Estimating 1

[AvayaNovice]

I guess this is fairly appropriate.

I'm running into issues more and more with estimating.

Most of my work is in the cable TV/internet industry. I am a subcontractor for the local cable company, and do roughly 8 installs per day. Some days I do construction (clogged conduits, trenching, laying conduit, pulling trunk line, etc.) and that's fun. Some days I do commercial internet installs, which is the base for this question.

It is the CATV company's policy to install a cable modem without integrating it into the customer's network, if they have one. Fine. They allow me to do my magic from there.

On the software side of it, no problem... I've been doing that for years, and my estimates are accurate.

My problem is that I'm experienced, but still not seasoned with cabling in terms of estimating.

I'm good at estimating exactly how much time it'll take to actually do the tasks... but my problem is factoring in for errors, problems, etc. As most of my estimates are slightly lower than the actual outcome. I usually stick with charging for the estimate... but I wish I could be on par.

I also wonder if it's more appropriate to charge a per location fee (ie. 6 drops with one cat5e one rg-6 and one cat-3, charging the customer X amount per each drop) or is it more appropriate to charge time and materials in the estimate. Or perhaps basing it off of which one sounds more attractive?

Give me some tips guys... you guys do this a lot more than I do, when I did cabling as employment... I never was on the estimating side, so this is a new science to me.

 

[Servamatic]

In the olden days when I was starting out, I used a simple method for estimating.
I calculated how long it would take me to do the actual work, and then you have several options.

You can factor in a percentage for management time (estimating, collecting the bills)
Add in my desired profit margin remember you divide to get margin. i.e. a 20% margin is actually calculated:
$100/.8 not $100*.2

You also need to consider warranty cost. I would offer 2 warranties, 1 year was free. A 5-year warranty would add 15% to the overall project. If you have to come back for an unbillable warranty call, at least you have something.

However, you figure your cost drop or hourly, add in the margin, management time, and warranty.

Then don't be afraid to quote shop a couple of your competitors to see how close you are. Pick a big name shop and a guy your size, see what numbers fall out.

Some things to think about...this should get some good conversation started. This is a subject I have seen get quite heated between some of my students.

Richard S. Anderson, RCDD

http://www.servamatic.net

 

[DRGL]

I always bill per drop,that way each job has some in built margin for errors and any warranty issues.Each job is sold with a 15 year warranty.There's no point cutting your margins right down simply to get a job-if you then get a warranty call on it you've LOST money not made,of course doing a good job in the first place is the obvious solution but i find this way works fine........(only 1 warranty claim to data!!)

 

[Bobg1]

Like richard says, calculate in a fudge factor.
You should be able to use the data from your past experience to see about what you need to come up to a workable solution.
If at the end of a job you give them a bill slightly less than what was estimated, you will make them happy.

 

[Servamatic]

DRGL

Do you offer a 15 year warranty, or does the manufacturer of the products you install?

Richard S. Anderson, RCDD

http://www.servamatic.net

 

[skip555]

I offer either a fixed quote or t&m when I do a fixed quote I estimate my time and materials and then throw on some extra no fixed amount just what I feel comfortable with given the scope of the job and the potenial for a warranty service call or two .(customers who come across as PITA are going to see a higher quote)


If I do a fixed quote I look at my time and materials when Im done and see how I came out . Ive been doing it long enough that my fixed quote jobs are almost always within 5% of actuall T&M usually with the % in my favor.

like some of the others are saying be sure to factor in overhead deprectiation on truck and tools , phone bill , rent,insurance advertising ect. I have that figured as a portion of the hourly fee we bill.

 

[mikeydidit]

One thing that I didn’t see mentioned that surprised me was no one mentioned looking at the jobs closely to begin with. On most everything we do, I have someone look at what is needed to be done closely and figure additional cost with problem areas. I usually add extra hours of labor at a flat fee on these. This may be what some of you are considering a buffer area.


Mikey

 

[Servamatic]

I assume when someone determines how long a job will take, he is doing so after a site survey. To estimate a job without that is usually folly. Of course on residential projects you usually can't do that till time to pull cable.
A thorough examining of blueprints (ALL pages) should get you the info you need, if you have the experience to read tham and understand how they relate to the job.
On commercial jobs especially "RTFS" Read The Specs!!!

Richard S. Anderson, RCDD

http://www.servamatic.net

 

[skip555]

I wouldnt do a job I couldnt inspect first as a quote that type of work would have to be T&M

like richard said If you have to work from blueprints spend time and examine them carefully

 

[AvayaNovice]

I always always prefield it. Take a look at my wiring path, make sure that I've got all of my plans as far as how I'm going to prewire down.

I just get a little hazy on how to make a professional bid.

Especially when it comes to retrofitting. New construction is easy... but retrofits can be so hard to estimate.

Even a single cat5e drop can be difficult to estimate when you're looking at crawling a 75 foot attic space, bringing the drop down a cinder block wall, navigating it along a countertop in which you can't get underneath... so many little lame problems that make it difficult to estimate how long it'll take.

Is it generally good practice to over estimate and try and come out beneath your estimate for return business, or is it better to try and be accurate in the first place... or even thenso, try to over estimate and stick with your estimate for the profit of it.

 

[skip555]

I always do the job for what I have qouted no matter what it takes unless the customer makes a change that I hadnt planed for at which point I will let them know "ok we can make the change but its going to be more than we talked about"

case in point in this thread I detail the problems I had with a panasonic voice mail install last week
thread936-702788 I spent at least 30 hours on this problem over the last 10 days it wasnt factored into the price I quoted for the expansion and I have billed the customer just what we agreed on and apologized for the problems he had.

the thing is you need to be accurate enough to cover yourself but not to much extra that you dont get the job.
Its something you will learn with experiance especaily if you keep acurate records of what each job actually runs vs your estimate.

 

[Servamatic]

Bidding remodel work is dangerous, at the most I would do that on a cost plus basis, or T&M, or T&M not to exceed.
Unless you know every possibility in remodel don't give a hard bid.

Do you do estimates or bids, do your clients know the difference? If you bid, that is the price unless as Skip mentioned the customer asks for extra's. Any time you give a hard bid quote, and there are changes, get a signed change order from the customer BEFORE you do the extra work.

If you explain an estimate to a client, then yes, come in under the estimated price.

Are you talking about format on a "professional bid" or how to figure the price?



Richard S. Anderson, RCDD

http://www.servamatic.net

 

[daronwilson]

Oh we go through this quite a bit. Basically I look at four options:

Design/build - you hire me at a fixed cost plus percentage on my labor and materials to design a solution for you, and to built it. We often do these as cost plus 10% at the low end. The nice part is, every minute spend on the project (design, CAD work, procurement, delivery of materials, secretarial work, long distance charges, cell phone time, etc.) is legitimately billable. So while 10% may sound like a low margin, if you are good at what you do you can make 10% on ALL your costs. Often that can be better than 30% on your labor and materials.

Quote - this option is generally reserved for equipment with a minimum amount of (pre-defined and quantified) labor. I might supply a server or a voice mail system on a quote, putting in 4 hours for configuration or something. This is usually a hard money price for the customer to compare with other vendors.

Bid - this option is strictly used when the customer has already had someone develop a solution for them, and that solution is printed in a bid format and generally accompanied by drawings. We try to stand pretty firm on this, and almost all of our larger jobs ($100k+) are done this way. The customer gets exactly what is in the bid specfications, and any deviation from that spec requires a change order prior to doing the work. Personally I think this rarely gets the customer the best solution, but it often gets them the cheapest solution.

Time and Materials/Estimate/Not to Exceed - these are all really T&M, but with some idea for the customer. Straight T&M works well when they just call and say please take care of this. Often, they want us to come out and look at the problem and give them an estimate. I have to be very carefull with this one with my guys since they often want to help the customer discover what is wrong. That...is what we call troubleshooting, and we charge for that. We estimate if the customer already knows what they need, and tells us, we can give them an estimate to repair it. Obviously you look a lot better if you watch your costs and can come in under the estimate. If the project is too wierd to really give a good estimate, we often explain that we won't really know until we get into it what has to be replaced or repaired; if the customer has a long list of things they would like to have done, prioritized, but they want to know much it is we may often ask them to suggest a budget amount or not to exceed amount. If we can agree on a not to exceed amount, the customer has some idea of what the project will cost and knows we won't go over the estimated amount without permission.

Most of our service calls are just straight time and materials, both marked up 30%. We have a group of our good customers (municipalities, county offices, hospitals, etc) that just call us to do the work and don't make us do the estimating for small jobs, and as such we discount the markup rate because we are the preferred vendor.

Now...if you are asking how to estimate, that's a whole nother approach. But I'm always interested in how others arrive at their prices as well.

Good Luck!


It is only my opinion, based on my experience and education...I am always willing to learn, educate me!
Daron J. Wilson, RCDD
daron.wilson@lhmorris.com

 

[buitenhek]

I try to stay away from the markups and use only GPM.

Competitive Bid – Gross Profit Margin (GPM) between 22% & 30%
This means divide your cost by 0.78 (22%) to 0.70 (30%)

Design Bid – GPM 25% to 35%

Service Calls – GPM 30% to 50%

Keep my guys busy only – GPM 16% (divide cost by 0.84)

I also add actual admin/CAD etc. cost along with actual tech rates to get me closer to the magic EBITDA (earnings b4 interest, taxes, depreciation and amortization).

Like Daron, if you account for all your costs (requires not violating the 7P's) and base your price on a modest profit, you will win many projects. By the way, for add-ons, I charge 38% - 40% GPM (they should have thought about adding drops sooner than asking me now under pressure). Hope that did not sound cynical!

Good question.
Peter Buitenhek