Linda Candels – Page 5 – Candels Estimating & Training

Get Specific About Job Specifications

You have set the groundwork for an efficient estimating process by knowing your business, your customers, and how to select the appropriate jobs to bid. Now it’s time to focus on the nuts and bolts of the process. A thorough review of a job’s specifications provides the roadmap to get to your bid price.

Front End Specifications

The front end specifications (Division 1) provide general project information that applies to all trades. The responsibility schedule will detail “who owns what.” Do not assume that everything you usually bid is part of the bid package on every project. The specifications should also specify the project schedule. Be sure you can meet the deadline since failure to do so may result in liquidated damages, which could be thousands of dollars per day! Often not being able to meet the schedule is through no fault of your own; you may be losing time from delays due to other trades. In this case, you should document the situation and inform the owner/GC to put them on notice, so as not to be hit with liquidated damages charges.

Project Walk-through

You should always attend the project walk-through, especially if it is mandatory. Valuable project insight can be gained about job site conditions and restrictions, working access, working hours, parking, or materials storage space, and even the presence of asbestos. If you don’t show up, you will not be able to submit a bid. A walk-through allows you to “see” what may not appear in the drawings such as existing equipment, access to the equipment, and general site conditions.

Bond Requirements

Also, the front end specs include bonding requirements — be it bid, performance, or payment bonds. There is a lead time in getting a bond, so the earlier you request one the better. Bonds can take 3 to 4 working days to get. As a result, a good working relationship with your bonding company can reduce the lead time tremendously. And, if your relationship is excellent, you may be able to arrange to write your bonds through power of attorney.

Extra Hours

Finally, the general contractor or construction manager may require you to carry “extra hours” to be used at their discretion, and they may need you to give allowances for contingent items. Often these are high ticket items, so you want to ensure these are included in your proposal. More often, general contractors, especially larger ones, are including “500 extra hours to be used at their discretion,” feeling that they are pre-buying hours that can be used for change orders at a discounted rate.

Electrical Information

Electrical information is contained in Division 16 or 26 specification sections. Other low-voltage information (fire alarm, security, public address, and telecommunications) may be included in separate specification sections. Be sure to know what you will be responsible for within your bid package.

The Specs Supersede the Drawings

Read the specs carefully. As the old saying goes, “the devil is in the details.” If there is a conflict between the specifications and what is shown in the drawings, try to pinpoint a reference within the text that defines the information that supersedes the other. It’s an old wives’ tale that “the specs supersedes the drawings.” For example, the specs may state that outside duct banks shall be run in Schedule 40 PVC. However, there is a note on the site drawing that states all duct banks shall be run in galvanized rigid conduit (which costs a lot more than PVC)!

If you can’t find a particular reference about what information supersedes, submit a Request for Information (RFI) for clarification. At all times, you want to be sure to cover your costs yet at the same time you do not want to cover any unnecessary costs that could unnecessarily inflate your bid price. Whatever you do, always qualify your bid! For example, it could be as simple as “Carried Schedule 40 PVC for all duct banks per specifications. Did not carry GRC per drawings.”

Specs are often considered “boilerplate,” meaning they do not always contain project accurate information. And to be truthful, it can get tedious reviewing hundreds of pages of what may seem to be worthless information. You always want to look for wiring methods, fittings required, required testing and coordination studies, and the responsibility of providing starters and disconnects. For private jobs, you will be able to deviate from the specifications. However, if it is a public project, you will be bidding on “plans and specs,” meaning you will not be able to deviate from the plans and specifications.

Be aware that specs may include information on systems that are not shown or referenced on the drawings. Carefully review the written narrative describing the system, components and wiring methods. And again, if any doubt exists, qualify your bid.

A thorough review of the specifications helps you map out the entire bid process and set the stage for the next part of the estimating process — the take-off.

Tips for Women to get into Electrical Contracting Industry

An increasing number of women-owned contracting firms are helping to level the playing field in a traditionally male-dominated industry.
While current statistics reveal only 9.5 percent of National Electrical Contractors Association (NECA) members are women-owned businesses, this number has tripled in the past 15-20 years and reflects a trend seen in physically demanding, tech-centric fields everywhere.

Here are some tips for women looking to get into the field:

Networking is very important for electrical contractors, and many jobs are won based on relationships that you build with each other in construction.
Participation in groups such as Women in NECA is extremely beneficial.
Get certified as a WBE. Certification as a Women’s Business Enterprise (WBE) is very important if you’re looking to do automotive industry work, federal and/or state work.
Encourage teamwork; it helps to foster a team-based approach involving men and women who all bring something different to the table.
Believe in yourself; don’t give up hope when you’re down.

These tips are just the beginning of what woman are capable of doing. Woman are strong and have a bright future in the electrical industry.

Labor Adjustment Costs

Now that you have determined that your take-off is accurate and you applied the necessary costs, let’s consider labor adjustment costs.

Depending on the size of the project you are bidding, you may have to carry money for a project manager (who is responsible to ensure the job is built to what was carried in the bid and/or negotiated upon award).

Oftentimes, the field labor force, for example, will have no idea that special provisions were negotiated with the owner for certain things such as the use of aluminum feeders (if allowable by local code) or open fire alarm cable. The project manager will communicate this to the job foreman, another labor component you should carry–again, depending on job size.

For very large or complex projects, you may have to carry more than one foreman. In union environments, the labor superintendent’s salary and/or a steward’s salary will probably be considered part of the company overhead, which we will get to a little later. Some larger companies also carry money for the estimator or clerical staff.

Labor Adjustment Costs – Escalation

Technically, for any building more than four stories high, the labor adjustment costs include an escalation rate of 1 – 2% per floor, which means that any item that is installed on the 20th floor, for example, will take longer to install than one on the first floor. How is that possible? Let’s not forget that a labor unit is comprised of the actual installation time, plus time for material procurement, coffee breaks, and actually getting to the area of work. So presumably, it is going to take longer to get to the 20th floor than the first floor, which includes not only waiting for the man lift but also transporting the appropriate material to the work area from the staging area.

In this competitive bid market, I realize that if you carry everything that I talk about, you may never be awarded a job. However, it is the estimator’s responsibility to identify ALL the costs in the estimating process. Then, upon review of the estimate and bid, items can be strategically cut to get closer to a more competitive number. At this point, decisions to cut items become strategic, but you have to know your complete costs before your strategy comes into play.

Estimating Overhead and Profit

Some companies bid their projects with a “fully burdened rate,” meaning the labor rate that they use to bid a project already includes a specified overhead amount in the hourly rate. Other companies apply their overhead rate as a percentage within a line item in their bid. Whichever option you choose, you should know what your overhead percentage is and carry it on every job. If you don’t know your overhead percentage, talk to your accountant. I suggested in a previous installment of this series that you should make friends with your accountant so you will already have this information. You simply cannot bid a job without covering all your costs, unless you want to risk the exposure of losing money on the project, if awarded.

Finally, profit is a beautiful thing. However, most estimators I know put in very little for profit: 2% to 5% — and for good reason. The market is just too competitive. This is where knowing your market, your customer and your competition will guide you to success. Only you can decide what will give you the magic number to get a scope review and eventual project award. Look at past bids and completed projects, review your numbers, and see if you can get an advantage somewhere.

In the next article, we will discuss your bid price and putting together a proposal (scope) letter to accurately describe what is included in your price. This is the final, and one of the most important steps, in submitting your price to the general contractor. Don’t miss it!

Never Underestimate the Power of Relationships

Now that you have assessed your business, know your overhead, and have a deeper relationship with your accountant, you are now ready for the next step. You know your business, but do your potential clients know you?

We know that price is a big driver in purchase decisions; however, when a general contractor, developer, construction manager or owner is faced with two similar prices, and they know one company, but not the other, who is more likely to get the contract award? That’s right—the one with the relationship. And, even better if you have a company history in the type of work you are bidding (and please let the contractor know that!).

Building Relationships is Key

Over the years, the theme that recurs is the power of relationships. Relationships help you find the private jobs and jobs that the general contractor may already have. Contractors who have remained busy, despite the economy, have put time and effort into building and maintaining relationships with their client base. They make this an integral part of their business, not just something to do “when they have the time.”

Just as many have viewed the task of “getting to know your business” as daunting, some may feel the same way about establishing, building, and maintaining relationships with clients. All you need is time! Over time, with just a bit of effort, you can build profitable relationships. Just do it!

The cold call method is a very good idea. You might not get to see the person you are calling on, but you can leave your business card, some company information, and even a box of doughnuts for the office staff. When you get your foot in the door, be prepared to bid a few jobs before you are awarded one. This is the contractor’s way of getting to know you as he watches how your prices come in. Watch for potential new clients when you are driving around, then stop in to introduce yourself. Check out construction sites too; it’s all about being in the “right place at the right time!”

Clients can also get to know you with documentation about your company. A simple folder with slip sheets detailing your staff, capabilities, tools and equipment, and past notable projects is a good start. For the more creative, create a brochure. If you do not have any experience in graphics, contact your local college. There are always students willing to share their new craft at a reasonable price. Also, adding a website always adds to your company’s credibility.

Meet New Clients in Networking Groups

An excellent way to meeting new customers is networking groups such as the Chamber of Commerce, the Rotary Club, the Elks or Eagles, and other social organizations. Chances are you will meet someone that will need work done, or they will know someone who does! Check out the Associated Builders and Contractors and the Associated General Contractors, too. Both represent all specialties within the U.S. construction industry and are comprised primarily of firms that perform work in the industrial and commercial sectors of the industry.

Cold calls, social clubs, and industry organizations will undoubtedly introduce you to potential clients. When you get the chance to bid, don’t expect to get a job right away, but persistence will pay off! Also, in our current world of technology, (think texting), it is still important to put your face to your company’s name and be able to explain why someone should do business with you. It’s a lot easier for a client to say “no” to someone they don’t know. Make it your business to get to know them and do everything in your power to become indispensable!