My partner and I have been asked by our old boss to bid a job finishing a restuaraunt interior. While we certainly have the skills tools and equipment to do it most of the construction is new to us since we formed our company a year and a half ago so we don’t have any track record to base our estimate on. So I was wondering what you think the best way to produce an estimate for this would be. I’m pretty sure there will be at least two other contractors bidding this work too so offering to do it T&M is not going to be an option.
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Replies
Doesn't sound good... you've never done the work before but you want to submit a fixed price proposal for it? I don't know how far the type of work is from your usual thing, but that's the first problem--you'll be learning on the job as a relatively new company in a commercial situation where I'm sure the owner wants it done NOW so he can get open. Problem two is that all you really can do is guess, and do you want to do that? Is your working capital so plentiful that you're ready to buy a job if you have to?
The only possibility I see is that you team up with a project manager or estimator who you *know* can produce the estimate for you accurately. Have them do that and possibly help manage the job, then you have a chance.
If there's other work available that's more your style, go do that instead.
David one of our problems is the "project manager-estimator" that could produce this estimate for us is our old boss who asked us for a bid. Its not that we have never done this kind of work becuase we did it for years for him its just we don't know for sure just how long its going to take. The problem is we looked through our means and hometech estimating books this morning but there is nothing in them for building things like banquettes or bars.
Guess!
You just said you've done the work before ....
so do a thorough walk thru ... building each piece in your head ....
then add it all up.
Use my "that'll take about'a" method ... as in that'll take about a day ...
remember ... in the "that'll take abouta" system .... there is no such thing as a half day ..... "abouta half day" gets rounded up to a full ....
And there's none of this silly hourly stuff .... and don't mention fractions ....
each phase is a seperate job .... don;t go getting confident you'll knock out 2 new adventures in one day .... cocky costs ya money.
Then ... after it's all added up .... before ya add your mark up and profit ...
add in 15 to 20% for the time .... because really ... when was the last time a project didn;t take at least 15% longer then the most realistic estimate?
Now ... after adding that 15% in .... add in a contingency day or so for each phase....
####'s gonna go wrong .... better to plan for it.
Now ... don't forget the biz percentages ... the usual profit and overhead ....
I regularly bid stuff I haven't done before ... but have done "similar" ....
This method just breaks things down into a "known catagory" ....
like ya know how to build a wall ... and have only build one wall at a time ....but now someone wants ya to build them a box outta 4 walls .... so take what ya know and break down the larger project to fit.
Plus ... with all the safety factors built in ....
if you're honest with yourselves about the time involved ... and have the balls to add in the extras ... you really shouldn't come in to bad in the end.
If it's too high ....
like Dad always said ...
U never lose money on the job U didn't take!
Me ... I'm dumb enough to think I'd go for it ... at least try and see how the numbers work out. For job's that'll grow the company I'm happy to exchange profit for experience every now and them ... as long as ya learn from it.
Jeff
Buck Construction Pittsburgh,PA
Artistry in Carpentry
Be sure you can get regularly scheduled payments as the work progresses.I've done restaurant interiors and some are so eager to open they forget they have to pay you; others(if its' already open) want you to work oddball hours around their staff.Not efficient.
But lay out your terms in the bid and throw your hat in the ring!
Remember to consider any union activity.
Restaurant/Bar owners are the worst to pay.
Extra's and change orders can save your ####. Real moneymakers those change orders.
Best of luck.Remodeling Contractor just outside the Glass City.
Quittin' Time
Jeff,
Good points and well put!
I think that message should be bookmarked somehow at the top of the business section of the forum for ready reference by all.
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Thanks to Jeff and David and Jim for their offers!
especially the ... ya never lose money on the job ya didn't take ... part!
Every now and then I listen to my Dad ......
I also liked his ... as long as ya learn ... message.
Like he says ... people pay lotsa money to learn stuff in college ... consider a coupla thou here and a coupla thou there as Contractors 101. As long as ya learned something.
Jeff
Buck Construction Pittsburgh,PA
Artistry in Carpentry
John, I'm with Jeff Buck on this...go for it! Do just what he said. I do it all the time, how the heck else are you gonna learn? Everyone who is long-term established always wants to talk you out of it....like they were born knowing everything about construction.
The key is to bid safe.....very safe. Jeff covered it pretty well. Don't be afraid of coming in too high....if you score the job you'll thank yourself. If you come in way low out of fear of losing the job....you'll hate yourself later. What's the worst that can happen if you bid high and cover your butt.....you'll have to look for more work and you will have learned something.
I always think I'm bidding high and get scared when I total everything out. But I get alot more jobs than I don't get. And I'm making a much better living than I thought I would in my first year of business. Gotta use your brass ones sometimes.
Now if my back would get better I could go make some money myself!
I'm looking at your tag........you working in the city by any chance? If you are, you better add (a lot) for that.
No one mentioned location in your figuring.......where can you park?, do you need to safe gaurd you tools while you load, unload, where is/who is getting the materials and are you familiar with them?
good luck,
eric
Go for it like Jeff said...I always add in 10% for T.I.F. Things I Forgot.
I just answered John in another forum on my website since he asked this same question there but with a slight scheduling twist to it. But I thought I'd repeat some of it here since it goes with some of what some of you other folks are saying too. I thought Jeff Buck and davidmeiland had thinking that jived right with some of my thoughts on this but I really particulary liked what
dieselpig said when he wrote:
I think that's real good advice
but like he says "be safe" too
I would suggest you break down the project into hand able discrete parts, in other words create a Work Breakdown Structure (WBS). Perform quantity takeoffs (materials) for each part of the WBS breakdown and then you can do anyone of a number of things....
Look for Similarity to Other Tasks - While you may not have figures you feel you can use for specific things like building banquettes you may find that cutting the the plywood forms that will be the basis of your banquettes will probably be similar to preparing (cutting up) sheet stock for cabinet carcase fabrication and indeed the assembly of the banquettes will probably be similar to assembling carcases too. Sit down with your partner and any employees (if you have them) and talk about the time requirements for each component part of the project.
Your recollections and theirs of similar tasks and their durations can be used to estimate the present task effort and durations. Task Effort and Duration are two different things. You need to know the Effort to set your price since that will be your estimate of how many labor hours you folks actually put into the work while the Duration is how much time it takes up on your schedule. If you have to wait for paint to dry between coats for instance that wont add to the Effort since you are doing nothing or doing something else while your waiting for the paint to dry but waiting for the paint to dry will take up blocks of time on your schedule. It is important to note that all projects are different; each project is affected by different constraints and assumptions, but it many cases this is a fairly accurate method to estimate task duration.
Look for Expert Advice - Ask someone who knows. Can you ask you old boss for help and advice? Be careful with that and take what he says with a grain of salt because he could be low balling to serve his own end and there is a chance he just really doesn't know too. You haven't said why he was your "old boss". Maybe he let you go so that he could pass off the estimating risk to you and or other subs. Is there someone else you know who know this kind of work that can help you out? (I think that's sort of what DavidMeiland was saying over on BreakTime in his post there).
Use whats called Nominal Group Technique
I quoting from some research I collected regarding this:
---"This is a group method that extracts and summarizes the knowledge of the group to arrive at an estimate. It assumes that each member of the group has a good understanding of the project and a general knowledge of the nature of the task. Each member of the group is asked to estimate the duration of the task. The results are then tabulated and presented to the group in graph form showing estimates from shortest to longest. The graph is then divided into quartiles. Those whose estimates fall in the outer two quartiles are asked to share the reason for their guess. After discussing these rationality's each member of the group makes another estimate as to the duration of the task. This second pass should result in a shorter range of durations. The group then repeats the process from the first pass. A third pass is then performed and the average of the estimates is used for the duration of that task."---
That's essentially what I was getting at when I said talk about this with your partner and your employees but that that gives you a formal methodology to follow.
Use PERT Three Point Estimate Technique
if you read along in these forums [I was referring to the Project/Production Management & Scheduling forum on my site] before I am sure you've seen PERT mentioned and I'm pretty sure you've seen me attack and or dismiss it but this is one of those conditions where you can use it effectively and like #3 Nominal Group Technique its a methodology you use in a group accessment too.
This method utilizes a formula that is essential derived from certain parts of probability theory. Three estimates are made for the duration of a task:
O: Optimistic - the shortest duration one has had or might expect to experience given that everything happens as was expected.
P: Pessimistic - the duration that would be experienced if everything that could go wrong did go wrong and yet the task was completed.
M: Most Likely - the duration that would most likely occur if the task were to repeated over and over again.
You then plug those values into he formula E = (O + 4M + P)/6 and that give you duration/and/or effort estimate. As I just said too you can do it as a group (maybe the best course given your relative inexperience estimating) and then you'll use the averages of the three estimates for O, P, and M values.
While I'm in the camp that he should absolutly go for it I think he should talk about this with his partner or partners and any employees so he has as much information and feedback as possible to make a good sound estimate on. I also think that helps get buy-in and commitment from the employees if they feel they contributed to the estimating process in some way.
Like Jeff and many other here too I've been pretty dumb and stupid in my career taking on jobs I didn't know how to do and I've paid the price at times but in the long run that's paid off in both expanding the realm of the work we do with actual real world experience and it also gives us the experience in estimating work we havve no experience in too. Make sense?
One final thing to keep in mind John that I didn't mention in my post earlier is that if this is premium specialized difficult work make sure you charge a premimum for it. See the Breaktime topic Pricing for ‘perceived value’.
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I love everyone's responses. I suggest you take most everyones advice here, John. If he is your old boss, and it seems your on good terms, ask him if he will tell you what the other bids came in at... after you have done your breakdowns and calcs , and submitted your bid.Ask him if he will share this info with you before he makes a final decision... if your bid is close enough to the others, you may drop it to get the work , or better yet, he'll accept your higher bid because he is familiar wwith your work. Good luck
Shep while I'm in total agreement with the first part of your suggestion "ask him if he will tell you what the other bids came in at..."
I couldn't disagree more with your suggestion "Ask him if he will share this info with you before he makes a final decision... if your bid is close enough to the others, you may drop it to get the work , or better yet, he'll accept your higher bid because he is familiar wwith your work."
That's essentially asking his old boss the GC in this case to collude in a form of bid shopping. At the very least it's unethical and in some cases and for some projects it's illegal. I've just got to butt in and say; nah don't do that.
The bidders on this supposed project have all be asked to submit their "best" bid. Who knows,... the GC's criteria may not be price but some other consideration such as understanding of the project requirements or meeting a particular schedule or what have you, but regardless of that asking for the chance to change your bid to beat you competitors after all the bids are in is essentially asking the GC to move the finish line in a race or another inning to a baseball game so that you have another chance at winning. It's bid rigging or another form of
If I submitted a bid in good faith to a GC and then he or she lets a friend or former employee look over my bid and revise their's accordingly to then beat me out I would be bloody furious. After reaming out that GC for bid shopping and bid peddling you could bet I'd never submit a bid to him again. That certainly isn't in the GCs best interest in that he or she will get a reputation as a bid shopper and no decent subs will work for them much less submit a bid. And the sub that undersuts the competition that way will earn a reputation too.
Here are some links to PDFs I've posted before regarding bid shopping you might want to check out:
Guideline on Bidding Procedures
Guideline on Bid Shopping and Bid Peddling
Guideline on “Scope” Bidding for Private Work
Guideline on Bid Errors and Adjustments
They all come from Guidelines for a Successful Construction Project (formerly the Construction Industry Survival Kit) a set of documents published jointly by the American Subcontractors Association, Associated General Contractors of America and the Associated Specialty Contractors, Inc.
And here's a link to some other articles I've recently read Bid Shopping and Bid Peddling:
It may be legal. But it’s certainly not ethical! and Bid Shopping/Bid Peddling:
Don't Play Games with your next Construction Project
On the other hand knowing what the others bidders have submitted after the contract has be awarded is entirely okay and is in fact highly recommended so that and contractor can use that information to help analyze their bid and see just where they are in the marketplace and make adjusts for the future.
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In my experience, resturaunts are often very cheao, want it fast, and will rush you.
But the inspectors will slow the process down, and be extra picky, which po's the owners more. You can get caught in the middle.
And payments? Make sure you have this part controlled tightly. Don't plan on getting your last one without a fight. I don't know why, but the reputation is pretty well known, at least around here.
That said, there are plenty of great resturaunt owners out there, and I'm sure that my picture is a little twisted...I hope so, at least.
Then there are the hassles of the hours, the parking, the need to do everything at once with all the other trades tripping over each other. Sometimes it gets ugly.
As a 'new guy' I will put in the extra hour here and there, as I figure I might not have every last speed trick figured out just yet, but I would worry that there might not be any time flexibility on a commercial job like this. Just be careful!
Jake Gulick
[email protected]
CarriageHouse Design
Black Rock, CT
Good advice Jerrald, But not only that but it says that you were trying to" stickit " to them . It is better to stay at home than to spend money getting to a job wearing out tools /machines just to break even or lose money. I tell people that if I can't make money on there job I can stay at home and do the same with less work involved.
Not too long ago I bid a commercial TI job here in the greater ATL area. Owner is/was a friend of mine. She asked for an estimate based on a sketch.
Owner supplied flooring, lighting, etc. Long story short, I bid the job based on sketch and the 'Murphy factor'. Long after I was notified that I did not get the job, I was called back for some consolation work. Learned at this point that flooring that shop owner was handling had still not arrived, contractor had still not been paid (he/she had been done for 45 days, flooring not in there contract), and owner still didn't know when flooring was being delivered.
Just food for thought.