If you are new to bidding, then you should probably start out with a time and material bid, being that is the safest route. But that will only get you so far, you will need to come up with a system that fits your company and your work style.
Bidding on Jobs, Need some advice
I am new to the job of bidding, I have worked construction all my life but never had to deal with bidding to get a job. Does anyone have any good advice for me? I have an idea in my head on how I want to do it but the more I think about it, I'm not sure its right. Do you guys bid a job on a hourly rate or by the job and the amount of time you think it will take to complete? Any information that you can give me will be greatly appreciated.
Thanks
Thanks
1 - 20 of 24 Posts
Learning how to bid is very difficult and it's one of those things your boss will never teach you, so when you go out on your own it can be very scary bidding jobs.
When I first started I was terrified that I'd lose money, I could not afford to lose money so I bid high and lost jobs. Then I bid low and lost money. It takes experience and you will pay dearly for that. In the meantime, here is my advice for what it's worth:
I'm assuming you're a one man operation.
1. Figure out your exact material costs. Know what you need to pay for materials.
2. Define the exact scope of work, be very specific.
3. What is the minimum amount of money you would accept for a day's worth of your hard labor?
Initially you add material costs to your minimum day rate and that will be the price you quote. If it takes a minimum of $200 to make you feel like showing up and working earnestly, that will be your daily labor rate.
Right now, since you are new to bidding I'm guessing you're new at this self employed thing, so you need jobs!
Later on when you're working over 40 hours a week you can gradually adjust your rate upward until you you hit that sweet spot where you have enough work coming in and you are making decent money.
Depending on the trade knowing how much a worker can produce in a day can be tricky. In new construction I know exactly how many boxes a day an electrician can wire, in remodel, not so much...
You must give the customer a fixed price and actually feel good about doing the work for that price. So again, be very specific in telling the customer exactly what you will do for that money and resist "scope creep".
A "real" business does not bid this way, they do a complex calculation and determine their annual overhead costs, labor costs, labor burden, expected profit and determine their hourly rate this way. By the way, this hourly rate in for "in-house" use only, never tell a customer your hourly rate, their heads will explode if you do.
Right now, you are lean and mean, be the low baller we all hate, face facts, we all started out as lowballers. Know you costs, determine what you want for yourself, it has to be enough to keep you interested in the job, and that's your price. This is your rock bottom price, it's only up from here!
:thumbsup:
When I first started I was terrified that I'd lose money, I could not afford to lose money so I bid high and lost jobs. Then I bid low and lost money. It takes experience and you will pay dearly for that. In the meantime, here is my advice for what it's worth:
I'm assuming you're a one man operation.
1. Figure out your exact material costs. Know what you need to pay for materials.
2. Define the exact scope of work, be very specific.
3. What is the minimum amount of money you would accept for a day's worth of your hard labor?
Initially you add material costs to your minimum day rate and that will be the price you quote. If it takes a minimum of $200 to make you feel like showing up and working earnestly, that will be your daily labor rate.
Right now, since you are new to bidding I'm guessing you're new at this self employed thing, so you need jobs!
Later on when you're working over 40 hours a week you can gradually adjust your rate upward until you you hit that sweet spot where you have enough work coming in and you are making decent money.
Depending on the trade knowing how much a worker can produce in a day can be tricky. In new construction I know exactly how many boxes a day an electrician can wire, in remodel, not so much...
You must give the customer a fixed price and actually feel good about doing the work for that price. So again, be very specific in telling the customer exactly what you will do for that money and resist "scope creep".
A "real" business does not bid this way, they do a complex calculation and determine their annual overhead costs, labor costs, labor burden, expected profit and determine their hourly rate this way. By the way, this hourly rate in for "in-house" use only, never tell a customer your hourly rate, their heads will explode if you do.
Right now, you are lean and mean, be the low baller we all hate, face facts, we all started out as lowballers. Know you costs, determine what you want for yourself, it has to be enough to keep you interested in the job, and that's your price. This is your rock bottom price, it's only up from here!
:thumbsup:
I like what Zinsco said except for this part;
"3. What is the minimum amount of money you would accept for a day's worth of your hard labor?
Initially you add material costs to your minimum day rate and that will be the price you quote. If it takes a minimum of $200 to make you feel like showing up and working earnestly, that will be your daily labor rate."
You do need to add certain expenses to your rate or you will end up financing your business overhead out of pocket, reducing your minimum day rate to less than you planned. If it's a minimum then you should not go below that, right?
Use the search feature in the tool bar above the header ad for more discussion and/or buy the book "Markup & Profit, A Contractors Guide by Michael Stone.
Good Luck
Dave
"3. What is the minimum amount of money you would accept for a day's worth of your hard labor?
Initially you add material costs to your minimum day rate and that will be the price you quote. If it takes a minimum of $200 to make you feel like showing up and working earnestly, that will be your daily labor rate."
You do need to add certain expenses to your rate or you will end up financing your business overhead out of pocket, reducing your minimum day rate to less than you planned. If it's a minimum then you should not go below that, right?
Use the search feature in the tool bar above the header ad for more discussion and/or buy the book "Markup & Profit, A Contractors Guide by Michael Stone.
Good Luck
Dave
Maybe a little clarification (cofusation more like it!)Learning how to bid is very difficult and it's one of those things your boss will never teach you, so when you go out on your own it can be very scary bidding jobs.
1. Figure out your exact material costs. Know what you need to pay for materials.
2. Define the exact scope of work, be very specific.
3. What is the minimum amount of money you would accept for a day's worth of your hard labor?
:thumbsup:
1. Figure your materials and add a little. Make sure not to forget something. And keep records. Computers are great for this. That way next time you will know better. Maybe even make up checklists for diffferent aspects of work.
2. Define the EXACT scope of work, be very specific. Put it in writing and get a signature on it. If you do not do this here is what can happen YOu bid to put vinyl siding on a house, then they decide to go right to the ground not just on the house but over the basement also and do not want to pay more. More labour and you lose money! (Just hypothetical of course
)Be Very Exact. In Writing.
3. Your wage also needs to include your costs of doing business. Just beacuase you charge $30/hr does not mean that is what you make. There are cell phone costs, gas, vehichle, tools, insurance, office supplies and all that. I am a lone carpenter doing renovations and about 30% of what I make goes to overhead. (after your first year you can do your own calculations if you keep good records.
Also there is lots of time spent that does not get billed to any job. Bookwork and such. 20 to 30% of your time is what I understand to be average.
So with my numbers (Yes I realize this may not be exact but it gives the idea)
I want to make $20/hr
Add 25% for time that is not directly on a job. $5
the 30% that I lose to overhead expenses. $10
Comes out to $35/hr that I have to charge.
That is just covering my wage no real profit.
If you are just starting out you may want to do a time and materials bid. Even so many customers may want an 'idea' of what it will cost.
I do a slightly combined approach often. I have found that by using a bid rate . I charge based on what I would bid. Making sure to charge for all the little extras I can make more.
Kinda a cost plus. Cost of materials plus my bid for doing the job.
If you look in the business section of the forum you will see a sticky thread on this topic.
Just curious, when you say "job of bidding", do you mean....I am new to the job of bidding, I have worked construction all my life but never had to deal with bidding to get a job. Does anyone have any good advice for me? I have an idea in my head on how I want to do it but the more I think about it, I'm not sure its right. Do you guys bid a job on a hourly rate or by the job and the amount of time you think it will take to complete? Any information that you can give me will be greatly appreciated.
Thanks
the act of offering to do a job for the least amount of money?
OR
the process of discovering a customers' needs and then showing your value to the customer at a profitable selling price?
This is when you would do "time and material not to exceed "X" dollars. Just make sure your "X" dollars covers all contingencies. Be prepared to do a lot more paper work if you go this route, to be fair to your customer you will have to produce invoices and payroll records for every penny spent.If you are just starting out you may want to do a time and materials bid. Even so many customers may want an 'idea' of what it will cost.
However, most GC's don't want to go this route, unless it's just small potato stuff. If your just bidding to HO, might be a viable option.
The second one; the process of discovering a customers' needs and then showing my value to the customer at a profitable selling price.Just curious, when you say "job of bidding", do you mean....
the act of offering to do a job for the least amount of money?
OR
the process of discovering a customers' needs and then showing your value to the customer at a profitable selling price?
I am not here to low ball, I am here to make an honest living doing what I love to do and what I am good at.
Read this book....Twice....At least,.
http://www.amazon.com/Markup-Profit-Contractors-Michael-Stone/dp/1572180714
http://www.amazon.com/Markup-Profit-Contractors-Michael-Stone/dp/1572180714
I like that answer, makes sense to know what your target is rather than just throwing stuff against the wall to see what sticks.The second one; the process of discovering a customers' needs and then showing my value to the customer at a profitable selling price.
You say you have an idea in your head about how to do it, does "it" mean the presentation portion or something else? What kind of ideas do you have in your head so far?
Jumbo, based on your advice, I just ordered that book. Thanks!Read this book....Twice....At least,.
http://www.amazon.com/Markup-Profit-Contractors-Michael-Stone/dp/1572180714
Listen to Zinsco them So. Cal. Boys know whats up.
My two cents--
When I started out I worked for someone so I did a lot of side jobs and used the money to build a decent arsenal of tools. So, in the beginning bidding for me was "what's the best tool I can get by doing this job?". That got my feet wet w/ bidding jobs.
One thing I used to do was felt like I was cheating someone if I knew someone else would do it cheaper. In the beginning, that may have been true because I didn't have that much experience but as time progressed so did my experience. That was a hard habit to brake. I've seen other work and absolutely not to sound arrogant but I think I do very good work- I take pride in what I do.
Another thing that was (and sometimes still is) hard to figure was material lists. It seemed for a while that I would figure my whole material cost, add 10%, then somehow the materials I needed would defy the laws of physics!. It seemed like I always shorted myself because once you give a bid- especially if you're competing w/ someone else- you can't raise it because you overlooked something. So just be sure to double, triple check your materials before you submit your bid.
Last bit of advice- It ALWAYS takes longer than you imagine it to, ALWAYS!! At least it does in my experience w/ remodels (mainly what I do). Just remember that when you're figuring out how much you need per hour because if you figure you need 20$/ hour, then figure it's going to take a week so you bid the job labor at $800 and it takes you a week and a half- do the math.
Last last bit!- If you're bidding a job for say tearing out a floor, always have a disclaimer in the contract. What I mean is, say you're tearing out a floor and installing a new one for example and there's a slider there, your bid needs to be contingent on the floor being solid. This * little sign is one I use a lot in my bids. For example, after I put a price, then next to the price I'll have the *. Then at the bottom of the bid (in teeny tiny print :whistling) I'll write something like:
*Price subject to change if floor under slider is damaged.
or something along those lines.
Good luck, hope this helps :thumbsup:
When I started out I worked for someone so I did a lot of side jobs and used the money to build a decent arsenal of tools. So, in the beginning bidding for me was "what's the best tool I can get by doing this job?". That got my feet wet w/ bidding jobs.
One thing I used to do was felt like I was cheating someone if I knew someone else would do it cheaper. In the beginning, that may have been true because I didn't have that much experience but as time progressed so did my experience. That was a hard habit to brake. I've seen other work and absolutely not to sound arrogant but I think I do very good work- I take pride in what I do.
Another thing that was (and sometimes still is) hard to figure was material lists. It seemed for a while that I would figure my whole material cost, add 10%, then somehow the materials I needed would defy the laws of physics!. It seemed like I always shorted myself because once you give a bid- especially if you're competing w/ someone else- you can't raise it because you overlooked something. So just be sure to double, triple check your materials before you submit your bid.
Last bit of advice- It ALWAYS takes longer than you imagine it to, ALWAYS!! At least it does in my experience w/ remodels (mainly what I do). Just remember that when you're figuring out how much you need per hour because if you figure you need 20$/ hour, then figure it's going to take a week so you bid the job labor at $800 and it takes you a week and a half- do the math.
Last last bit!- If you're bidding a job for say tearing out a floor, always have a disclaimer in the contract. What I mean is, say you're tearing out a floor and installing a new one for example and there's a slider there, your bid needs to be contingent on the floor being solid. This * little sign is one I use a lot in my bids. For example, after I put a price, then next to the price I'll have the *. Then at the bottom of the bid (in teeny tiny print :whistling) I'll write something like:
*Price subject to change if floor under slider is damaged.
or something along those lines.
Good luck, hope this helps :thumbsup:
Seriously,you have not read it?Jumbo, based on your advice, I just ordered that book. Thanks!
....It is an awesome book.
Me too, hope its worth the $25 bucks.Jumbo, based on your advice, I just ordered that book. Thanks!
Bidding is tricky. You don'e have to let them know that you're a newbie when it comes to bidding. you will figure out by yourself if you are getting a good deal.
re bidding
The best possible way to bid is to first breakout the project into subcategories. then estimate each section and add the total. If you don't have an R S Means estimating book
http://rsmeans.reedconstructiondata.com/ I suggest you get one. they also have them on E bay. Get one that is a year old for as cheap as 20 bucks.
good luck!
The best possible way to bid is to first breakout the project into subcategories. then estimate each section and add the total. If you don't have an R S Means estimating book
http://rsmeans.reedconstructiondata.com/ I suggest you get one. they also have them on E bay. Get one that is a year old for as cheap as 20 bucks.
good luck!
An estimating book or computer program can help you quite a bit when it comes to figuring up bids. Like the others have said, it takes experience but if you have a good handle on what things cost, how long it takes do complete tasks, and how much overhead you have, it shouldn't be too bad. National Estimator has been pretty good for me.
It's worth way more than that. I wonder where I would be in today's economy with out studying it myself.Me too, hope its worth the $25 bucks.
The book however is not the end all be all on the subject. It is an excellent place to start or jump to but our work here is never done. While M. Stone covers very well how to discover your true overhead and how to calculate charging properly for it, Jerrald Hayes has interesting thoughts on recouping overhead by applying it all to your labor rate.
I figure Stone taught me how to cover my overhead and Hayes taught me how to apply that coverage.
Good Luck
Dave
You say you have an idea in your head about how to do it, does "it" mean the presentation portion or something else? What kind of ideas do you have in your head so far?
I have an idea about how to bid the jobs based on the time it will take to complete the job. The materials part confuses me because there are always alot of unknowns when it comes to remodeling bacause you never know what you are getting into. But I have a very good idea of what it costs for materials like sheetrock, sheeting, that type of stuff but it the other things like cabinets and vanitys that are tough because there are so many options with varying prices.
Is it wrong to ask a HO to give you a couple days to figure up a bid? I am assuming that they have to if they want a fair price.
How do you go about making sure you get exactly what the HO wants, do you look through catalogs with them or take them to the store to figure out exactly what they want?
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