Virg

acting as the general contractor on most jobs i was wondering how some of you deal with sub contractor bids. ive never marked up what the plumber/electrician/hvac bid was even though i have to spend time keeping them up to speed on the project and making sure they have everything they need. is it ethical to add a percentage into the bid to the customer so that, that time is covered. i do the carpentry and hang the drywall so there is also the taper and painter on the sub list. only been in business for a year and i seem to come out on the short end too often. trying to find some of the many holes in my business. would appreciate advice from any of you generals out there. Also i do the drawings and get the permit

KillerToiletSpider

I don't think I know a GC that doesn't mark-up sub labor.

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neolitic

Call it a "mark-up",
call it "supervision"...
you need to get paid for
your time and exposure.
Starting with the first
phone call, the time
it takes to set out
scope of work........

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JumboJack

A lot of GC's sub out all of the work.If they don't mark up the subs they will not make any money to speak of...

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AtlanticWBConst

It is absolutely ethical. Not ony that, it's also an industry wide practice.

Do yourself a favor, next job you get, start counting and keeping tabs of ALL the time you are putting into a job. (That includes all the time spent calling, meeting, etc, - with subs) Add your insurance overhead, your gas usage, your time at the supply houses, phone calls, planning, etc....Factor all that in....and see where you are at.

You just identified a big hole.

There are two areas which you listed that you should be getting paid for as well.

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genecarp

lets make some changes in year 2, like making money

Heritage

There are exceptions.

Sometimes you can't mark up on some of your subs...you'll bid yourself out.

If you add on 10% on 3 sub-trades, each at 10k, you are charging 3k as your markup. By the time you do all your math and let's say you go over a bit on your overhead, unforeseen, material etc...you could be overbidding 10k.

As a general rule, yes, always mark up your subs. Just remember that none of them will be working with you if you never got the contract signed because you came in too high. Sometimes I have to take a pay cut and settle for the parts of the job I can handle "in-house".

Also, with some subs, I save by paying "labour only" and purchasing/delivering material myself.


I know...in a perfect world I could ALWAYS mark up subs, but I've lost out on too many jobs. I've learned where I can and when I can't. When I can't, I think of it as an investment on building/furthering my relationship with that particular sub. It's an investment that not everyone will agree with, but "everyone" isn't paying my bills

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KillerToiletSpider

Are you saving?

I raise my bid by 15% if the GC is supplying the fixtures, to makeup the markup I am not getting on them.

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Virg

clearly i have much to learn about the business aspect of construction. keeping track of running around i have not done, just the actual building time. do any of you use a certain percentage amount added to the sub-labor bid to cover for management and supervision time cost or do i need to concentrate on the actual time tracking. also do u charge the same fee for building as for management if u do use time tracking. i would think yes. i am really liking this website. i appreciate that there are people out there that are willing to help

Heritage

Everyone's gotta eat. The name of the game is fairness and respect. I could see you doing that to a GC you don't care much for/haven't worked much with in the past. I have a hard time believing it if a good percentage of your work comes through that guy though.

Charge your fair price, get steady work. Tax the GC, he'll find someone else.

On the flip side, I can't stand a GC that tries to milk his subs because he can't bid properly/run a respectable business.

If you work with me, you won't markup your price, you'll ask for a fair deal, you'll get it. The jobsite will be immaculate when you show up, nobody will be in your way, you'll do your job, you'll get paid on time and you'll be on my next job.

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KillerToiletSpider

I don't disagree with that, but it works both ways. I am doing a job right now that has $135,000.00 in plumbing fixtures, which would work out to roughly $20,000 for us when we supply the fixtures, if we don't supply the fixtures, we need to make that $20,000 back in labor. Most GC's work with us and let us supply the fixtures, those that don't pass along the higher labor rate in their price to the architect or the designer.

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hammerwhipped

The markup depends on if you've worked ewith these subs before and how much time you needed to spend with/on them on past projects. Assuming their work is good you might have to spend more time with them cause they care or you have to spend very little because they know what's expected of them and can just go off the plans.

hammerwhipped

Go ahead and mark it up it's perfectly ethical not to show there is a mark up on the subs or any of the pricing. Payment for the sub goes through you not the HO. It also makes you reasonably priced compared to the sub

3Kings Plumbing

The GC's I deal with here usually mark it up 20% above my price. One GC I give him a discounted rate on labor. We been friends for over 7 years and he's the one that talked me into starting my own plumbing company. So I try to take care of him.

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Double-A

Virg, read Michael Stone's book, Markup & Profit: A Contractor's Guide

Its a great place to start to help you understand some of the answers you're going to get. Its an easy read but it can be very eye-opening.

As for supervision time, I say that is the very first thing you need to account for in your initial estimate. How much time will the project take? Well, however long, you're going to need supervision onsite during that time.

As for how much to charge for this, only your real numbers will tell you that. You can start with some assumptions, but as you gather time doing the actual work, you'll need to change out those assumed numbers for the real ones you're (hopefully) keeping track of. Every GC I know has a slightly different business model, so they have differing overheads.

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skylands

Everyone has to make a profit or there's no point to any of this.

My subs were with me for years. I bought all the materials including doing all the take offs and ordering. That mark up went to me. The subs came in at a flat rate that I would mark up. They were paid after approved inspections. Never (and I repeat) never make a sub wait to get paid. They are your life line and will stick with you forever as long as they are treated with respect. You will develope a knack of learning which sub will work well with the others. It just takes time.

As GC, it's expected that you have secured the funds to manage the project. Every once in a while the whole payment situation gets in trouble. It's during these times that your subs will go to any length to complete the project so that everyone can get the pay we all earned. Then you can all comfortably move on to the next project,,,,and the next and so on.

But by all means, put a mark up on your subs. No need to hide it, appologize for it or explain it. It's all part of doing business.

BuriedHammer

Don't forget:
Inspection Fees
Permits
Clean Up
Trash Disposal Fees
My newest for outdoor projects: Rain (estimated days x .1 = rain days)

Katherine

As a Subcontractor I have always marked up cost for my time, I include my gas,Insurance,Etc. SO you should do yourself a favor and always remember that TIME IS MONEY. Do not make the error of doing a cheap price to have work.I have been in business for just a few years and I was determined to be known for quality work and I do have higher prices than most of my competition;but,my company is growing fast and we are known for exceptional work and people are willing to pay the price.Also keep in mind the rising cost of gas and other materials.GOOD LUCK

StickBuild

I can't agree woth you more on this. Fuel and Insurance are huge expenses that are over looked and can creep up at you at any given time. Example I have had diesel trucks and it was al;ways cheaper than unleaded gas, now its close to a dollar more than premium unleaded... What happened there?

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lee

you get more mileage per diesel, in my opinion it is still more economical because you're using less of it even if its more expensive.