Day Rate/T&M?

tgeb

I looked at some work today that is pretty complex with a lot of unknowns and variables.

Essentially we will have to excavate soil from large planters outside of a pretty big commercial type building so that waterproofing can be done. (it is apparently leaking). We will not be doing the waterproofing.

These planters have:
Lighting, that shines on the building. (Big Lights)
Drain lines, for surface drainage.
Tunnels that act as giant air ducts for intake and exhaust for the HVAC.
Irrigation systems for the plantings.
It is unknown whether there is drainage systems at the bottom of these.
The depth in some locations would be around 10 feet.
The planter walls are about 8 feet above the adjacent area. (we will have to get in by going up a set of steps, which we cannot damage, or hiring a crane to swing the equipment in.)

I hate doing work T&M but there is no reasonable way to price this thing out for contract sum.

Any ideas or thoughts on the best way to handle the contract?
Things to look out for?
I want to cover my bases but not put the owners on the defensive or over do it with details or NIC's.

I would like to get this job, (it could lead to other work, and is somewhat high profile), but don't want to lose my shirt in the process.

So my real question is how do you guys handle Day Rate and T&M work?
Any thing I should be particularly including in the agreement?
Stuff to watch out for?

I am open to all advice, short of run away fast. I already thought of that!

__________________
Tom

www.gebcon.com

denick

Tgeb,

This isn't your first time around the block. You are an intelligent person who takes his work seriously and has pride in the outcome.

You want to be fair, take a second and third look at the job, Think it though a couple of different ways.

Present your best plan to the customer. And let your presentation and reputation take it from there. Easy for me to say. Hard to do. But in this situation maybe the safest way to proceed.
Getting a good night sleep during the job is important.

__________________
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

ctkiteboarding

flat fee per day ,

work efficiently so the client sees

after the job is done ,the client will be impressed and hopefully send some leads your way,

tgeb

Thanks for the encouragement and vote of confidence.

One of the problems I have with T&M work is for example:

A portion of the work that you would typically charge say $1,000 (fair market value). You go in and do it T&M and the bill is only $750 because everyone hustled to get it done.

OK now I am doing 1K work for 750, how can I get my numbers back up but not look 25% higher on my Daily Rate than the next guy?

Another example:

Daily Rate is for my mini excavator, I get down there work an 8 hour day and head out. After I leave I have to pick up pipe and fittings on the way home, then at home I have to load saws and other tools, get some form lumber together, ect, ect. By the end of the day I have put in 12+ hours that would have normally been included in my contract bid. How can I get compensated for the time away from site that is legitimately related to doing this work??

This is were I get hung up on the Daily Rate thing, and why I am throwing this out to you guys.
I have found that I end up doing too much for free and need to figure out a work around.

__________________
Tom

www.gebcon.com

ctkiteboarding

yes i see the "extra work "issue,,, i think it comes with the program ;
if you are to owner/operator, the extras are what it takes to get the job done,,,

i set my day rates per machine and stick to them , i also end up working long days but i think thats the way it goes in our line of work,,,,,

talk with you client and discuss the extra's , see what they say,,

if you are comfortable with them ,they will be with you ,

then you should be able to get full day rates without feeling like your over charging ,

good luck R

Driftwood

Set 2 or more rates. One for mobilization,another for laborers,one for machine time,and yet another for running around picking up drainage ect.
Make sure You're going to get paid for repairs to any breakage that occurs in the process ! Stuff happens , even to the most careful ! I say if I wan't to gamble ,I'll head to Tahoe .

rino1494

I agree 100%. You never get paid for packing the truck for the next day or running around doing errands and getting supplies. It just comes with the territory.

I would just go in there and give them your prices per hr for each machine and laborer. Tell them about the unforeseen conditions and that damage to lines may occur and any repairs will have to be extra.

I would sit down and figure up a ballpark price. Tell them that this is just a ballpark figure, but don't hold me to it. It may be more, it may be less, but it is what it is. Be professional and present yourself like a gentleman and you won't have any problems.

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Vermaraj

Everything in your list are legitimate expenses I would expect (and have ) paid on T&E jobs. On a lump sum bid I would assume these are included in your overhead expense. When I sign T&E then delivery expenses are billed to me one way or the other.

I have seen it done a number of ways:
1) dedicated driver that gets billed by the day.
2) cost + 15% markup for rented tools. 15% covers cost of arranging tool rental and delivery.
3) contractor has supplier deliver everything on the site.
4) contractor charges a per use fee for certain tools ( say $100 for a saw, which covers everything: delivery, maintenance, blade wear, etc...) Nickle and diming on a T&E is a pet peeve of mine!
5) all materials marked up +20% to cover finance charges, delivery, broken cases, etc...

#3 is by far the most expensive option in my opinion. There is nothing like getting a bill for 3 lengths of conduit $10, special delivery charge $150, markup 15% of $165. As a general I appreciate when my subs make an effort to obtain material at a reasonable price. I am certain your client will feel the same way.

Little

I agree as well with the regard to picking up materials, loading it up, etc. That is just and extra you have to eat. I would charge for mobilization/demoblization of any machines though. Now for pricing the job, the unknowns are unknowns and you when you come across them you have to get paid for them in a change order. Can you store the soil you excavate onsite? How are you goin to be removing the material?

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Commercial Construction, Central Jersey

lukachuki

Good Question to which I don't have many answers except that anytime we have done a time and materials job the (homeowners in our case) feel like they have to watch everything to make sure they are getting value for their money. It has never gone over real well because as you stated they are not aware of all the behind the scenes work a large project takes as well as not having a clue about what needs to happen when so both sides are frustrated.

I see many with much more exp. than me have given you great advice. I currently figure the knowns of a difficult job for which I give a set price and then for the unknowns, of which there are many, I do a change order which is an agreed upon time and materials charge to reimburse my company for the time and expense incurred by the work outside of the original contract. I'm still learning though and the situation you have described is prone to be sticky. One other thing that I have learned as well in situations like this is to overcommunicate with the GC/Owner right from the outset and then on through the job. People don't mind reimbursing you for work that you have done they just don't want to feel taken advantage of in a T&M situation.

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Less with the jaw more with the paw!

rino1494

This is true sometimes when it comes to working by the hour. If I can expect someone to be a pain, I'll bump up our hourly rates. If they don't like it, then they can get somebody else.

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

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PSDF350

Charge like an equipment hualer, from time he leaves the shop till he gets back to shop plus mileage. Like was said in a direct bid it would be factored in, just like all other related expense's.

Vermaraj

One last thought that you are free to ignore.

When I was working as a project manager for a Fortune 500 company we had orders to bid everything lump sum. The powers that be figured that way the worst case scenario was always known and they would not have to go back and ask for more money. Most of my friends who were in similar positions at different companies were under the same orders.

I never thought much of this approach. Especially when you consider the amount of engineering required for proper bid documents. Nevertheless they knew that the contractors had to pad their bids to cover and they didn't care because going over budget on a project was a career limiting event. Worst case scenario for a desktop PM is a loosely defined, unending T&E job.

Keep this in mind when approaching a T&E job. More often than not the PM is hanging out there on his own when he is willing to contract T&E. If you outline the major items and the hourly rates for those items. Then you can discuss the need to have delivery expenses or special tool charges upfront. They will be prepared and usually understand the uniqueness of the project demands certain expenses. If on the otherhand you unexpectedly drop, at the end of the project, 40 hours of delivery time, various surcharges and a list of extras the PM is likely to flip out.

When I was looking for good long-term contractors I would always throw out a T&E contract to see how they perform. Many contractors would take advantage of the situation by padding labor hours or tacking on every expense they could think of to squeeze out extra margin. The best contractors would layout what they expected to accomplish, major unknowns and expected labor and expenses. Then if things did not go as expected they would give a brief explanation of why and a new estimate.

tgeb

Got a call this morning, (they have said all along they wanted to start on the 23rd) they awarded me the job!!

These guys seem to run a little "last minute" on everything but I am able to start this week so they are pleased. (it will take some real juggling but I can accommodate them).

I put together a pretty comprehensive price list, combined with a proposal that outlined our procedures and what I perceived to be problem areas of the project and my intended solutions, what we would and would not be responsible for etc.

The super said we were not the low bid, but he felt we would address their concerns better than the other candidates.

Thanks for all the advice, I'll let you know how it goes from here.

Woo Hoo!!

__________________
Tom

www.gebcon.com

ctkiteboarding

congrat go get'em

rino1494

See, I knew that you could do it Tom. Congrats

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

Uncle Sam wants YOU....to speak ENGLISH

denick

Tom,

Congratulations on the award of the work!

Give it heck!

__________________
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

lukachuki

Way to go Tom...it pays to be professional....literally!

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"The problem with internet quotes is, you never know if they are authentic." -Abraham Lincoln-

Less with the jaw more with the paw!

tgeb

Thanks Guys.

As much as I hate T&M work turns out to be the best thing here. They have already just dropped on me that instead of around 8' of cut to the bottom of the foundation it is more than likely 15' of cut. All class "C" soil = 1-1/2:1 slope and no place to put the stockpile in the planter.

For some reason they don't want to be forth coming with the original plans so I can figure out what I'm up against. It's like this "mystery job" which can be fun...but the more I know the better things can be planned.

My wife and kid were hoping I could take vacation with them next week...doesn't look like I will make it at this point. But I haven't given up hope yet!

As for being professional I have always worn a uniform to work, even when I worked for guys that did not require one, I would purchase my own and wear them every day. I provide my guys with uniforms so they don't look like panhandlers while on my job. When on-site these guys represent my company and I want people to have the impression that we at least give a crap how we look.

We may run over your azaleas lady, but we'll look neat and tidy while doing it!

__________________
Tom

www.gebcon.com