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Discussion Starter · #1 · (Edited)
Well, i was a piece worker before for drywall. Now i got into subcontracting for GC's for drywall. Well, I have about 4 estimators/project managers working for me. 2 still learning and two who have experience. Now one of the estimators has been telling me how to run the business, but i think he might be wrong and making me lose money. I pay 2 estimators a salary they demanded to work for me, which is a salary of 4,000 every two weeks. One estimator who is still learning and has gotten a few projects for me earns 2,000 every two weeks, the other under 2,000.

For projects i pay them a percentage of total amount left. Lets say a project contract was for 70,000.00 and after it ends we spent 55,000.00 on material and labor used on the project. so they get 2% from 15,000. Now i think ther eis somethign wrong with the way they are making me do this. Because they consider the profit what is left from the contract. Should i first deduct a % for expenses and overhead before deciding what the profit is? BEcause for what i am paying them they have only gotten about 7 projects under 80.000.00.

Please give me advice on how to make up for the salaries iam paying them and espenses. Do i deduct something on salaries from projects? how do you guys make up for salaries payed to your estimator/project managers. Especially if they want to go on vacation like 3 times a year for over a two weeks and still want to be paid?


I talked to my son who is still in college and he said i should do this. Tell me if this is correct and if i should implement to my company asap. COrrect it please.


I am going to pass this out to my estimators this monday, please correct or add anything missing. I dont want them to tell me i am wrong and to argue with me.

"Overhead: deducted from total contract amount

Small Project: 10% ($0.00 to $99,999.00)
Medium Project: 20% (100,000.00 to 499,999.00)
Large Project: 30%: (500,000.00 and up)

Tax/Burden: 10% of project contract amount. (Added to percentage of overhead)

-----After overhead and tax/burden deductions, your project can be evaluated to see if there was any profit or loss. -------

Profit: Profit for company and project manager, if any, to be determine after overhead and tax/burden.

Project Manager 0-2% from total profit, if any.

Notes:
Overhead: Refers to operating expenses to run the company. Overhead is applied as a percentage to total costs (material, labor, indirect costs, sales tax, ect.) This helps cover office cost, PM salaries for managing project, accounting services, heating/cooling, ect.). Overhead might run from as low as 10% to more than 25% or more depending on project and office cost.
Tax/Burden: Refers to sales tax on material, fees, insurance on labor, social security, workers comp ect.
Profit: Profit brought in by a certain project after overhead and burden. "



This is what i have so far. so do i deduct all of this before determening what the profit is? are my % correct, what are the average % for markups? Please HELp!!!!
 

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You gotta mess. You need to be ready to fire everybody Monday. They wanna argue, they can hit the road. You all seem to consider the $15K left after the job as profit. It is not.

On the hypothetical $70K job, $55K are direct job expenses; labor, material, supervision and tooling. That leaves $15K for profit and operating expenses. You need to figure out what it costs to operate your company over a year. This will include rent, equipment, taxes etc.

You may be better served by giving a year end bonus or offering profit sharing, after the books are cleared.

Right now, you have someone "helping" you run the company who is incapable.
 

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Al Smith
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Well, i was a piece worker before for drywall. Now i got into subcontracting for GC's for drywall. Well, I have about 4 estimators/project managers working for me. 2 still learning and two who have experience. Now one of the estimators has been telling me how to run the business, but i think he might be wrong and making me lose money. I pay 2 estimators a salary they demanded to work for me, which is a salary of 4,000 every two weeks. One estimator who is still learning and has gotten a few projects for me earns 2,000 every two weeks,the other under 2,000.

fire everyone in red this coming Monday. keep the blue one.
 

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Discussion Starter · #10 ·
You gotta mess. You need to be ready to fire everybody Monday. They wanna argue, they can hit the road. You all seem to consider the $15K left after the job as profit. It is not.

On the hypothetical $70K job, $55K are direct job expenses; labor, material, supervision and tooling. That leaves $15K for profit and operating expenses. You need to figure out what it costs to operate your company over a year. This will include rent, equipment, taxes etc.

You may be better served by giving a year end bonus or offering profit sharing, after the books are cleared.

Right now, you have someone "helping" you run the company who is incapable.

Where do salries fall down under? So if i calculate office expenses for the whole year, what percentage do i take from that to distribute to projects? lets say i spend 10,000 a year just on supplies, or over 100,000.00 plus everyones salaries in the office. how would i distribute this cost to projects.
 

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Discussion Starter · #11 ·
fire everyone in red this coming Monday. keep the blue one.

How do you run your overhead and profit on jobs? do you deduct overhead on jos, plus the project manager's salary, before you calculate the profit after you finish a project?
 

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Discussion Starter · #14 ·
Well, im actually spending what i saved up while i was a piece worker. And that will drain soon, unless i make changes.

Do you guys think the %, for the amount a project is worth on my first post, is correct. Or is it too low or high.
 

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Al Smith
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Well, im actually spending what i saved up while i was a piece worker. And that will drain soon, unless i make changes.

Do you guys think the %, for the amount a project is worth on my first post, is correct. Or is it too low or high.

Good grief Peter. It sounds to me like you got four guys who's priority is spending down your life savings. Can you even tell which ones (if any) are actually making you money? If you can, fire everyone else, and quick. Because captain, your ship is taking on water and sinking fast.
 

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Profit: The positive gain from an invesment or business operation after subtracting for all expenses. And that includes your salary as well.
 

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You need to talk to somebody who knows how to run a construction business. And not somebody who works for you. Retired guys, normally CEO, VP's etc, are a great resource. They appreciate being able to do this, they don't have an axe to grind, and they are often inexpensive.

Your gross and overhead is larger than you as an individual can handle. Shed weight.
 

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Pompass Ass
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Well, i was a piece worker before for drywall. Now i got into subcontracting for GC's for drywall. Well, I have about 4 estimators/project managers working for me. 2 still learning and two who have experience. Now one of the estimators has been telling me how to run the business, but i think he might be wrong and making me lose money. I pay 2 estimators a salary they demanded to work for me, which is a salary of 4,000 every two weeks. One estimator who is still learning and has gotten a few projects for me earns 2,000 every two weeks, the other under 2,000.

For projects i pay them a percentage of total amount left. Lets say a project contract was for 70,000.00 and after it ends we spent 55,000.00 on material and labor used on the project. so they get 2% from 15,000. Now i think ther eis somethign wrong with the way they are making me do this. Because they consider the profit what is left from the contract. Should i first deduct a % for expenses and overhead before deciding what the profit is? BEcause for what i am paying them they have only gotten about 7 projects under 80.000.00.

Please give me advice on how to make up for the salaries iam paying them and espenses. Do i deduct something on salaries from projects? how do you guys make up for salaries payed to your estimator/project managers. Especially if they want to go on vacation like 3 times a year for over a two weeks and still want to be paid?


I talked to my son who is still in college and he said i should do this. Tell me if this is correct and if i should implement to my company asap. COrrect it please.


I am going to pass this out to my estimators this monday, please correct or add anything missing. I dont want them to tell me i am wrong and to argue with me.

"Overhead: deducted from total contract amount

Small Project: 10% ($0.00 to $99,999.00)
Medium Project: 20% (100,000.00 to 499,999.00)
Large Project: 30%: (500,000.00 and up)

Tax/Burden: 10% of project contract amount. (Added to percentage of overhead)

-----After overhead and tax/burden deductions, your project can be evaluated to see if there was any profit or loss. -------

Profit: Profit for company and project manager, if any, to be determine after overhead and tax/burden.

Project Manager 0-2% from total profit, if any.

Notes:
Overhead: Refers to operating expenses to run the company. Overhead is applied as a percentage to total costs (material, labor, indirect costs, sales tax, ect.) This helps cover office cost, PM salaries for managing project, accounting services, heating/cooling, ect.). Overhead might run from as low as 10% to more than 25% or more depending on project and office cost.
Tax/Burden: Refers to sales tax on material, fees, insurance on labor, social security, workers comp ect.
Profit: Profit brought in by a certain project after overhead and burden. "



This is what i have so far. so do i deduct all of this before determening what the profit is? are my % correct, what are the average % for markups? Please HELp!!!!
Do you work for them or do they work for you?

You should tell them the pay schedule, not the other way around.

Get some new estimators and figure out the pay schedule before you hire them.
 
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