[Sparky]

A friend and I are thinking about starting a small contracting/remodeling business. We plan on starting small ( decks, basements, garages etc.). Our biggest concern is estimating. Can anyone suggest some resources, hints, pitfalls etc. Also, any advice for a coulpe of guys getting started in the business?

Thanx!

 

[Grumpy]

You've come to the right place! I can talk for hours about what you asked Estimating is tricky and is the key to weather your business will survive or fail. I won't give you very specific advice but I'll break down the estimating process for you.
Material+Labor costs+permits=job cost. Job costs+overhead+profit= what the customer pays.

Rule one is know your overhead. Ya know? Those pesky bills that come every month no matter if you do 0-100 jobs. Telephone, insurance, car payments, office rent, secretary etc... What we do is break our overhead into working days. We know we work about 200-225 days per year. All jobs are then broken down into working days and the overhead value is multiplied by the number of days and added to the job cost. At that point we have figured the very least you can make on a job and BREAK EVEN. Any money after this point is profit.

Even if you guys are working as installers don't forget to figure your time into thr equation when estimating. Figure what youa re worth per hour. Figure how many hours the job will take. Don't forget to ad labor burdens like insurance and taxes to the number. This is how you figure labor cost.

As far as the partnership goes: I don't know your relationship with your future partner so I can't comment but I will say that you should enter into the partnership with a formal agreement drafted by a lawyer. The lawyer will identify who has what responsibility and what happens if someone wants out. This is a must, no matter how much you trust the person... People change.

One more tip on estimating... It's better to lose a job because you are too high than win a job because you are too low. Last tip, use a spreadsheet in exell for figuring the math. It might take some time to construct and tweak the spreadsheet but it's time well spent.

 

[hatchet]

I know I've said this here before.. but I do have an excel spreadsheet with a pretty good listing of activities for doing estimates. I'll see if I can clear out the current pricing stuff and post it for everyone. Realize that this is not a typical job that I'm working on right now (for most contractors) and that it's a GC's take-off listing. But take what you like and modify it to your hearts content.

 

[hatchet]

http://www.construction-resource.com/projects/Est-Template.xls

I probably need to explain a few things. The grey columns at the top are the ones that you should modify - the rest are calculated. The Item Code and Description can also be changed - they are arbitrary and specific to the current job I am working on. After putting in all the information you can hide columns G through N and use it as a billing tool. To use it for billing all you need to do is enter in the TTD for the first month for each line item. The following month you will copy column S and Paste > Special > Values only into column T. This essentially zeroes out the month for the next months billing cycle. Then update the TTD column again and you're on your way.
You can also use this for a job purchase schedule or buyout schedule. After doing takeoffs and giving your best guesstimate - the sheet will give you an updated total column (Column P) - then when receiving actual bids from subcontractors you can update the Buyout / Budget (Column Q) and it will show you buyout savings or additional money that goes to profit.
One other peculiarity when using it as a billing tool - it can be used one of 2 ways. You can bill with labor and material for each line item (since it's already included there) or just update the Labor TTD on the bottom line. I do method 2 because I have a seperate cost control for labor only and it's easier
Let me know if you have any questions.. there are a couple examples at the top.

 

[Grumpy]

Nice spreadsheet. The only problem I have with it is it's for GC's not subs I think most subs spreadsheets are more customized and less like a means or dodge.

 

[hatchet]

Yep..
Hence..

Realize that this is not a typical job that I'm working on right now (for most contractors) and that it's a GC's take-off listing.

 

[hatchet]

But it does give items for contractors to think about also.. such as permitting, overhead items, margin, contingency, burdens, etc... that sometimes for new contractors can be missed easily.
Otherwise it's just a tool.. everything can be erased from the 2nd line down and revamped for a specific trade. It's the principles that are what's really needed.. not the list itself.

 

[Grumpy]

Yes your 100% correct. Those items are often overlooked for the first few jobs, sometimes the first whole year!

 

[hatchet]

And if they were missed you hope you can recover from it and not go under. Some friends of mine design websites (well I do some also), but they always ask questions about estimating for designs. They give me estimates to review and the first thing I ask, without looking at estimate, is who is paying for your phone, office space, paper to print contracts on, internet to do you job, advertising, etc..etc? They say "Oh that's in my hourly rate!" When I start deducting those costs from their hourly rate they typically end up getting personally paid less than $5/hr. Then they finally get it...

 

[Grumpy]

Yes rich, that was part of my problem when I did webdesign also That's why I don't do web design anymore.

Webdeisgn is funny like home improvement. There are so many un-qualified people trying it. (Not saying your friends are unqualified)

 

[hatchet]

haha.. some of them are unqualified.

 

[Sparky]

Thank you guys!

 

[hatchet]

Hope it's useful for you.

 

[PapaMike]

Estimating Spreadsheet

Thanks for offering your spreadsheet for us to use. I tried to download it and the link did not work. Is anyone else having the problem getting it. I need something like this as I have been in the business 8 years doing primarily woodrot, windows and custom cabinetry. I am now expanding into more areas as requested by my repeat customers. I'm barely making it and one reason is my estimating, All HELP is GREATLY APPRECIATED!!!!!!

Thanks
Mike



I probably need to explain a few things. The grey columns at the top are the ones that you should modify - the rest are calculated. The Item Code and Description can also be changed - they are arbitrary and specific to the current job I am working on. After putting in all the information you can hide columns G through N and use it as a billing tool. To use it for billing all you need to do is enter in the TTD for the first month for each line item. The following month you will copy column S and Paste > Special > Values only into column T. This essentially zeroes out the month for the next months billing cycle. Then update the TTD column again and you're on your way.
You can also use this for a job purchase schedule or buyout schedule. After doing takeoffs and giving your best guesstimate - the sheet will give you an updated total column (Column P) - then when receiving actual bids from subcontractors you can update the Buyout / Budget (Column Q) and it will show you buyout savings or additional money that goes to profit.
One other peculiarity when using it as a billing tool - it can be used one of 2 ways. You can bill with labor and material for each line item (since it's already included there) or just update the Labor TTD on the bottom line. I do method 2 because I have a seperate cost control for labor only and it's easier
Let me know if you have any questions.. there are a couple examples at the top.[/quote]

 

[mikec]

Probably because the post is 6 years old

 

[AJAX]

Almost 7 years old! Holy chit!

What problems are you having with the estimating?

For me I don't have SF pricing or flat fees for anything. Each job is unique and thought through accordingly.
If you have been doing this for 8 years you have an idea how long it takes to do certain thing and with that knowledge you can adjust for thing that you havn't done. OR, for repeat customers you can maybe ball park a job for them then T&M it. And remember the price can always come down. It's very difficult to bring it up!

 

[jhammer7]

Does anyone have a template like this that they would be willing to share?


J