work that I not really technically familiar with. Especially things like HVAC and plumbing.
It as I think about all this and how I think about how I will want to handle these kinds things that's got me asking what others do.
The potential trouble with allowances is lets say you figure a project to have $12,000 worth of HVAC and plug that in as an allowance but then when it comes time to get a real price from a sub it comes in at $25,800 aside from having the problem of a client that's been shocked with a price that double what they thought they would have originally as the GC I also wouldn't have enough of a markup to cover the supervision and my profit associated with that extra $13,800 worth of work.
I(we) really do need to find ways to sharpen up that original estimate that we plugged in as an allowance don't we?
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If you "estimated" a HVAC job for $12000 and it was actually $25000 then you were not in the ballpark. I'm not sure you were even on the turnpike in the next state. I think you have answered all your own questions about how particulars can impact a square foot price. With the exception of heavy construction jobs there is no bible for us like Means Cost Data etc. Here are a few things that I try to remember when pricing jobs.
1. Never never never spout off a ballpark price
2. Keep your mouth shut except for pertainent questions, let the owner do the talking
3. Take the info home and think it over
4. Think again
5. If you want to proceed then detail everything out
6. Take the specs to your subs and let them price their parts
7. Put it all together as a proposal
8. Never work with subs you don't know
9. Never give a price without all the specs and give your price on those specs. If they want a change, repeat the above.
10. Material prices are subject to change
People seldom hire a contractor on price alone. It is your proven abilities that get you the job. Why should you do any work on behalf of the subs? I don't want to handle their money or do their homework. If there is a questionable area, take carpet for example.Give the customer an allowance. In my area $3/yd. is a middle of the road price for material. They can choose $2/yd. or $2000/yd. I don't care my price is for $3/yd. I would not use an allowance for large items such as all the HVAC work. I think you already know how that works.
Edited 11/18/2003 6:21:45 PM ET by Hammer
A lot like Dave said. If I'm in ballparking mode, I can get pretty close to what the subs are going to want. I know what drywallers charge here, I've used the plumbers enough times my guesswork there is pretty spot on, same with the electrician. But those are only good for estimating a range a project might fall into. I need the client to be sure they want to proceed before I start asking subs to come out and look at it and give me a price. No sense wasting someone elses time if you get the "oh, I didn't realise it was going to cost . . ." . But when it gets to the nitty gritty, I try to have all the details fleshed out and in writing so when they're standing there they know exactly what the bid is supposed to entail. Final numbers count. SWAGs are just for getting in the neighborhood.
"The child is grown / The dream is gone / And I have become / Comfortably numb " lyrics by Roger Waters
RW,
I'm ambivalent about that strategy -- giving a guestimate to a customer to see if they are serious or can swing the $ -- and then calling in the subs for bids.
This is what I see happening: underguestimating, the customer gets optimistic, then they get the real proposal and it's much higher than the original guestimate, and then they get pissed, thinking I'm doing the bait and switch (or whatever kind of con).
I don't have enough experience with this yet, but from a sales standpoint, wouldn't it be better for the first price they hear to be the one on the face of the contract? Not only because the $ is important, but the contract contains MUCH more than $, it also contains the specs, conditions, exclusions, etc.
Just ramblin' here.
Tim
Tim-
Great concept (the first number being the "right" number), but it seldom happens that you're given anything other than a napkin to price from. I do think it's important to make ANY number thrown out a realistic one, but I'd say you'd be hard pressed to lock in a number in the preliminary stages.
Bob
Tim-(regarding a guesstimate first strategy) 'This is what I see happening: underguestimating, the customer gets optimistic, then they get the real proposal and it's much higher than the original guestimate, and then they get pissed, thinking I'm doing the bait and switch (or whatever kind of con)." I think that's one of the things I was getting at in my post regarding getting a fairly accurate estimate to build an allowance price off of (msg#36886.12)
"I don't have enough experience with this yet, but from a sales standpoint, wouldn't it be better for the first price they hear to be the one on the face of the contract? Not only because the $ is important, but the contract contains MUCH more than $, it also contains the specs, conditions, exclusions, etc." I think so, I'm in agreement with that. Especially given that I think the single greatest fear that people have when contracting work on their homes is CREEP whether that's schedule creep (they're worried about the project dragging out longer than they expected )or price creep(where the project keeps on costing more and more and more).
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Randal- "If I'm in ballparking mode, I can get pretty close to what the subs are going to want. I know what drywallers charge here, I've used the plumbers enough times my guesswork there is pretty spot on, same with the electrician." I can do that with drywall and maybe elecrical but forget about plumbing as I already said, I wouldn't know where to really start.
But lets say your estimating a project and it has something in it that your aren't familiar with like a curved stair with plaster molding in the grand entrance foyer. What do you do then to avoid the client saying "oh, I didn't realise it was going to cost . . ."?
Which bring to mind another question does anyone else out there write out real genuine Requests For Proposals to get third party pricing like I do or am I just a freak?
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jerrald , we always use RFP's... most of our subs don't know what an RFP is, but they humor me anyways..
everytime i do a lumpsum bid and guess at the Subs prices, i'm wrong.. and of course the reason i'm guessing is because i procrastinated too long and now i have to give my proposal to the customer without the quotations from all of my subs..
Mike Smith Rhode Island : Design / Build / Repair / Restore
hey Mike ...
I skimmed thru ...
don't make me reverse skim ...
what's an RFP?
Will actually read thru all this later ...
JeffBuck Construction Pittsburgh,PA
Artistry in Carpentry
RFP, RFQ... request for proposal, request for quote, request for qualifications... you see stuff like that all the time if you get anywhere near how the government spends money. They go to lengths to ensure that all bidders get the same info to bid from, so that bids are apples to apples. I did some purchasing for a federal program and wrote an RFQ every time I wanted to buy something. Everyone submits sealed bids on the same day. Now, if the procuring party has a favorite sub, sometimes they steer the bidding, like how Bechtel is apparently getting the sweet deals to remodel Iraq. Just kidding, George.
I think it's a great idea to give subs a 'scope of work' document that details what you want. If you put effort into it, over time you have a nice set of docs that you can whip out everytime you're going to sub something. Some of it is not specific to a given job, like, 'painter shall use oil primer on all bare wood surfaces' or 'plumber shall use copper pipe, none 'o that lousy butyl' or 'all circuits everywhere always shall be 20 amp'. You can work out your company's minimum specs that you always want and detail those in the stock 'scope of work' for each trade. Then, on a per-job basis, you add the other details, like 'the Smith Residence shall have all Grohe fixtures' or 'the Jones remodel shall have Diva dimmers throughout'.
I used to go out to a job and meet a sub, talk it over with him, clarify a bunch of stuff, and then get their price. I'd then go out and meet a second sub, and having gained clarity in the first conversation, I'd give them better and more complete information. Bids would not be apples-to-apples. I realized I was wasting everyone's time and now I try to write a scope of work every time I have multiple bidders.
Anyway, if you put down a number for a subtrade and you're wrong, you're jacking your client (or yourself). Only the simplest things can be guesstimated, otherwise, major risk is being taken. I do think it's valid to throw a number out there to see if the client can still stand after they hear it. Why drag 11 subs to a house only to find out that Mr. Jones thinks a new bath can be had for $2500? Better to give him a ballpark now, off the top of your head, and tell him that's what it is. Even better, use a range, like, 'in our experience, complete kitchen remodels can cost anywhere from $50,000 to $200,000." That's what my old boss used to do. He got to that point in the initial phone call within 2 minutes. Saved himself a lot of trouble.
Mike Smith - "most of our subs don't know what an RFP is," YES! I know exactly what you mean. It's like I'm talking Greek. But a lot of GCs don't know what they are either when I ask for one. Scope of Work descriptions too.
A lot of time we get invited to look at projects where we have to figure out just what it is (the scope) that were supposed to figure a price for too. A lot of those we end up declining to bid since we figure the management on a project like that may also be sort of loose and it already tough enough working with crazy schedules we certainly don't need more or them.
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No, you make a very valid point. I'd like to address both your and Tim's issues here.
Tim, I'm almost ambivilant about doing things that way too. I don't like it. I wish everyone had gobs of dough around and however much I wanted for a job was mine. I'm not trying to be snide. The reality of my world is people hear about me, from a friend, a neighbor, whatever, and they say "I gotta get him to do X for me". Now some folks have a great grasp on reality and understand that some things cost money. Others . . . I've honestly had people who wanted to line an office with built in cabinetry be surprised that the cabinets were going to be over $500.
With that being said, I am in absolutely no mood to send three or four guys who are subs and who are also hopefully friends out to look at a job, to take their time, their gas, and their energy, to give me a bid on something that might just be a pointless exercise anyway. So I'm back to my M.O. for this kind of thing. I can say "Mr and Mrs. homeowner, based on what you're showing me here, I would anticipate that the scope of this job is going to be in the neighborhood of $XXX"
I hate doing it too. There's always the risk that someone thinks of something else to add and gets miffed that the price changed. That's happened. But more times than not, just having an idea to give them (with all the disclaimers you like: ESTIMATE!!!!!) helps me save energy and helps some people without experience dealing with construction get a reality check.
And back to Jerralds - hey, risks have to be weighed. You start asking me for hand turned volutes, you bet I've never put one in a house. You're right. RFP. But that's not day to day. Each situation I take as it comes. Most of the time, I suspect you also are pretty spot on with where the subs are going to be. When its a new twist, you don't so much as blink without having a solid number. No different here.
And as to the s.f. pricing - that's all just ballparking anyway. So say the drywaller is $1.25/s.f. but your place has all the cuts and corners it could ever have. This door is arched and that bar is curved and hey we put a groin vault in the entry. Of course he's going to add for it. But that's only that job. It doesn't change that the majority of the time, his pricing works out such that if you assume the buck and a quarter, you're in fairly safe territory."The child is grown / The dream is gone / And I have become / Comfortably numb " lyrics by Roger Waters
This guy in the minor leagues is enjoying this big league talk. (Even if I don't know s**t about professional sports . . .)
Depend upon the work. If I know from "get go" that it's subbed, then I can use a general measure (like an area or volume rule of thumb). This will get me to the right ball park. Then I can (somewhat) compare the sub's price to my estimate.
If I've done a detailed estimate, then I tend to be a lot more interested in how the sub estimated the job--especially if there's a big variance in the final numbers.
Now, for some one who specializes in one trade, they will often have a better grasp of the finer detail of that trade than a generalist (commercial waterproofing come to mind). Or, the sub has access to better deals on materials than I can expect (commercial roofing leaps to mind).
So, I think the answer is "Yes," they are different. Even though they are largely the same.
CapnMac- "If I've done a detailed estimate, then I tend to be a lot more interested in how the sub estimated the job--especially if there's a big variance in the final numbers." Yeah! I think that's one of the keys things I'm getting at in here with this line of questions. I not only want to know the price for a project but how a sub or other third party estimated that project so the next time I look at one that is similar I can estimate it using their approach.
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Jerrald,
When I go at a project, I make the first round of estimates myself. Then I gage what I come up with against the conversations I have had with the client. I like to have an idea what they think they can handle time and price wise before I spend any real time on the estimate. Once I feel that I can get within arms reach of their limits then I bring in all of my subs and get good numbers. I Add 20% then go back and review my first estimate using the things they pointed out that I missed. Figure material without any discounts I get, then put it together for the client. I sell the hell out of our unique abillity to get the job done on time and in budget. Hard criteria when almost all we do is play with very early buildings with lots of suprises waiting to steal away my profit and sanity.
any help?
CurlyHand Hewn Restorations Inc.
Restoring the past for the future.
Hey Curly every little bit helps. I just said this the other day somewhere else that if I talk to 50 contractors about estimating techniques I get 45 different styles and methods in a response so it all helps toward figuring out what this crazy mixed-up business is all about.
I think you hit on another two key points we all need to keep reminding ourselves of though when you said " ...I sell the hell out of our unique abillity to get the job done on time and in budget." Number one, YOU HAVE TO SELL SOMETHING and not just give a client a price. (and did I emphasize the word SELL when I just wrote that?) and number two, "on time and in budget." are HUGE hot button selling points.
It's another topic altogether that I'm always very interested in but the on-time aspect I find might be the toughest. Especially so in your line of work. Re:"any help?" Possibly, ya ever hear of Critcal Chain scheduling? (While it sounds similar and they do have some simlar roots, it's different from Critical Path Method)
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Jerrald,
Sorry, by any help, I meant does this help you at all. As to the sell the hell out of time and budget-I KILL most of the other guys with that. They all have a rep for going over on both counts.
CurlyHand Hewn Restorations Inc.
Restoring the past for the future.
Hey Curly like I said it all helps (I was saying thanks) and I was just offering something in return (Critical Chain works for us).
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Our problem is that rarely is there enough detail in the plans to get a firm price from our subs. We give them the rough outline and they propose the details. How does the owner know if the heating system is exactly what he wants? Will it heat the house? The same for the wiring, and cabinets, and trim, etc.
What we try to do is get a firm proposal to form the basis of an allowance. If nothing else it gets the sub (we use a preferred set of subs if available) to think about the job in detail and in terms of dollars and cents. Most of our customers just want a realistic budget that will allow them to make informed choices. This ground work allows them to do that.
If we are doing the estimating for them, we use a similar project for which we know the actual costs, factor in differences in size and complexity as well as inflation and we can come up with a pretty good number. Since we are a GC, we don't need perfection on every phase of the job, but we do need to have a good average. In many ways this is a lot easier than for a sub giving a firm price on something that is only a proposal.
Thanks as always for your comments Schelling "Our problem is that rarely is there enough detail in the plans to get a firm price from our subs." I do understand that problem but on the other hand with some of the designers and architects we've been fortunate enough to deal with the opposite is sometimes true too. I just picked up a set of plans and specs for a project the other week from this one builder to submit a bid on and the package weighs 7-1/2 pounds and that's just for us as interior woodworking subs. I should commend this builder too, the package contained two sets of plans 37 pages in each, one set was full size 24" x 36" and the other was the same set shrunken down to 12" x 18". There were 33 pages of SKs varying in size from 8-1/2 x 11 to 11 x 17. 27 pages of specifications and three sheets loose sheets of design revisions that have already taken place and have been accepted. And all this is for what is an approximately a 6000sf house. This builder has made every effort to make sure we have all we need to estimate this job correctly. I've also done other projects designed by this architect for other builders so I'm familiar with his work and he really "designs" absolutely everything so I know it all in the drawing too.
There though for sure a wide spectrum of completeness to plans and details that we can expect to see in our careers.
"What we try to do is get a firm proposal to form the basis of an allowance." Good idea, that's a real good practice. And I couldn't agree with you more that "Most of our customers just want a realistic budget that will allow them to make informed choices."
Here's where what you said I thought was really interesting and you are to the best of my knowledge the only one who I can recall ever hearing REALLY say this other than me "If we are doing the estimating for them..."
I think one of my points that I wanted to hopefully get at that I think sort of goes towards a response to what Cliff is saying in his post (msg# 36886.32) is that if I can get itemized estimate data (unit costs) from my subs (I should clarify that while we are primarily interior finish subs we also sub out some of our work too) we can help them out by estimating the projects for them.
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WHERE CAN I PURCHASE THE CRITICAL CHAIN PROCESS:)?
I try my best to prepare for bids by subs by taking off all the units I know they use. Cubic yards, square yards, square feet, number of corners, electrical "openings," lineal feet, tons, number of doors, windows, lf of base, # of cab boxes, everything. Then I'll give them an information package of drawings, notes, plus "for information only," all the quantities I've taken off that I think are relevant to their scope.
Jerrald,
You said that you provide a lump-sum bid to the prospective client, right? That's smart--there are big advantages to this, which have been discussed at length here in other threads, and on other forums.
Given the advantages of lump-sum bidding, why would you expect a prospective sub to give you a breakdown on his or her bid to you? I do not want a GC hammering me on price for one task or for a specific choice of material, because my bid is higher than a competitor's. Could that be where you want to go with this, try to get your subs to the lowest common denominator on price?
If you want a bid, ask me for a bid. If I've gotten business from you before and I expect to in the future, I'll do a detailed takeoff and a bid based on my labor rate, materials markup, overhead, and profit. I'll only do that once or twice for free, if I don't get the job; then I'll expect to be paid for a bid (or as Sonny Lycos calls it, a "specifications and cost analysis"), just like you ought to be getting paid by your client for a bid.
If you don't like the bid price and want to see if I can reduce the price, I'll cut the scope of the job or the quality of the materials, and give you a revised bid.
If you want to use Means or another cost estimator and factor in your guess of my labor rate etc, give it a try. Or look at my $/SF price on past bids (which will vary considerably, assuming we're not talking about tract housing here), and pick a number for ballparking it.
One sub posted that they don't like it when the GC provides their materials. In California, if you install something, the law says that you are responsibe for warranteeing it for four years. So if the GC wants me to install 39 cent receptacle outlets, I'm on the hook when the POS outlets fail in a couple of years. And, as mentioned, I'm more efficient working with certain types and brands of materials, so if the GC gives me something different, I'm making less money on a per hour basis. And the GC is profiting at my expense.
I know that other states may not have such stringent warrantee laws, but why would anyone give up the markup revenue to a GC who wants to keep that money himself, and in doing so cheat both the sub (of the money) and possibly the client (of the quality)?
If your motive in wanting to know your sub's estimating methods is pure (you just want to save the time and the sub's effort in preparing a bid) well then, my comments don't apply. Someone would have to trust you with their business to share that information; if you were careless with it and it got out to a competitor, that would make it real tough to compete.
Cliff
Cliff when I emphasized that we do lump-sum bids what I was really referring to and trying to clarify was that we do fixed price work and not T&M although what you were thinking with regard to giving a bid with a single price and not a breakdown is true too more often than not.
But as I hopefully inferred above therein lies a problem for a GC who try's to estimate what we are going to charge him for a particular project if he just looking at that bottom line number. We had a two projects just over a year ago that were pretty close to each other both on the map and in terms of the square footage of the houses. One was a Georgian Colonial while the other one was sort of Bauhaus inspired. The same square footage the Georgian was over 60% more expensive to finish.
If that builder was using historical data from us to estimate his projects if we did the Bauhaus inspired house first he would consider our SF price for finishing the Georgian way too high.
"Given the advantages of lump-sum bidding, why would you expect a prospective sub to give you a breakdown on his or her bid to you?" There are a couple of reasons that I can think of. I don't think I shocking anybody when I say that most small little contractors while they may be great at techniques and crafts of their respective trades they don't necessarily have the best business skills. One of the problems is they often really suck at estimating. Case in point how many people pop in these forums asking what to charge for this job or that without ever even saying at the very least what region of the country they are in is. And then a lot of people in these forums actually try to give them answers! Hey I'm not trying to insult anyone because that how I started out too but the truth of the matter is there is a very high percentage of contractors out there that really don't know how to estimate or have real primitive and/or inefficient and/or inaccurate systems for estimating.
If I see a breakdown of how a sub has figured the project I can first of all identify if he knows what he's doing buy seeing how he defined his estimate in terms of it Work Breakdown Structure or Work Package(s) I can see if he or she has covered all the bases, left anything out or even if I have left something out!
Using that data that I've picked up from a previous estimate from a particular sub I can then use that data again when looking at another project creating a "preliminary" estimate and then go back to that sub saying I've looked at this job we are considering bidding on and I figured it for this and that and I thought it might be worth X dollars to you but before I ask you to take the time to look it over more thoroughly with a site visit and all final quote do you think I'm in the ballpark for what it's going to cost and are you interested in a project of that kind of scope?
If that subs says yes that the price is close to correct I can then give to my potential client a ballpark figure that if fairly accurate to see if the project will then fly and if they don't go for it I haven't wasted any of my subcontractors' time and if the do accept the preliminary budget I've then presented I can then call in those subs who are interested to get their firm quotes knowing we either have the project or have a high confidence of landing it.
Another reason I may want that breakdown is, and this relates I think to what Schelling said with "Most of our customers just want a realistic budget that will allow them to make informed choices." is that suppose as a sub I give you a price for a curved stair and metal balustrade installation and your client is blown away by just how expensive it is. Rather than the project being scrapped as being too expensive by giving you (the GC) a breakdown as to what certain elements cost the client can then still get the curved stair they want by substituting one baluster style for another.
Re: "then I'll expect to be paid for a bid (or as Sonny Lycos calls it, a "specifications and cost analysis"" I think there is a huge difference between submitting a bid and as Sonny Lykos calls it, a "Specifications and Cost Analysis" but that's another whole topic to talk about someday. "...just like you ought to be getting paid by your client for a bid. " I don't necessarily agree with that at all and that kind of thinking can backfire on you too. What I object to is Sonny's partisan extreme absolutism that getting paid for estimates is the only way to go. It all depends. But like I said that's a whole other discussion.
"One sub posted that they don't like it when the GC provides their materials." I saw that here too and I think that too all depends again too. Sometimes I have no problem with that when it comes to custom millwork or perhaps cabinets or even stairs that we don't actually fabricate ourselves. We do projects where sometimes we never actually meet the homeowners. On those projects the designers and the GC-PM are making all those decisions with the Owners and as long as they don't make changes from a simple base to a high three or four piece build up I am often happy to let them work with the clients on those kinds of selections and take responsibility for the quantity and quality of the materials. I don't know how that would fly in California but the more I hear about California the more I'm glad I'm a New Yorker every day. Talk about over regulation. I wouldn't be in this business if I lived out there. I'd find some other line of work,... seriously. I don't know how you guys do it without going nuts.
"... but why would anyone give up the markup revenue to a GC who wants to keep that money himself, and in doing so cheat both the sub (of the money) and possibly the client (of the quality)?" I am actually not giving that up that markup revenue at all. I'm a PROOF or what's also been called Indexed Markup practitioner. All my Overhead is recovered through the markup I place on our labor alone that way whether I do have materials or not on a project to markup my overhead is still being covered but that again is another topic altogether too. I was just saying to Mike Smith the other day (since he practices PROOF) that I was wanted to find out who else is calculating and figuring out markup that way and was probably going to start a discussion on it real soon. (I've got a lot of stuff I'm working out sorting out in my head nowadays, that why all the questions. Talking about it all, especially the act of writing down what you think, helps you clarify your thinking don't you think?)
" If your motive in wanting to know your sub's estimating methods is pure (you just want to save the time and the sub's effort in preparing a bid)" I think it is. And in fact years ago I even designed an estimating software package that I could give to them that's compatible with my systems so that I can easily transfer their data into mine (and they then had also real software system they could also use to submit bids to other potential clients too, which before working with us they often didn't have). And you are certainly right that that kind of relationship and the other ones I've been talking about here are built on a foundation of trust. Really good points, thanks.
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As a GC, when you request a quote from subs, I should think your grasp of the job is good enough to provide a scope of work specific enough that they can bid a hard number...given some of the variables that everyone deals with to cover unforseen circumstances, etc.
Writing a good scope of work, providing a schedule, etc. is the job of the GC. (The job of any supervisor, GC, whatever, is to make it easy for an employee or sub to do their job.) If they can't bid it with what you've given them, then either you need to review what you've written, or find someone else to bid.
Your bid for that portion of the job is their bid to you plus your markup.
Jerrald, the key word in your analysis of what needs to exist for your proposed estimating system is trust. I've worked in a project management capacity on commercial projects and I can tell you that the whole 'give me your breakdown on this bid' is for beating a lower price out of someone, unless you are feeding me alot of work on a consistent basis there is no way I'm going much beyond stating a price. Now I know a couple of guys(ok, actually all of about one commercial facilities director) that I would provide that type of bid too. Everyone else would immediately balk if they saw the labor fees I charge alone, often I end up being the only bidder on commercial projects because I'm the only one who has proposed an unique way of doing something that doesn't require alot of demo or shutdown of an area. Now sometimes I propose this great idea and no one else knows how to do it so I'm the only bid, sometimes my idea is shopped and there are 3 bids; I usually never know till later on; I treat my employees far better than my competition and I buy local and US-made as much as possible, so my costs are high, I don't want some bottom-line only driven manager trying to lower my bid on every project or just scrapping projects because he is offended that a carpenter can make more than him.
If you wanted bids for other scenarios in case you had to substitute out a different lockset style, for example, my bidding system is refined enough(or getting there) that I could plug in the different numbers and quickly give you the correct figure. I agree alot of one-man run construction co's are absolutely terrible at bidding, but to your benefit actually, they are usually just cheating themselves and messing around with their bidding too much by showing them your systems would just lead to higher prices you'd be paying.
As a conclusion to a long winded letter that doesn't seem to benefit the cause you are working towards, ie. efficiently gc-ing residential construction, I think you will have no problem finding subs that price in a manner(ie consistent between certain jobs) that you will be able to follow their estimating structure after reading a few bids. You will know that X electrical job takes X many guys and that he charges 48 a guy/per hour and will get you for 3 whole days on this task; you will definitely end up in the right ballpark(though maybe not exact enough for you after reading some of your other postings) on the numbers. I'm not involved with new home construction in any capacity but I would think if a sub of yours consistently underbids that is his problem, absent any extenuating circumstances he is eating the loss; assuming this than if you give him enough work you'll have no problem getting estimates from him promptly enough and you'll be able to ballpark at least one of your other subs quickly enough that you shouldn't have much delay in putting estimates together. Good luck finding 3 companies(and I really recommend having a pool of 3 or 4) who are doing anything resembling quality work to give you that much info on their estimates.
Ray
Real good points again Ray- However regarding:"I agree alot of one-man run construction co's are absolutely terrible at bidding, but to your benefit actually, they are usually just cheating themselves and messing around with their bidding too much by showing them your systems would just lead to higher prices you'd be paying." and "...I would think if a sub of yours consistently underbids that is his problem, absent any extenuating circumstances he is eating the loss; " I'm not so sure about the higher prices part of that at all. And while it would be to my short term financial advantage to have lousy bidders bidding my projects I think it is better for a long term relationship to have contractors that are financially stable and have consistently predictable pricing methodologies.
"Good luck finding 3 companies(and I really recommend having a pool of 3 or 4) who are doing anything resembling quality work to give you that much info on their estimates." While it isn't easy I been working with and around a bunch of really good sub-contractors and also I'm always being approached by others too so I'm not too worried about quality work but like I inferred above 3 out of 4 of them will be lousy and/or slow at producing pricing information.
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Good point on the part about wanting financially stable subs, I personally pay more to work with subs I get along with so I'm certaintly not in that game of encouraging financially unworkable bids. I'd rather make less money and have a fun working environment than have a bunch of surly guys working on the cheap, no matter how proficient they are; alot of the tract home producers could care less about their subs as long as they are cheap and it was with those guys in mind I made the statement about a sub doing a poor job estimating being a boon for the builder.
When you mentioned you had 3 to 4 good subs but their pricing was weak or slow, in my mind that disqualifies them from being a good sub. As it is I spend far more time working than I wish I did(don't we all?) and having to chase a sub for a proper estimate or to send me in an invoice so I can get them paid is just wasting my time; if they were an employee I could tolerate the paperwork nuisance as a tradeoff for good craftsmanship but I look at my subs as companies I am doing business with and a component of their business performance is handling the non-labor parts of the job with the same proficiency as the on site work. Alot of these subs are also working out of there home and are on jobs all day, so chasing them for paperwork issues can mean calls on nights/weekends, I don't want to be thinking about work during those hours.
-Ray
In an earlier post here, or in another thread regarding estimating, someone was saying he charges for producing an estimate. To my way of thinking, a fee for producing an estimate is only justified when there is only a sketchily drawn scope, and the owner is relying on the contractor/builder to perform a significant amount of design and specification work in order to most accurately build a price.
In cases of jobs as you describe, with the work clearly defined on drawings, specifications, and scope documents, I think it would be an affront to the client to have a prospective bidder insist on a fee for doing the work of producing a responsible bid. The owner has already invested a significant amount of money with architect, design, and engineering people.
Is a fee being demanded for well-spec'd hard money bidding, simply because it is time-consuming? I don't get it.
Mr. Micro - "To my way of thinking, a fee for producing an estimate is only justified when there is only a sketchily drawn scope, and the owner is relying on the contractor/builder to perform a significant amount of design and specification work in order to most accurately build a price." I think you and I are on the same page regarding that. Excellent post.
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Most of the discussions about charging for estimates, spearheaded by Sonny Lykos, have centered on estimates to the homeowners, not to GC's. As such they have involved a significant amount of design and specification by the estimator. In fact, Sonny does not call his estimates, but Specification and Cost Analyses.
I don't personally know of a single case of a sub charging a GC for an estimate though I am sure it does happen. On the other hand it is a common practice for the most reputable companies to charge homeowners for estimates that are refundable if the contractor does the work.
Let's use these code words to describe two different types of owners with jobs up for grabs. This is not about sub bids; I am digressing. It is about bids versus estimates, and charging fees for them.
"Homeowner" will mean someone who has not completely and precisely reduced his desired work scope to writing. His plans and ideas are incomplete. He may be clueless as to his needed budget. You will need to conduct some serious meetings with him, on site if necessary, to work out and understand the scope.
"Client" will mean someone who has invested the time and money, and probably engaged the assistance of a professional, to have his desired work scope reduced to writing in great detail. His plans are complete, as are his specifications, and together define a project scope that is buildable. He has a budget that is realistic.
For a Homeowner job, a builder works to provide an estimate, and a fee for producing that estimate is warranted.
When prequalified and invited to bid a Client job, a builder submits a bid. He should not get, nor ask for, a fee.