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By Contractors For Contractors! |
Let's start bidding! Construction Estimating Free Tutorial |
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This is page two of our construction estimating free tutorial on bidding, estimating and putting it all together. Part one discusses putting your bid together, when you are the only installer for your company. Part two (below) discusses what changes you'll need to make to your numbers, when you're ready to hire one or more employees. Keep your eyes open for links to products designed to simplify the bidding process. Oh, and if you haven't yet, please subscribe to my free newsletter yet, please do! BIDDING | ESTIMATING | PUTTING YOUR BID TOGETHERWhen hiring an employee to do your field work (while you stay in the office), you'll want to have as close to 40 hours as possible for your new employee. Since you're planning on working in the office now, you'll need to include your salary in the overhead expenses.Because your employee will be doing the installing, you'll be paying him the labor $ that you would have been paying yourself if you had been doing the work yourself. That means that all of a sudden you aren't collecting a paycheck! But you need money to live too, right? That's why you add your salary to the overhead list, to make sure you collect enough on each job so that you get paid too, but.... Keep in mind that once you add your salary to the overhead list, your overhead percentage will literally skyrocket, which will raise your bids. Depending on how much you need per month to live on, you could easily price yourself right out of the market and not win a single job! Let's use the example above, with your employee grossing $3440.00 per month. Now let's say that you need $4000 per month, clear, just to keep your bills paid and your family healthy and happy. Look at what the overhead percentage would now be, based upon tables 3 & 4 from part one:
135% !! Well, that's not going to work, you won't win any jobs with that overhead. That's basically equivalent to figuring up the job and then doubling the labor on it. If your competitor bids it at 100 hours and you bid it at 200 hours, guess who's going to get the job? Looks like you either better seriously cut back on your living expenses or hire another employee! But wait... If you hire another employee but don't increase your work load, you've got two employees but only enough work to keep each busy half a week. Two half weeks equal up to one full week, so you're right back where you started, $3440 in wages (only difference is it's split between two employees now) + 135% overhead. At this point it becomes evident that you have to increase your work load at a faster pace than you hire employees. If your employee is getting 40 hours per week, and then you cut your employee's hours in half because you bring on a second employee, chances are soon you won't have any employees (or groceries for your table). You've got to have the work available before you hire your next employee. This is where "growing is painful" comes in... You have to do the extra work until there's enough to keep a second employee busy. Remember when you were "swinging hammers by day and wielding pens by night" [installing during the day and doing your paperwork at night]? Guess what... Better put your pen down and go find your hammer... This means you're back to working in the field during the day and working in the office in the evening. You can't bring the next employee on without having a full 40 hours for him (or at least very close to it)... Otherwise he'll just go to work for someone else who does have the 40 hours (or he'll jump back and forth from company to company and when you really need him he'll already be "committed to someone else", leaving you high and dry when you least need it...). Once you've got enough work for two guys, hire your second employee and then get to work putting more jobs on your board. Let's take a look at what your numbers look like when you've got two employees, making the same wage (tables 7 & 8).
Wow, hiring two employees makes a huge difference in the overhead percentage. That's because now your overhead expenses are figured on 80 labor hours instead of 40 (two employees instead of one). Now I'm bettin' that you won't win a whole bunch of jobs at a 68% overhead either. So, now you'll need to keep your two guys working while you work at building the volume again. Once again, you'll have to do that work until there's enough to keep a third guy busy 40 hours per week... So, unless you've got an unlimited bankroll somewhere (and if you do then what the heck are you doing in construction?) ;) ... You can see how difficult it can be to build your business. You can do it, but you've got to be committed. I still end up burning the midnight oil sometimes... Instantly downloadable fill-in-able proposal and bid forms available If you need proposal forms or bid forms we have several available for purchase and they all come with unlimited free replacement and unlimited free support. Thank you for visiting. I hope that this article has helped you! If you'd like to subscribe to my free newsletter please click here. I have many more articles pertaining to business available by
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