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If you can use 30% for your overhead cost and still get work.... God bless you. If I did that in my industry we would all be sitting in the office with nothing to do.

The way I do it is to figure how long a job will take and figure out my salary costs that way. For supervision I will use 2K a week which includes everything. If I figure I will have a PM on the job for 18 months (which is about how long one of our houses takes us to build) I take 2K x 4.33 to get my monthly cost and then multiply by 18 to get $155,880.00 for supervision.

If you do it that way you really can't loose unless the job takes a lot longer then you expected. Usually if it does take longer it is due to changes by the client, designer, architect.... and when we do change orders that add time on to the job we also include the cost of supervision.

Blanket costs can get you in trouble both ways. If it's too high you wont get the job and if its too low you don't make money.

You really need to have your finger on the pulse to properly estimate a job.
 

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Discussion Starter · #43 ·
If you can use 30% for your overhead cost and still get work.... God bless you. If I did that in my industry we would all be sitting in the office with nothing to do.

The way I do it is to figure how long a job will take and figure out my salary costs that way. For supervision I will use 2K a week which includes everything. If I figure I will have a PM on the job for 18 months (which is about how long one of our houses takes us to build) I take 2K x 4.33 to get my monthly cost and then multiply by 18 to get $155,880.00 for supervision.

If you do it that way you really can't loose unless the job takes a lot longer then you expected. Usually if it does take longer it is due to changes by the client, designer, architect.... and when we do change orders that add time on to the job we also include the cost of supervision.

Blanket costs can get you in trouble both ways. If it's too high you wont get the job and if its too low you don't make money.

You really need to have your finger on the pulse to properly estimate a job.


Well, i will let them estimate jobs using low markups, if they want. Right now they estimate with an overhead lower than 5%. I will take away 30% regarless of what they use on projects. Up till now i have been mixing the little overhead they use with the profit. so the company wanst getting anything set aside for overhead. A percetange of the totl amount remaining was considered the profit and 2% of that went to the project manager/estimator.
 

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Discussion Starter · #44 ·
If you can use 30% for your overhead cost and still get work.... God bless you. If I did that in my industry we would all be sitting in the office with nothing to do.

The way I do it is to figure how long a job will take and figure out my salary costs that way. For supervision I will use 2K a week which includes everything. If I figure I will have a PM on the job for 18 months (which is about how long one of our houses takes us to build) I take 2K x 4.33 to get my monthly cost and then multiply by 18 to get $155,880.00 for supervision.

If you do it that way you really can't loose unless the job takes a lot longer then you expected. Usually if it does take longer it is due to changes by the client, designer, architect.... and when we do change orders that add time on to the job we also include the cost of supervision.

Blanket costs can get you in trouble both ways. If it's too high you wont get the job and if its too low you don't make money.

You really need to have your finger on the pulse to properly estimate a job.

what is the 4.33 for? and is the 2k the total amoutn of your salary for one week, or just a portin?
 

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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.
Peter,

You have no idea what you are talking about. You ask for help in determining your overhead, then you talk about using different percentages for each job depending on salaries. WTF? Pulling numbers out of the air will not help you.

Your overhead is your overhead. Quit being lazy, add up your expenses and face reality. Until you get a handle on these numbers you are headed for disaster.

You need to know the whole picture. What's your total overhead as a percentage of sales? What are your sales costs? What percentage do you figure for direct material and labor? Advertising? What NET profit percentage are you aiming for?

Direct Material and Labor xx%
Overhead XX%
Sales Costs xx%
Advertising Costs xx%
Profit xx%

Total 100%

If you don't know how to find these numbers and add them up, find an accountant ASAP. You can't be guessing what your overhead is, you can't let your estimators use a 5% factor if it's really 15%. Seriously, get some professional help, you are in way too deep.
 

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:eek: Just read this post....... wow,....

Sometimes there comes a time where certain employees develope a "sense of entitlement". They seem to think that "without them your business would go in the toilet". We have all known some of these types of people, and if some of us look deep enough we may have been one of these types at some point in our construction career.

These types of people can and WILL cause damage to the morale within a company. You CAN NOT fix a morale problem by throwing money at it.

It sounds to me like you need to take control of your situation. YOU own the company. YOU decide whether your in this to WIN a successful future for yourself and your family, or are you in this to throw all of your hopes and dreams out the window.

There is alot of great advise that was thrown your way. My suggestion is that you should........
  • Step back from the situation
  • Take a breath
  • Evaluate the advise that has been given to you
  • Formulate a plan of action
  • THEN GET OUT THERE AND TAKE CONTROL OF "YOUR" COMPANY THAT "YOU" CREATED AND YOU DREAMED ABOUT HAVING!
:thumbsup:<<<a big thumbs up to YOUR future!
 

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peter -

You are over your head and trying to get big depending on the salaries your employees demanded.

Take a close look at what you are trying to aggressively do and look at the compitition and their staff. They may have had some of the same people hired at a lower rated.

Bidding is just a small part of running the business, since the the bottom line reflects the income (generally estimates) and the site performance. If the two are agreeable there is a problem.

Does one of the estimators have a wife or friend that is also a receptionist/secretary/accountant, you have a bigger problem.
 
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It sounds to me like you need to take control of your situation. YOU own the company. YOU decide whether your in this to WIN a successful future for yourself and your family, or are you in this to throw all of your hopes and dreams out the window.

There is alot of great advise that was thrown your way. My suggestion is that you should........
  • Step back from the situation
  • Take a breath
  • Evaluate the advise that has been given to you
  • Formulate a plan of action
  • THEN GET OUT THERE AND TAKE CONTROL OF "YOUR" COMPANY THAT "YOU" CREATED AND YOU DREAMED ABOUT HAVING!
Exactly! Figure out what you need to do, and what kind of margin you need. You need to do this soon, but not Monday.

What kind of gross are you doing to justify $300K + in the office? You could certainly make more profit if you had less gross and much less overhead.

I would certainly think that you could shed a couple of $100K guys pretty soon. They are costing you alot of money, and are bidding jobs that aren't paying for themselves. The longer they are there, the longer they develop a relationship with your customers that they may steal away from you.
 

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what is the 4.33 for? and is the 2k the total amoutn of your salary for one week, or just a portin?
4.33 is how many weeks there are in a month on average.

The 2K number is salary, workers comp, and taxes.

If you have medical benifits in there you have to add that in too. Not sure what you pay your supervisors so that 2K number will change accordingly.
 

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Wow man , Your at 7500 bucks just for sales / managment ?
Way to much pay unless the guys are killing jobs and draging them in your door.
We have had guys getting 7% of profet& over head if a job was sold @ 30% If a job is sold at 25% The sales guy gets 2% Over 30% the sales guys split is 50/50 with owner.
The down side is there is no pay. (Bummer)
The sales guy get a cash draw of 1000 dollers a week untill they start selling. Some guys make a real good buck.
We never had much luck with sales/ job manager combanations .
The sales guys always turned the job over to a forman or supper, it leaves more time to chase leads and lie to the coustemers . :thumbup:
 

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rselectric1- funny :eek:




peter555;822961 and is the 2k the total amoutn of your salary for one week said:
Sorry, I didn't answer this question. That is the total salary for the week. I have a PM on each new home. If I do smaller jobs I will cut that number accordingly. If the job only requires 20 hours of supervision I will reduce that 2K to 1K.
 

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Peter-are these guys bringing you the work-is that why the high salary's?

when you are computing labor costs for a job, are you SURE you've come up with ALL the costs? is WC covered?

Are you really using your savings to fund this new career? If so and you risk the chance of running out of savings, you owe it to yourself, wife, chiildren and the state to invest in a person who can teach you how to run YOUR business (caps to indicate yours is not like Joe the drywaller down the road). This is your life savings man-guard it, because those four clowns will run you into the ground if you allow them to.

shooting from the hip, no salary and commission only on total contract with a higher percentage based on more proift. I.e. 1% of total project plus 15% of profit minus overhead or something like straight commision only on total job minus direct labor/materials. Is this work all subbed out-as in you are not touching anything other than the office phone?
 

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Good lord!! you're paying them 100,000 a year to estimate? And you're paying a total of 4 people close to 300,000 year? Pay attention to how these people are telling you to CALCULATE your overhead and then divide that by how many days or hours your company works in a year. Then multiply that number by however many days or hours a job takes you. add that number to the job cost and the rest is basically profit. This is a simplistic way of doing it.

Suggestion two I have is if this is really how your company works go out and hire a professional accountant or financial consultant. They will pay for themselves easily if your company brings in this amount of work.

Suggestion three: Fire them all and get people that cost a lot less. Seems to me you're paying a lot more than you should for their help. Also, if you're not making 500K a year it seems like you're managing and running a lot of company for not enough. Just fire one estimator and take his salary and add it to yours.
 

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Good lord!! you're paying them 100,000 a year to estimate? And you're paying a total of 4 people close to 300,000 year? Pay attention to how these people are telling you to CALCULATE your overhead and then divide that by how many days or hours your company works in a year. Then multiply that number by however many days or hours a job takes you. add that number to the job cost and the rest is basically profit. This is a simplistic way of doing it.

Suggestion two I have is if this is really how your company works go out and hire a professional accountant or financial consultant. They will pay for themselves easily if your company brings in this amount of work.

Suggestion three: Fire them all and get people that cost a lot less. Seems to me you're paying a lot more than you should for their help. Also, if you're not making 500K a year it seems like you're managing and running a lot of company for not enough. Just fire one estimator and take his salary and add it to yours.
Good post sonalamp!

Welcome to CT

A hint of protocol before posting much more here:

Fill out your profile including area and do an intro in that section.:thumbsup:
 

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Ya know when I was just a kid, I used to sometimes let myself be baited with BS like this. I'm grown now, and I'm sitting here with my beer probably laughing almost as hard as the OP is. :party: :laughing:
 
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peter,
I've just been run through the ringer on a similar thread that i started about p/oh. Difference is my business is brand new, and i don't have your expenses. I don't have enough experience to offer business advice. However, before I started my company I worked for a HUGE union outfit doing millions of dollars of drywall/plaster work. They had 1 estimator. I'm sure he was paid well, and he worked like an animal. They had 1 general foreman that went from job to job to monitor field foremen. I also know for a fact, you could get a young estimator for $20 per hour to do take-offs, which you could then double check and price accordingly. this way you save yourself time to be your own general foreman in the field.
 
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