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peter,
I've just been run through the ringer on a similar thread that i started about p/oh. The guys in this forum have been EXTREMELY helpful. 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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peter,
I've just been run through the ringer on a similar thread that i started about p/oh. The guys in this forum have been EXTREMELY helpful. quote]

Yeah you got an exceptional hazing and you held your own very well IMO!
I think you're a keeper here:thumbsup:
 

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Peter, I am going to ask the same old question that just about all of the newbies get asked. Where are you located? (or did I miss that? :whistling)

The guys and gals on this board have worked very hard to get where they are. They have more experience than most can shake a stick at. They have all given you very excellent advice. It appears to me that the consensus is to fire the estimators, get with a CPA and/or a bookkeeper, and get this all figured out.

I have to agree with the vast majority of this except, I am not one to burn bridges until I know that I am off of the bridge myself. You obviously did not get there overnight. The estimators should not be allowed to demand what they get. If they are doing their job and everyone is making money then you should compensate this accordingly. However, if they are not making you money then you need to do a breather and come up with an exit strategy for them.

The majority here say to fire the estimators. While I would say that may the ultimate solution, you have to decide if you fired them who is going to do the estimating? Also do you have a written employee policy? If you fire them all, did you have justification to do it at one time? All of this did not happen overnight. You may want to talk to an attorney as well to make sure that they cannot retaliate against you. Also remember that it is Christmas and jobs are tight. If you fire now, will that damage your reputation in the community? At the end of the day, they did not do wrong. YOU DID! You let them run over you and it is costing you money. I am saying that you need to think this strategy and come up with a sound plan before you do any knee jerk reactions. You may find that all or some of the two guys are willing to get you on a plan. Their job is at stake as well if you are not making money. You have to be like a good disciplined Father and say this is what is going on and this is how we are going to fix it. Asking questions like this on this board is great, however, we do not know you, we do not know all of the details, what your volume is, and we do not know where you are.

You are asking excellent questions but you really need to ask the ones that can look at the overall picture. Depending on where you are maybe one of the guys here can sit down with you. You really need to get a plan together before you sit down with the present estimators. And once you do, you need to impliment it.
 

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Thom
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Peter, this is how you fix this. Now listen to me, I'm in charge here.

Send me a check for $100,000 monday morning. This will get us started. Then Fire all your estimators, and I will do it from my house. Just keep sending me checks for $100,000 every monday morning and I will let you know when you have work to do.
 

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actually, if this isn't thorough BS, i'm incredibly curious as to the: A) size of the company (field personnel and office personnel)...B) volume of sales....C)how long in business....

though, i don't expect answers...
 

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Discussion Starter · #71 ·
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?

Well, the one who makes 2,000 every two weeks came on board two years ago. He did not know anything, so he learned here from the other estimators. The one who makes 4,000 every two weeks pretty much sold him self to me. I did not know the average pay for estimators/project managers, so he said he would only work for me for this price. He said he could get many a lot of jobs, and i knew him from friends and knew he did get big jobs. Well he said to pay him 8,000 every month and we signed a contract that he would only work 3 days a week. well so far he has gotten me about 5 small jobs, with profits under 30,000.00. He also wants a 2% bonus from everyjob of what is left. I never took out any overhead from the prjects. I just found out he only puts a 0-5% for overhead in his proposals, but he does not want that deducted from the total profit aver the project. So the markup is never deducted after a project is done. this guy has already left for vacation 3 times this year for more than 1 month. He demanded that i pay him, because he works monday to friday, when he is only supposed to work for 3 days. his excuse is that the two days should accumilate for paid vacations. Anyway, that will stop this monday. I am going to offer him a new deal, he likes it fine, if not he can leave.

I also took on another good estimator that i worked for while i was a piece worker, and he got many hotels while he was on other companies. Anyway, i am paying him 3,500 every two weeks. He got on board september. He hasnt produced anything yet, because he doesnt know how to use the software we use in the office. I guess i will buy the software he does know how to use because he is costing me more money with him trying to learn to use quickbid. I don't know if i should redue his pay and raise it when he starts producing. I know he can get big jobs, but so far nothing. He even elft for a month vacation in november.

i guess i screwed myself by not knowing or finding out how to pay people the proper way. they told me what i wanted to hear, but so far they are not delivering.
 

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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.

Here is the deal, Peter.
If this is a joke stop as I am hurting for you.
Second if it is not a joke, pleses, please pull the phone book ou and call every CPA listed until you get one to answer the phone. Then go as quick as you can drive to their office with what books you have.
Then ask for his help as you really have no clue on how to figure overhead, much less profits.
Monday, go to your phone book and find your lov=cal chapter of SCORE and ask for an immediate consult with a retired business owner.

You are throwing money away paying your estimators like this. Your whole pay system needs to be looked at by an outswide source, and not us at a forum.

:thumbsup:

Please, close the computor and call right now!!!!!!!!!!!!!!!!!!!!!!!!:thumbsup:
 

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I eat sawdust.
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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.
Find out how much it costs per hour to run your business.

Your total operating cost including salaries, office supplies, gas, rent, taxes, tool maintenance, ....everything for a year. when you have your yearly cost divide by 52, that's how much it costs per week. (this is not counting vacation and down time, you can figure that out on your own)

You work 40 hours per week? Divide that by 40, that's how much you need to earn every hour to cover your costs. You earn less than that you are losing money. Everything you earn over that is profit. This number is separate from job costs (materials, etc.)

So if you were using the example from your first post, that $15k that is left over divided by the number of hours that job was. If it is less than your hourly cost to run the business you lose money. if it is more you made a profit, and you can see how much.
 

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I did not know the average pay for estimators/project managers, so he said he would only work for me for this price. He said he could get many a lot of jobs, and i knew him from friends and knew he did get big jobs. Well he said to pay him 8,000 every month and we signed a contract that he would only work 3 days a week. well so far he has gotten me about 5 small jobs, with profits under 30,000.00. He also wants a 2% bonus from everyjob of what is left. I never took out any overhead from the prjects. I just found out he only puts a 0-5% for overhead in his proposals, but he does not want that deducted from the total profit aver the project. So the markup is never deducted after a project is done. this guy has already left for vacation 3 times this year for more than 1 month. He demanded that i pay him, because he works monday to friday, when he is only supposed to work for 3 days. his excuse is that the two days should accumilate for paid vacations. Anyway, that will stop this monday. I am going to offer him a new deal, he likes it fine, if not he can leave.

I also took on another good estimator that i worked for while i was a piece worker, and he got many hotels while he was on other companies. Anyway, i am paying him 3,500 every two weeks. He got on board september. He hasnt produced anything yet, because he doesnt know how to use the software we use in the office. I guess i will buy the software he does know how to use because he is costing me more money with him trying to learn to use quickbid. I don't know if i should redue his pay and raise it when he starts producing. I know he can get big jobs, but so far nothing. He even elft for a month vacation in november.

i guess i screwed myself by not knowing or finding out how to pay people the proper way. they told me what i wanted to hear, but so far they are not delivering.
I think as long as I was doling out money, I would also pay an attorney to find out what you can do about worthless's contract. Sounds to me it's time for a cut in pay to everyone, but you and the guys that perform the work.
 

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Here's another exercise that might bring things into perspective for you:

Take your highest paid employee's salary (total up everything you pay him for the year) and divide it by your average gross profit margin percentage.

For example: If you pay your guy $40,000 a year, and your gross margin is 30%, 40,000/.3 = 133,333...

What that number means, is you have to bring in $133,000 in business just to pay him. Total that number for all of your salesmen and that might help you get your head around this a little better.

If your margin slips to 20%, the break even on him jumps to $200,000.

It's not hard to see how an incompetent salesperson, under the wrong compensation plan, can quickly put you in the poor house.


"Men lie. Women lie. Numbers don't"
-JayZ
:laughing:
 

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Who's a dupe? Pete or us?

I am beginning to doubt the authenticity of the original post. With every entry, Pete's situation is becoming more and more over the top.

He has two salesmen making between $91 K and $104 K each, plus bonuses. Neither has brought in any volume of work, and both punch in absurdly low margin numbers into their bids.

Later we find out that Pete now needs to buy a completely new sales program for one estimator because he is unfamiliar with the company's existing program.

Furthermore, it is disclosed that the highest paid employee negotiated to only work three days per week, and is now receiving month long paid vacations as comp time.

Most commercial and multi-family drywall work is bid off plans, with unit pricing derived from linear- or square feet. An estimator with a CAD can punch out a lot of numbers in an afternoon. Yet for some reason, Pete needs three estimators.

At a margin of 20%, with a office staff of $500,000, Pete should be grossing $2.5 million. At Pete's 5%, it runs out to ten million dollars gross. Pure and simply, those are huge numbers for a drywall company, especially one owned by a former piece worker, draining his savings.

Pete has been more than reticent in disclosing his gross, the number of field employees, and how long he has been in business.
 

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For "Pete's" Sake......... we can only hope it's not true.

If it is a hoax, it serves us right for not running him through the torture mill and answering his questions before he told us who, what, where, and why...
 

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