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Al Smith
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Do i deduct a portion of his salary from the project. Or the total amount im paying him while the project runs.
Total. perhaps you need a flow chart to deduct the time hes actually working on that particular project as opposed to others at the same time. For example. Have him track his hours hes playing solitaire on the computer to the Evans project. The time hes buying or browsing ebay, to the Miller project. All the hours on Facebook or twittering, The Jones project. Get the picture?
 

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Discussion Starter · #22 ·
Profit: The positive gain from an invesment or business operation after subtracting for all expenses. And that includes your salary as well.

DO i only deduct from a projects prfit a portion of the managers salary? or a percentage for every project, or the total amount of his salary while the project runs?


Guys, they are getting me a few projects. I just need to know the correct percentage or average % from the profit for each project. I think i will fire some of them, if they make me some money. I will give them a warning. They should be making me more than what i pay them. I guess only reason i kept them is because i thought they were helping me run my company, but i guess they only care about their pocket.
 

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House Painting Denver
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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.
I really agree with this! They are not the owner, so they shouldn't be dictating what the percentages are. They can offer suggestions, but it's time to let them go if are demanding you to do something that you are uncomfortable with. Remember it's your company and NOBODY is irreplaceable!
 

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Discussion Starter · #24 ·
I really agree with this! They are not the owner, so they shouldn't be dictating what the percentages are. They can offer suggestions, but it's time to let them go if are demanding you to do something that you are uncomfortable with. Remember it's your company and NOBODY is irreplaceable!

I agree. I just need help in what percentages i should put for each project to cover salaries, office, ect.... Like an average. ANd what is the lowest an overhead should go, and at what amount should i raise it.
 

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Discussion Starter · #25 ·
I am aware that i am being taken by my employees, and trust me i will talk to each one this monday to let them know they need to pull their weight or they can leave. But please read my ppaer that i plan to give out this monday. DO you think it is correct or if the percetanges for the prject amounts need to be chnaged? I want to make it clear that this will affect every project, but i want it to eb accurate. Please give em advice on what Percentages i shoudl use, even if it is averages.

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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I hope this is a joke. Fire all four estimators today, don't even wait for Monday. Then go invest in some books on basic business principles, construction estimating, contracting, and construction management. Profit is what is left over after all cost burdens. You need to know your overhead costs/burdens. Profit will be determined primarily based on the risk and monetary amount of the project though there can be other considerations involved. There are no magic percent values that universally cover O & P. The sooner you realize this the better off you will be. You need to look within your company to determine what these numbers are.

You need to determine the profit before the jobs starts not after.
 

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DO i only deduct from a projects prfit a portion of the managers salary? or a percentage for every project, or the total amount of his salary while the project runs?
That depends. Is the employee managing one job at a time, or multiple jobs. If multiple jobs, then you could figure a percentage split and bill that to the respective project.


Guys, they are getting me a few projects.
That means nothing if you're not making money.

I just need to know the correct percentage or average % from the profit for each project.
You need to develop a system as to how you attach expenses to each job. Then, you can start coming up with an accurate profit. It sounds like you need a good bookkeeper instead of multiple salesmen. You need to be able to run a small company profitably before you can even think about running a large one. Scale back, regroup, then work back to where you are now the right way.
 

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I agree. I just need help in what percentages i should put for each project to cover salaries, office, ect.... Like an average. ANd what is the lowest an overhead should go, and at what amount should i raise it.
Peter, nobody here can give you that number since your expenses are unique to your business. You need to know your costs in order to cover them, and then some, with the work you do.
 

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Discussion Starter · #29 ·
Peter, nobody here can give you that number since your expenses are unique to your business. You need to know your costs in order to cover them, and then some, with the work you do.

At least give me advice on how you guys do it. Like where do your overheads come from, and what percentage you guys use and where it comes from ect... and where how you distribute the mangers salary.
 

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General Contractor
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If this is not a joke, it's way ahead of whatever is in second place for the best joke I've heard all year.

Dang, there were years I didn't even make what this guy claims to be paying one estimator as a salaried employee.
 

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At this point you do not have a full understanding or your own overhead costs. To commit it to a quasi-contractual agreement is premature at this point. You need to get a handle on your understanding of these costs, before you decide how to divide any profits (?).

Meet with your employees individually, and tell them that you have reviewed your books, and business conditions are becoming difficult. From this point on, salesmen will not receive any percentage of the total job. After this review period, you anticipate profit sharing for all employees.

Tell them that you expect all employees to continue their excellent work during this transition, but if any feel that this will create an undue financial hardship on them, you understand.

The two classic ways a construction company gets into trouble is too much work, or not enough work. You are clearly in danger of the former. If you are dipping into your savings, then there is clearly no profit in the company at this point.

But, to reiterate again: DO NOT COMMIT YOURSELF TO ANY PAY STRUCTURE AT THIS POINT
 

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Discussion Starter · #32 ·
At this point you do not have a full understanding or your own overhead costs. To commit it to a quasi-contractual agreement is premature at this point. You need to get a handle on your understanding of these costs, before you decide how to divide any profits (?).

Meet with your employees individually, and tell them that you have reviewed your books, and business conditions are becoming difficult. From this point on, salesmen will not receive any percentage of the total job. After this review period, you anticipate profit sharing for all employees.

Tell them that you expect all employees to continue their excellent work during this transition, but if any feel that this will create an undue financial hardship on them, you understand.

The two classic ways a construction company gets into trouble is too much work, or not enough work. You are clearly in danger of the former. If you are dipping into your savings, then there is clearly no profit in the company at this point.

But, to reiterate again: DO NOT COMMIT YOURSELF TO ANY PAY STRUCTURE AT THIS POINT
Well, thanks! you're the first one, in my opinion, that has posted a way to turn around my company, and not just tell me to close shop. That is a good idea not to give anyone profit, since they are not even making me enough to cover their salary. Till then i can start calculating the amount of overhead i should take for proects.
 

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At least give me advice on how you guys do it. Like where do your overheads come from, and what percentage you guys use and where it comes from ect... and where how you distribute the mangers salary.
Advice... wise men don't need it, Fools won't heed it.

Over simplified....

Take all your expenses for a total year.

Subtract direct labor and material.

Divide that number by your annual sales volume.

That's your percentage of overhead.
 

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Ok, I'm really confused with this whole thing but your % breakdown really has me scratching my head :blink:

"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)

If anything it should be going the other way where the larger project will have a lower percentage of overhead cost. Are you figuring that on a "small project" you will have 1 supervisor, on a "Medium Project" you will have two supervisors, and on a "Large Project" you will have three supervisors and that is why your percentage goes up? If thats the case you may want to get some better supervisors that can handle a bigger job.

As a general rule (which I don't do anymore, now I itemize everything and don't use any blanket costs) I would use 10% of the total contract for General Conditions (phone, office supplies, printing, supervision, office staff, gas, parking tickets, whatever, ect ...)

What % of the jobs that your "estimators" are working on, are you actually getting. Remember that with your way of doing business right now you are paying them weather they get the job or not. Now the cost of the estimates of the jobs that you didn't get have to be spread out over the jobs you did get.

Nobody can tell you what number to use. You are the only one that can answer that question and you should have all that info in your records to figure that out. It will take a little digging but it's all right there in your checkbook.

You really need to grab the bull by the horns and get control of you company before you are back doing piece work again.

Good luck
 

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Pompass Ass
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Well, thanks! you're the first one, in my opinion, that has posted a way to turn around my company, and not just tell me to close shop. That is a good idea not to give anyone profit, since they are not even making me enough to cover their salary. Till then i can start calculating the amount of overhead i should take for proects.
If they are not covering their salary, why would you even have them working for you?
 

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Discussion Starter · #36 ·
Ok, I'm really confused with this whole thing but your % breakdown really has me scratching my head :blink:

"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)

If anything it should be going the other way where the larger project will have a lower percentage of overhead cost. Are you figuring that on a "small project" you will have 1 supervisor, on a "Medium Project" you will have two supervisors, and on a "Large Project" you will have three supervisors and that is why your percentage goes up? If thats the case you may want to get some better supervisors that can handle a bigger job.

As a general rule (which I don't do anymore, now I itemize everything and don't use any blanket costs) I would use 10% of the total contract for General Conditions (phone, office supplies, printing, supervision, office staff, gas, parking tickets, whatever, ect ...)

What % of the jobs that your "estimators" are working on, are you actually getting. Remember that with your way of doing business right now you are paying them weather they get the job or not. Now the cost of the estimates of the jobs that you didn't get have to be spread out over the jobs you did get.

Nobody can tell you what number to use. You are the only one that can answer that question and you should have all that info in your records to figure that out. It will take a little digging but it's all right there in your checkbook.

You really need to grab the bull by the horns and get control of you company before you are back doing piece work again.

Good luck

This is what i need. some help on ways to determine my overhead. Thanks! Yeah right now im going to take 10% of everyjob just for office expenses, not including salaries. Right now i am adding up all the salaries for everyone including ym self. Putting a percenatge on each one from the total amount from salaries. I'm thinking of using different % for each job depending on their salary. So if one estimator makes 96,000 a year in salary and total expenses for all employees plus office supplies is 435,000, he is 19%. So i will add to his project 19%. But if i take the percentage only from salary from all estimators, i will add another 10% to the 19% for office expenses.
 

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If this is not a joke, it's way ahead of whatever is in second place for the best joke I've heard all year.

Dang, there were years I didn't even make what this guy claims to be paying one estimator as a salaried employee.


And you jump my stuff for grossing monthly 5600. And lets not forget my benie package. Yeah that takes it close to 8g's a month.
 

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Monday, after your talk with the salesmen, I'd be looking for a good bookkeeper. What your asking for is a course in accounting and there is a lot to it. Here is an excellent book to get you started. http://www.amazon.com/Where-Accounting-Basics-Business-Numbers/dp/0966571924 Even with a bookkeeper, you should know what the numbers mean. This is not a problem that you can solve in this thread or over the weekend. The good thing is that at least you know you have a problem.
 
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