The first in a multi-part series, this article will outline nine steps to preparing more accurate bids.
Summarizing your estimate to determine the break-even and bid price can be an overwhelming task. One simple mistake could put you out of business. That's why this phase of the estimating/bidding process requires that you use sound judgment on intangibles such as job conditions, labor productivity, miscellaneous material requirements, waste, theft, small tools, direct job expenses, overhead, and profit.
Over the course of the next several months, we'll outline each step of this process so you'll be fully confident and completely prepared to tackle any estimate that comes your way.
Total Labor Hours
To determine the total labor hours on a project, you need to adjust the estimated labor hours based on each particular job you undertake. Then, you add additional labor not included in the takeoff.
The first step in determining the total labor hours of the job is to transfer the labor hours from your price/labor worksheets to your estimate-summary worksheet. This is a simple and straightforward task. Next, you must adjust the labor-hour value for the working conditions based on a percentage of total man-hours or a fixed man-hour for a specific condition. Proficiency at this task only comes with experience. Sometimes, it can be simply an educated guess. This is what makes estimating an art form.
When adjusting the labor hours from the price/labor worksheet, you must consider many factors, such as:
- Building conditions
- Change orders
- Concealed/exposed wiring
- Construction schedule
- Job factors
- Labor skill
- Ladders and scaffolds
- Off-hours/occupied premises
- Remodeling old work
- Repetition factor
- Restrictive conditions
- Shift work
- Weather and humidity
If you've already factored in these labor-unit conditions during the takeoff, then there is no need to apply any additional labor-hour adjustment. However, it's often a better practice to apply some of these factors during the takeoff and others at this stage in the estimate/bid. (For a detailed explanation of each of these factors, see "Adjusting Labor Units the Smart Way," from the September 2000 issue of EC&M.)
After you have determined the total adjusted hours, you must determine any additional labor requirements, which might include:
1. As-built plans: As-built plans are intended to show the actual location of all feeders, branch circuits, and size of equipment in accurate detail. Be sure to include the labor to create and maintain as-built drawings. Also, be sure to include the labor hours for revising as-built drawings when you write invoices for change orders.
2. Demolition: Some jobs require you to remove the old electrical wiring before you add anything new. You must consider the labor for demolition. At times it's just an educated guess, but with experience you'll get a feel for what's reasonable to apply.
3. Energized parts: Working on energized wiring requires proper equipment and employees who have been trained and certified by OSHA to work "hot." This type of work requires special precautions to ensure personal safety and takes considerably more time to complete.
4. Environmentally hazardous material: Be sure your bid includes the labor required to handle environmentally hazardous material. This includes preparation, packaging, shipping, and proper disposal of ballasts, electrical discharge lamps, and radioactive exit signs. It's a good idea to subcontract this type of work out to a company that specializes in it.
5. Excavating, trenching, and backfilling: There are places in the country where you can't plant a bush without a pick. Conversely, if you try to dig a trench in sugar sand, the more you dig the wider the trench gets - without getting any deeper. Poor soil conditions can turn a simple job into a career. Don't forget about the requirements of core drilling, asphalt cutting, digging, and backfilling. Often it's more cost-effective to subcontract this type of work than take the entire responsibility of cutting fiber optic cable, telephone wires, underground high-voltage utility lines, sprinkler pipes, water lines, or a gas main.
6. Fire seals: Sec. 300-21 of the NEC requires you to install a fire seal whenever you penetrate a fire-rated wall, ceiling, or floor. Be sure to include the labor for this condition in your estimate.
7. Job location: If the job is in a remote location, you'll find it more of a challenge to manage the job properly. In addition, the job location can affect the quality of the available workforce. If the job is located in an area that requires extensive travel time, it may be more difficult to get materials to the job when needed. Worse yet, the job could be located in the middle of a city where the streets are under construction and traffic is horrendous.
Example: What is the total travel time required for a 212-hr job that has three workers? The travel time for each day is 1/2 hr per worker.
Answer: 212 hours ÷ 24 hours per day (three workers) = 8.84 or 9 travel days. The travel time is 1/2 hour per day for each worker, the total travel time is 9 days x 1/2 hour per day x 3 workers = 13.5 hours.
Note: Some projects do not have water, electrical power, toilets, or telephone service. This can make life more complicated and expensive, and these jobs will take longer to complete.
8. Matchup of existing equipment: Maybe you have a situation where you must match existing equipment, colors, or fixtures. This can become a time-consuming adventure.
9. Miscellaneous material items: We've already accounted for the labor for common miscellaneous items such as phase tape, wire nuts, straps, and spray paint. However, some estimates have additional requirements of miscellaneous items such as engraved labels. Be sure to include the labor to install these items.
10. Mobilization (startup): Don't forget to include the labor required to set up the job, such as getting the job trailer prepared or installing temporary wiring.
11. Nonproductive labor: Labor units only include 5% for nonproductive labor. Does the job have the potential to have excessive nonproductive time?
When you're on a job for a while, your employees get to know the other tradesmen. As a result, breaks tend to get longer and more frequent.
Is this job going to be on a beach or other location with a high-labor distraction factor?
Inspection tours are a fact of life. The larger the job, the more frequent and longer the tours. Sometimes projects have multiple inspectors for the different systems, often by different inspection agencies.
Does this job require job meetings and close coordination with other trades?
12. OSHA compliance: Are you required to pay your electricians to attend a training and certification program? At times, OSHA requires training and/or certification for emergency medical treatment, working in confined spaces, working on energized parts, or tool and equipment handling.
13. Plans and specifications: If you lack adequate blueprints and specifications, you'll need to add a factor to account for anticipated nonproductive time to figure out what is required. Labor-units assume you have clear and conflict-free blueprints and specifications. If this is not the case, you need to inform the owner that your estimate includes additional labor as a contingency.
14. Public safety: Public safety is a factor, especially when doing work for city, county, state, or federal governmental agencies. Are you required to install safety cones, barricades, or security gates? Be sure to read the specifications closely.
15. Security: When working in some governmental and private facilities, you are required to jump through hoops to get clearance for your employees to enter the facilities. Some facilities require security to be notified well in advance of people entering the premises. This requires proper supervision to ensure the workers are not waiting at the gate too long.
16. Site conditions: Because of traffic conditions, projects in downtown areas of large cities can cause significant lost time. Traffic conditions and narrow streets make it difficult to unload material and equipment. Parking and a lack of storage space are also problems. Add labor to cover these conditions.
17. Subcontract supervision: Don't forget to include the labor required for your electricians in the field to supervise the subcontractors.
18. Temporary, standby, and emergency power: You must include in your bid any labor required to ensure that temporary, standby, or emergency power is available and safe.
19. Warranty: Don't forget to include some labor factor for service calls. If you don't, then the estimate will not truly include all costs. Maybe you feel if you include all costs (like service calls) you won't get the job because you'll price yourself out of the market. But, does it make sense to sell a job without including all costs?
After you've taken all of these factors into consideration, you can confidently add the times to acquire the total labor hours required for the job. The next step is to calculate the labor cost that goes with this labor-hour total. We'll save that discussion for next month's column.