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  • Information needed

    I know this may be a subject no one speaks of,
    But I need some help bidding commercial jobs.

    I have done residential remodeling for 4+ years now. Recently I stated my own company for several reasons.

    I need some help bidding commercial carpentry and framing.

    I have done a few commercial jobs and gotten all of them since my bids are almost half of the others.

    Any advice or a point in the right direction is appreciated.

    Do be to harsh with me for asking. Every one started at the bottom once.
    !

  • #2
    Orange,

    I'm not in the carpentry business or, for that matter, any of the "trades". However, I used to be in the sub-contract Technical Manual business where I had to compete with much older and more experienced competitors. When I started, I worked for a sub-contract shop and years later I worked freelance.

    The thing that is common to any business where you need to competitively bid, is knowing your costs. It is one thing to win a bid, and something else entirely, to make money on the project!

    I remember when I first started, one of the VP's came into my office and wanted to discuss the contract I had just won with IBM. I was thrilled to think that on my second time out, I actually won the bid. The VP just looked at me and asked if I was happy with my accomplishment. On responding, "YES", he said, "Well before you go to the next bidders conference, stop up at the office and see Julie (she was the Petty Cash clerk). I asked, "What for?" and he said to pick up a bunch of "Twenties"..."That way you can just attach a $20 bill to each illustration and hand it across the table to the other company. That way you'll save us a lot of grief!"

    The point being of course that I underbid to a point where it cost my company money!

    A lot of guys go into business and fail, because they don't account for everything. Often they don't make enough profit to get through a future "dry spell". Depending on the project, there may be some unknowns. You need to factor that into the bid. If you find youself underbidding your competitors by a good percentage, you may want to up your bid on the next project. Bargains are only nice when you're buying, not when you're selling. Unless, of course, you're trying to get your "foot in the door". But even then, you don't want tp give the impression that you're "unaware" or trying to "undercut". Some clients can become quite uneasy if your price is too low. You want to win the bid, but also win the confidence of your prospective client, not scare him away.

    When I had my business, the first thing I did was sit down with the wife to find out how much money we needed each year, and then broke it down to a week. Then I figured that out of a 40 to 60 hour week, I was probably going to be doing some things that I simply can't charge for...like bidding jobs, calling suppliers, traveling to find new clients, etc. Having a handle on that no-charge time, told me how many "chargeable" hours I needed to produce income and also how much I had to charge per hour. It also allowed me to establish a profit plan so I could bank a "growth" and "what if" amount.

    So, you can't just bid the job to put money in your pocket and pay for materials. You've got to bid with a reasonable profit margin so that you can grow and also be secure. If you can account for everything it takes to do the job, your time, help, gasoline to go back and forth, and whatever other "out-of-pocket expenses you have; then you'll probably find your quotes coming a lot closer to your competitors.

    Just remember, you are NOT in business just to do a great job, or to beat your competitors, or to be your own boss! You are in business to make a living; and every client that you have is your boss. So, you bid jobs to make money and you need to cover today's expenses and tomorrow's growth. You need to look down the road and plan for everything that you want in your future. You also need to take into account, what happens to you, your family, and your business, if you get sick or hurt. Also, do you have insurance to cover liabilities? All of this needs to be factored into your hourly rate and, of course, your bid. Then, ask youself how your rate measures up with the competition.

    One thing that is important (IMHO) is knowing your competitors, do they have a lot of overhead, are they swamped with work, or are they hungry for it, what are theie strengths, and what are their weaknesses? How do you compare? If your bids consistantly win you the project, you might want to raise your rate. Similarly, if you loose a bid, then you need to know why? Also, knowing why you lost money on a job is vital; but knowing why you made a profit is also important; so you can repeat the process. Similarly, you never want to take a job, knowing that it won't pay the bills. If the competition drives you to do that, you may as well quit and take a job anywhere you can.

    Hope this helps, and hope some of the guys experienced in your trade respond.

    CWS

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    • #3
      Man that was a great responce.

      I still need some advice in a form of numbers though.

      I did a commercial job and the super was on me for low balling the finish out. (first job)

      He told me it was almost a national average to bid:

      $2 sqft / for demo

      $7 sqft / metal stud framing ~ sheetrock

      $2 sqft / painting

      $10 sqft / cement slabs


      I have never gone under in a job I did. I have though made little to no profit on alot.

      Trails of a new boss...
      The joys of being self employed.
      !

      Comment


      • #4
        Orange,

        Doesn't look like you've got any other responses to your question. Sorry!

        I do have a question though, if the numbers that you posted are a "stndard" in the industry, then what makes one bid, better than another?

        Reminds me of the old days when we would quote to do an Illustrated Parts Catalog. The soliciting company would issue various items and their quantities and we all quoted by the "line item" x the "quantity". If all of the vendors quoted the same price for a particular line item, the only way the quotes would be different was if one of the sub-contractors counted wrong or calculated wrong. So, having a "standard" is a good place to start, and then vary your price dependant on your needs.

        Just a thought,

        CWS

        Comment


        • #5
          Orange,

          I can’t add too much to CWS’s comments, but have a thought or two. You might contact and establish a relationship with a supplier and see if they can help with bidding. Local lumberyards, plumbing and electrical suppliers often will jump through hoops to gain and maintain clients. There is a Home Depot Supply in San Antonio. I don’t know if they have the same extent of knowledge as other suppliers, but may be a starting point.

          A couple of years ago, Home Depot distributed a CD called the ProBook. It allowed you to do job quotes for material, labor etc… If I remember correctly, it also gave some labor rate averages. It wasn’t the easiest program to use, but allowed you to look up current Home Depot prices, place orders, format and print bids.

          Good luck, it takes a lot of courage to start your own business.

          Comment


          • #6
            Orange,

            I think that aslong as you make a profit that is good for you and, get the job, and do good work that's all that matters. There are some guys that would yell because you under-cut them on the job, but let them yell if the price is good for you and they can't do it cheeper then all the better for you and youe customer. And that's the way the bidding prosses is suposed to work, that way builders can't just get together and all bid the same to keep there prices and profits up. But you should try and figure out a good balance between profit and deal for both you and the customer.

            Todd

            Comment


            • #7
              Hey Orange...first a howdy from a fellow Texan,
              I know your dilemma, When I first started my business I had no idea what to charge. Some of it was logical a lot of it was a stab in the dark.
              I think what I wanted was somebody to take my hand and tell me exactly what to charge. It ain't gonna happen.

              What I ultimately found out was, exactly what CWS is telling you. You are going to have to sit down figure on all the financial variables in your business and personal life, monthly bills,insurance,gas, kids college,future retirement,entertainment,etc....basically what do YOU need to make a comfortable living. It is a long list, but you have to do the homework.
              Keep breaking it down to where you KNOW what you have to have an hour to not only get by, but to get ahead.

              My only advice is dont figure on a 40-60 "billable"hrs. Which would be 1900-3000 hrs. a year. I would start with around 1400-1500 "billable" hrs. You'll put a lot more hours than this in a year but personnaly I wouldn,t want to pay you for the time you spend running to the bank or figuring some one elses bid,or down at the lumberyard buying tools, yadda..yadda

              As far as telling you what to bid for adding an 800 sq.ft. addition to a house(for example) that depends on how much time YOU think it will take YOU.
              What takes me 8 hours to do might take you 6.
              Keep records of your past jobs and compare.
              I have used estimating books for standard man hours per unit in the past...BUT only as a guideline not for fact. There's too many variables on each job.

              I've pretty much stated what CWS said but it's sound advice, he just said it more eloquently.

              One more thing...don't worry if you bid LOW enough to get the job...make sure you bid HIGH enough...period.

              [ 10-06-2005, 02:30 PM: Message edited by: j_sims ]

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