Billable Hours??

cexcavation

Hey Guys,

I need some advice/encouragement in regards to getting my billable hours up. As of the end of this year, my billable hours are at 898.1!!! That wouldn't be a problem per say if I was goofing around the other 1100hrs or so, but I put in 60-70 plus hours a week in the summer, and at least 40hrs per week during the winter. The problem I have is that a lot of that time is spent loading equipment, pipe, tools, washing equipment, maintenance, paper work, bidding, job site consultations/estimates, etc. I figured out my overhead including my wages, and I will need to raise my hourly rates as of the first of the year. My question is, do I put everything into my hourly, or do I start doing set-up fees, etc.?? I typically have more work than I can keep up with, but I fear that I may be short changing myself on what I bill. What do some of you guys do. Right now my hourly rate on equipment (compact equipment) is $80/hr and $45/hr manual. I figure I need to bump up equipment $10/hr and manual $5/hr. Obviously areas are different for pricing, but most guys around here are anywhere from $75-$85 on compact equipment-which is realistically too cheap. I just can't figure how they are paying employees etc. unless they are billing a lot more into the jobs-i.e. not billing off of the hour meter as much as going from the time they leave home to the time the come home. Just looking for ideas. There isn't any room to mark up aggregate since prices are already inflated, some room on pipe, so it seems everything falls back on getting my labor hours up. What is the most acceptable form of charging? Set-up fees and then by the hour off the meter? Or do you mark materials way up? Or do you bill from the moment you are on the customer's clock thinking about their job, talking with the customer about what they want to do, etc.? Any advice or insight is appreciated. I have plenty of work it seems, just don't seem to be charging enough. I work way too much to be only billing out less than 1000hrs per year.

Jason

Williams Ex Co

Jason, heres what I do with my mini equipment.... Mini Hoe is billed out at $95/hr and nobody bats an eye at that.... More work than I can get done usually. Job clock gets set to zero when I show up with it on the trailer, if I need to jump out and probe where im digging the clock keeps running.... If im doing manual labor in the trench I shut it off and that time gets billed out at $45/hr. If I work from 7 am to 5 pm and there is 6.5 hrs on the clock that leaves me with 3.5 hrs to bill at $45... 6.5 hrs to bill at $95
The big hoe gets billed at $150/hr with a $1500 minimum....

john1066

heres what we do every item we do gets coded on the big jobs. so we keep track of what we are doing and in the office there is a price structure for each code. so if we are setting a catch basin and it takes 1 hour in that you have the excavator loader 2 laborers 2 operators 1 foreman and depending on where at truck and driver. and also have the CB and stone with the excavation. but for what your looking for i think you are looking for how to bill T&M work. pretty much when we are doing this work everything gets billed so when we write out the slip we will put
like this
John Deere 710G 8 hrs
operator 8 hrs
ten wheeler 10 hrs
tag trailer 10 hrs
foreman 10 hrs
truck with tools 10 hrs
laborer 10 hrs
laborer 10 hrs


and if they argue just remind them they called you. but usually i tell everyone minimum 4 hours

cexcavation

Thanks for the advice guys I think what I am noticing is that since I am a one man show, I only bill out for what I am running at the particular time......this seems fair on one hand, but on the other, I have 3pieces of equipment, a 10yd dump, trailer, compactor, etc. sitting on the jobsite essentially for free. However, if I did not have the 10yd truck sitting there getting loaded, then I would have to hire someone else to sit in their own truck at $80 while I loaded them. Furthermore, I could hire a driver and have my truck and/or trailer, etc. making money on someone else's jobsite. As of right now, the customer gets the truck for free until I hop in the seat. Problem is,when the job is over, the clean-up, maintenance, insurance, etc. are all the same. It seems like it should be acceptable to charge some sort of amount to cover the costs of all the other equipment associated with a particular job. I think all too often I reward the customer with my efficiency and ability rather than looking at the project as though I am doing a 3-man job for a 1-man price. The hard part is justifying that to a customer who is paying me on a T and M basis. When I bid jobs, I can factor a lot of this stuff in and no one bats an eye. The issue I have is that most of my work is T & M due to it being residential work with a very broad scope-no real way to pin any of it down into a bid. It sounds like you (John1066) charge for your tag trailer, etc. How do you explain that to a customer? I like being able to break it all down (which I do for manual vs. equipment labor) but when you start explaining why the truck cost this, trailer cost this, etc. the typical customer seems to say "Yeah, but you were on the excavator all day" If they only want to pay for the excavator, then I have to jack my equipment rate higher than what most guys claim for their hourly rate. My overhead is low, I do all my own maintenance, built both of my dump trucks, etc. and my calculator is telling me that my hourly rate is far too low. Just thinking out loud and looking for some outside perspective. Thanks again,
Jason

tgeb

Jason, I have been in your shoes and here is what i do and how I justify my pricing.

I charge a move fee for each piece of equipment each time it is moved to the job. This covers some of the cost of the truck and trailer.

Each piece has a daily rate to be on site. (I calculate this rate by simply checking the rates at the local rental houses and base my rate on what I feel is fair.

For instance, lets say the rental co charges 250/day for a skid loader, then you must pay fuel, insurance and tax on that. If a builder or H/O had to rent that loader it would cost them probably 325 to 350 per day. If I charge 300/day and include the fuel, they are getting a bargain for the machine for the day. I already am paying insurance so they save that also.

If I have more pieces of equipment running the same day each is treated similarly.

Now we have to put an operator in the seat, he gets billed out at so much per hour and it does not matter if he is on a machine or talking with the job super or H/O, he is on billable time even if the equipment is idle and we are doing lay out, utility location, whatever, man on site should be getting paid.

If I have 3 machines and 1 operator, I get 1 daily rate for operator and 1 daily rate for each of the machines.

When I bid contract work I try and factor in some of the "off-site" work into the bid so I get paid for some of the running around, loading tools, scheduling trucks, and the other stuff we do but no one sees and we never get paid for.

Now the rates for your equipment and labor would have to be decided by you based on what you can get locally.

I hope this makes sense.

__________________
Tom

www.gebcon.com

Vinny

I'm a little lost here Jason. I cant for the life of me see how you only billed less than 900 hours in a year for your time, and you were always busy working at the site at least 8 hours per day. It sounds like you may not be focused on making money and are instead focused on working, which is easy to let happen as a 1 man operation.

IMHO, the problem is not the fact that you area a 1 man band. And frankly, the way you are dividing / invoicing the time on the variuos pieces of iron seems not only fair, but correct. I say this because if I were a client of yours, I would not expect you (nor would I pay you) to charge me an hour of excavator time while you were trucking a load of fill across town, and billing me for that too while the digger stood still.

Again, IMHO, it sounds like there is either a "nice guy" problem or a managment problem, both of which are your problems if this is the problem. BTW, I aploigize in advance if that seemed to harsh. I dont know you and dont want to sound critiacal, but you asked for opinions / suggestions so.....

First, regardless if your 1 man or 100 men, you must figure for, or charge a mobilization fee that is relative to reality and is fair. Say you get $150.00 per hour for the truck and trailer. And it typicly takes 1.5 hours to do a move. Figure it into the job. Then the next job gets a mobilization charge also. So the move from job A to Job B is on Job B, get it??

Then I would also suggest starting a production library. This is a method of documenting and tracking various tasks you perform. For instance, you dig water lines. OK, then standars residential 4 foot deep water lines may be one catatgory and you can label it by code (1001). Now, all footing digs at 4 feet can be 1002, and on and on and on.

Do it on an excel spread sheet and in 1 month of normal various operations you'll have an accurate estimating basis.

Then, the importatnt part, track the job. EVERY TASK ON EVERY JOB. and compare it to your historical data. If need be, make adjustments to your library of info or add codes / catagories.

And of course, compare your estimated hours to the actual hours to ensure your doing enough billable hours.

I am not insinuating this will be easy, but once you have the ground work done, it'll become second nature.

BTW, if you are that busy, raise your prices. it may slow closed deals but you may make more for less work. Not a bad thing, right??. You can always lower them if you need or want the job.

__________________
Roccies Asphalt Paving
The Right Way Driveway Company
If you say you cant, your a loser. If you say you wont, your a quiter. Which one do you want to be?

dayexco

my question is....wtf would any of you work by the hour? that's a loser from the get go if you're productive at all. hourly rate forces you to compete with the newbies who have absolutely no clue as to what their costs are.

__________________
someday, i'll be as patient as Nick.

Vinny

Good point Day.

And I'm sure Jason will be along when he checks the net, but I can see where just doing things hourly can be, or at least feel like, its safe and secure. Like "I cant loose". And at times, its just like that.

Though I have always felt unless site conditions force you to do it hourly, and those conditions and prices are clearly spelled out to avoid any BS at billing time, doing it on contract price / lump sum was the best way to work.

__________________
Roccies Asphalt Paving
The Right Way Driveway Company
If you say you cant, your a loser. If you say you wont, your a quiter. Which one do you want to be?

denick

I agree with dayexco in most cases. Except for the person or company that knows their costs to do business down to the nickels and dimes. And has the ability to forecast an accurate workload for the coming year.

Years ago there was an excavating company in lower Fairfield County in CT. They were very well run they did a lot of big contract work. They also did a lot of work by the hour. They charged 10% to 30% more than almost everyone else for their equipment. "BUT" they were on the job when they said they would be. They "produced" when they worked. They had an equipment base of enough equipment to "get the job done... period" They charged for everything and every hour on a job. They always had work. Good work.

How many company's are capable of the discipline it takes to do that????

__________________
Nick

"Every day I remind myself that my inner and outer life are based on the labors of other men, living and dead, and that I must exert myself in order to give in the same measure as I have received and am still receiving" Albert Einstein

cexcavation

Thanks Guys. It is good to hear the different perspectives. I do in part suffer from the "nice guy" problem.....that is partly why I am asking to hear how other guys are billing themselves out. I do agree with Day about the hourly battles with new guys......problem is in this area (mostly rural) even the seasoned veterans are out there doing hourly work at ridiculously low rates, which in turn puts everyone in the mindset of "What do you get per hour?" It's always been that way. In a bid situation, alot of these same guys are far too low to cover much over wages. When I travel outside of my local market, I can bid jobs comfortably, make good money, and have customers that don't question anything.....simply because those markets seem to stay current with job costs. So my main question is how do I deal with customers like Vinny??? You gave very good advice Vinny, and I found something that I thought was interesting. You wouldn't be willing to pay for my dumptruck sitting on site simply because the seat is empty(I reversed the excavator for the truck but same idea). However, if that truck wasn't there, I could stack the overburden, hop in the skidsteer, shuttle it across the site and restockpile for future use. If I were to bill you for the unmanned truck, you would pay less than if I charged you for all of my machine hours, but you would still somehow feel as though I was cheating you.......see my point I am not talking about billing for my hoe while it is not working per say, but in my opinion the truck is working while it sits since it is getting loaded. I also like Tgeb's method of basing a fair rate for the equipment needed using the local rental yard. If an excavator is absolutely needed here and there for the job and I haul mine in, I should be able to bill it out at some rate for the necessity of it......otherwise they can go rent one and end up paying more than my fair standby rate........I am not talking about taking advantage of the T and M situation, but I feel that there should be some fair way to cover those items as the would be in a bid situation. What I am realizing that Day's eloquent words are right on. T and M stinks unless you start nitpicking the wages to the point of irritating guys like Vinny You can "hide" your true cost's of business in a bid, but T & M takes away the privacy and then you are forced to get down in the mud and brawl with lowballers doing lowball work based on the generally accepted hourly rates. Now for the problem.......most of the jobs I do are realistically unbiddable. Get five different excavators to bid it based on the customer's description and you will get five bids that don't have more than five things in common out of say 20. I just bid on a street improvement/sewer job and out of 3 contractors, all bids where +-$500 on $46,000......I won the bid and felt good about it since the scope of work was clearly defined. This was an engineered project with plans, bid on by some out of the area guys who have been doing this a long time. Take these same guys and throw them into my usual job and they would probably be scratching their head as I am now I really enjoy the clients I work with, I just need to be able to make what I would make bidding the work while still giving them the "freedom" to tailor every project to their needs. I will be working on this come next year......thanks for all the input. I look forward to hearing more.....this will be my 6th year of scratching around making dirt look good and hopefully I will start making the money that corresponds to my actual time spent.

denick

Anybody who wants to do better with charging the right amount for what they do should look at Ellen Rohrs materials. Read her books "How Much Should I Charge" and "Where Did The Money Go" they make you think. Her stuff is at,

www.barebonesbiz.com

__________________
Nick

"Every day I remind myself that my inner and outer life are based on the labors of other men, living and dead, and that I must exert myself in order to give in the same measure as I have received and am still receiving" Albert Einstein

Williams Ex Co

Sometimes there no way to make money on T/M... Heres an example.
An investment company from MN called last week, needed a curbstop valve and riser box replaced on one of their rental units. I told them $500 plus materials. Steep? Look at it this way... They got a licensed/bonded plumber, a laborer, a service truck equipped with all the tools and supplies to get the job done, an equipment trailer with mini hoe, frost ripper tooth and buckets, a jumping jack compactor...... Thats well over a 100K investment for me. The job took me 1.5 hours start to finish. No way to do it hourly. Does the price still sound steep? Nope!

Yesterdays call was a HO with sewer problems. I told him I would replace his outdoor cleanout/P trap (I think that is his problem) hourly.... It will take maybe 3-4 hours tops. Told him I needed more info to give him any more prices... i got that info today when I looked at the markouts. To get to the sewer main I will have to cross the street and the fiber optic and the copper and the natuarl gas.... City wont accept spoil from the trench for backfill across street so that has to be hauled off and aggregate hauled in.... This job is WORTH 6-7K..... Will probably take me 2 days... If I sat in my mini hoe for 10 hours a day for 2 days at my hourly rate thats less than 2k.... I wouldnt even touch this job for 2K!
Know what it costs for you to work and bid accordingly. Nothing wrong with T/M but you will be way farther ahead if you bill what the job and your equipment are worth.

rino1494

If you are on a job for 8 hrs, then you should get paid those 8 hrs. On T&M jobs, if I have to jump out of the machine to do something, I leave it run. If I am gonna be awhile, like 15 min or more, then I'll shut it off. At the end of the day, I write down in a book what I did. For example, if I was there 8 hrs and I worked the machine for 6 hrs, then I will mark down 2 hrs labor. 4 hr minimums are good, daily rates are better.

__________________
Life is hard. It is harder when you are stupid

Uncle Sam wants YOU....to speak ENGLISH

lfsgcs@gmail.co

I have to disagree with Rino. Life is harder for the smart ones who have to dumb themselves down to the level of the stupid.

Regards

Vinny

I hope I didnt offend you CEX. Apoligies if so. I certainly didnt mean to offend.

It seems like you took my comments in stride. I just get nutty when a hard working guy, like your self, doesnt get ahead. It makes me wonder if some GC's are taking advantage of you. And nothing gets me rhiled up like a F n piece of dirt GC that beats a site guy up (except maybe a terrorist attack)

__________________
Roccies Asphalt Paving
The Right Way Driveway Company
If you say you cant, your a loser. If you say you wont, your a quiter. Which one do you want to be?

denick

This topic is something I am struggling with for a while now. Our guys now meet at the shop at 7:00 AM. I try to have the information they need to go to the job ready. We talk about what needs to be done, load the trucks and head out to the job. 7:15 would be a good time. That doesn't seem to happen, 7:20 to 7:25 seems average. If anyone is late your waiting to go over things or need to go over it again with that person while the others wait.

It takes an average of 20 minutes to get to most jobs. It seems to be getting to be a regular thing to stop for a coffee on the way. If the truck needs gas or fuel needs to be picked up that can add another 20 minutes.

Arrival on job seems about 7:45 to 7:50. Now machines need to be checked, greased, warmed up and a discussion of what to do. 8:20 to 8:30.

Well now the money starts to be made, so far it's all been non billable (productive) time wether or not you are working by the hour or contract.

I don't have an issue about my mens work time. They are not time wasters. there is a day once in a while or a guy has a problem or issue that day.

4:00 PM end of work day. Especially with the short daylight hours. We will work longer if we can. We take 30 minute lunches this is not paid time, sometimes a little longer. 2 of the guys go out for lunch everyday to get a sandwich using the company truck. This sometimes adds to the length of lunch. The added problem the guys who don't go out for lunch don't as a rule go back to work until the others return. With another couple of breaks during the day.

Guys have now been at work for 9 hours. getting paid for 8.5 of those. If the week is a regular week they have a 1/2 hour overtime. Productive time is 7 hours with probably 55 minutes an hour.

Now there is, cool down machines, clean tracks, clean up job site, drive back to the shop, clean out trucks, return tools and park truck. Now a 10 hour day.

It breaks down to 6.5 hours of production and 10 hours pay.

So? What do you think?

I want to figure this out before we go back at it in April.

__________________
Nick

"Every day I remind myself that my inner and outer life are based on the labors of other men, living and dead, and that I must exert myself in order to give in the same measure as I have received and am still receiving" Albert Einstein

Vinny

Yea, you and everyone else.

Your buisness isnt much different than anyones. We all have inefficiencies we'd like to see corrected but while you may be able to find a few minutes here or there, your not gonna get back that whole thing.

We've done a pretty good job of tightening up those little bleeders. The super and the mechanic are in at 6:15. The formen are in at 6:30 to get the days plan from the super. The needed machines are on the trailers from the day before. The mechanic starts the trucks and checks all lights and tires. The drivers are in by 6:50, they recieve thier maps and duties for the day, then thier on the road by 7:00. The crews get in by 7:15 and leave by 7:20. By the time they get to the job, set up and start, its 7:45 +/-. They get a break at 9:15 if the job allows and lunch before 2:00 (state law BTW). The its wrap up starts between 3:20 and 3:40 and back in by 4:00.

My tool trucks are fairly large so they carry the diesel tank, gas safety cans, and a greas gun. Its a laborers job (supervised by the forman / operator) to grease and fuel the machine at the end of the day if its staying on the job. Otherwise the mecahnic does it at the end of a day when it comes in, or 2 days if the hours were low for a given period.

Weekly, the deisel fuel and gas is replenished by the mechanic on Saturday. I dont autherize any stops on the way to the job. And if a guy is caught, everyone in that crew, including the drivers, gets money deducted from what ever bonus is available at the time.

Every job is figured with a seperate set up / wrap up time plus the actual production time for the given task.

I dunno. I wonder if I have lost many jobs by trying to recapture these little, but necasary time loosers like travel time, set up, wrap up, breaks. But I cant imagine not figuring it into a job. I'm sure a fair amount of my competitors dont, but thats thier busness.

__________________
Roccies Asphalt Paving
The Right Way Driveway Company
If you say you cant, your a loser. If you say you wont, your a quiter. Which one do you want to be?

cexcavation

Hey Vinny,

Not to worry.......I was not offended at all I really appreciated your advice, just thought I would give you a little razzing is all!!!

Williams Exc.,

Thanks for the insight........I am the guy who ends up doing the 5-7k job for 2k since that is how long it took me on the job. But as you point out, it isn't worth doing for 2k. I need to start taking the attitude of what a job is worth and not so much how fast "I" personally can get it done. My reward for being efficient should be going home sooner than expected and taking my wife out to a nice dinner with the extra profit. As you mentioned, when you have 100k worth of equipment sitting in the street, there is no way you can charge for just a couple of hours....I have a $250 minimum, but anymore, that really isn't enough since you will typically spend more than half a day getting there, doing the job, getting the customer squared away, and getting to the next job......do too many of those minimum jobs and you'll start going hungry.

To everyone,

I am thinking more and more about the hourly rates that we all charge in our respective areas. If a guy starts to figure all of the "Non-billable" time into his overhead costs, then the hourly rates are more than likely too low as they are. As Denick has mentioned, his guys aren't necessarily slacking off, it just takes more time than most realize to get a machine to the jobsite, fueled, warmed up, etc. etc.-this should be expected and is normal. Now if you are moving into different jobs almost every day or so like I do, then the amount of non-billed time is incredible. The honest truth is that almost no one wants to pay you for all the "unseen labor" costs, so the fair thing seems to be to raise the equipment rate accordingly. That way, the customer aggrees up-front on the hourly price that covers the actual cost of business and then there isn't any need to try and explain the warm-up, greasing, etc. Idealy, all jobs would have a "value' and everything would be put out to bid. Problem is, there are a large number of customers who prefer to go hourly. If excavators were more unified like Electricians, or Plumbers with regards to their hourly rates, it would help everyone.....including the customer since there wouldn't be the back of mind worry of "That guy down the street who charges $15/hr less." If that guy does exist, he will more than likely come up if everyone else is holding strong at the market value. If you look at equipment rates vs. inflation over the last 20 yrs or so, we are working for peanuts comparitively and our insurance/bonding/educational demands are far more extensive. It is my opinion that if a guy truly works at the "going rate" on a straight T and M basis, his profit will be as much as 1/2 of what it would be in a competive bid situation. Point being, that bids are for the most part keeping up with the times, but our advertised hourly rates are lacking, since like Williams Exc. stated a 5-7k job would go for 2k at an hourly rate. I am raising my rates at the first of the year, and am going focus on selling my projects in a bid vs. hourly. Thanks again for all the advice and perspective.

Here's to a great year to all,

Jason

john1066

We run completely different from all of you. Our drivers start coming in a 6am there is a not hanging by the keys for their daily assignment. then at 7 the mechanic comes in who has work orders on the equipment thats either in the yard or on site to get worked on. the only other guys who come to the shop are foreman and supers they will come in between 5:30 am and 6:30 grab what they need and go. on each job is 1 or 2 shipping containers that have oil grease compactors shovels and what ever other supplies are needed. each super has their own container that follows them. as far as equipment the lowbed works all day moving stuff from site to site as needed. the rest of the help goes directly to the jobs where the super has everything planned for what is being done during the day. the operators are expected to show up by 6:45 the latest and have the machine ready to go at 7:00 no later. coffee break comes around 9-9:30 for 15 mins lunch is at 12:00- 12:30. there are no other breaks. if a machine breaks down that operator goes onto something else till its fixed. no matter what everyone in the company stops for lunch unless authorized by a super or my father. this seems to work out for us that way we don't have everyone wandering around the shop in the morning productive work starts at 7 we keep everyones time to 40 hours a week unless we are getting paid premium time.
as far as woring T&M we do that alot on things that you may not be able to figure into some jobs. stuff like digging the interior plumbing and electric lines or hammering rock on a smaller job or all the things that come up as change orders. those are some of the things that we do for time and materials. its easier to keep the guys out of the garage. we find it nice with all the supers having their own container that way you keep the same compactors generators pumps and stuff together with one person. and pretty much anything else can be brought out to you within a day. people laugh but at the end of the year at lay off time the lowbed is what delivers most of the checks. even tho we try to run a pretty tight ship we do sometimes taking a longer lunch or coffee your not always working right at 7 so its hard but can be done

rino1494

Interesting first post. Please explain. Are you refering to my post or my sig ?

BTW....welcome to the site.

__________________
Life is hard. It is harder when you are stupid

Uncle Sam wants YOU....to speak ENGLISH