It's a little ironic that this will be the last article seeing as this aspect needs to be addressed before you ever start your estimate / bid.
The price you assign to any project must fully encompass your operations and your capabilities. Well what does that mean? I'm glad you asked! Company operations and capabilities can be broken down into a list of seven (7) categories. ( Surely, by now, you know how much I like making list.)
This brings our series on Fundamental Rules for Mechanical Estimating and Project Bidding to a close. My goal is not to educate or teach but to highlight and remind most of you about the things you already know. I'll be posting more on estimating in the future and my hope is to delve a little deeper into "Best Practices".
I hope the information helps you to win more profitable bids. Please feel free to contact if I can ever be of assistance in your estimating and bidding process.
OK, this is going to be short but it is, without a doubt, one of the most important. It's bid day. Your take-off is done and you've got all your numbers together except for equipment and distribution cost. The minutes are ticking by and you're waiting for your supplier to send their number so you can finalize everything and seed in your quote to the GC's. For whatever reason (and we know what they are) the supplier is waiting to the last minute to send out their pricing. Time is tight and you want to make sure you don't miss anything.
So to help relieve your stress and make the bid go smoother, add these steps to your check list when it's time to put your bid together.
SELECTING SUB-CONTRACTORS: Fundamental Rules for Mechanical Estimating and Project Bidding Part VIII
After talking with many mechanical contractors and HVAC suppliers, there seems to be a general agreement that our industry is in the midst of a major shift or change. I'm not talking about the newest equipment or the latest service app, it's about how we estimate, bid and even install our quoted work.
In particular, I am finding that more and more contractors are hiring subs to perform various aspects of the new construction / renovation process. I have one contractor who has gone as far as to sub-out everything but the startup and turn-over of their projects. Is this risky? You bet it is, however this particular contractor has gone to great lengths to vet, develop and maintain good relationships with his subs.
If you are considering using sub-contractors try and follow these common sense rules and while not guaranteed (please note disclaimer) I believe it will make the transition easier.
No matter where I go or whom I talk to there seems to be a recurring theme: I don't have enough time. I know it goes against our cultural and, for many of us, our nature, but if you will stop and and look back at what you've done it will save you a great deal of time and (most importantly) heartburn.
One of the best ways to save you both time and money is to adopt a system that works for you and with you. For example, when I begin a take-off. I upload the drawings and check the scale on the plans. Then I read through the specs, notes, schedule and details and look for anything unusual or of significant importance. I always start with the supply, using the same color (blue). Then I take-off the return (green) and then exhaust ( orange). The only exception is if out-side or makeup air is involved then I'll usually rip it between the return and the exhaust. So it goes every time, without fail because I know full well that if I deviate from that process there is a better chance that I will either overlook or forget something.
Do yourself, your company and your family a favor find a good system and/or checklist and use it diligently. after a couple of projects you'll be amazed how much smoother the process flows. If you need any tips or hints you can access the Tools page on my web site or you can contact me and I'll be glad to assist you in anyway I can.
PROJECT BREAKDOWN - CHOOSING THE RIGHT TOOL FOR THE RIGHT JOB: Fundamental Rules for Mechanical Estimating and Project Bidding Part VI
Commercial HVAC projects come in all shapes and sizes with varying degrees of complexity. Accordingly, not all projects need to be approached in the same fashion. let's take a moment and look at three of the most used and see what we can expect to achieve with each.
Joe, the general contractor says to Larry the HVAC contractor, "Larry, I've have a developer friend of mine who is thinking of building a 10,000 sq ft retail site. What do you think the HVAC would cost on something like that?" Larry steps back and scratches his he a moment and says, "Well, based on my extensive experience that should run you close to $80,000. BUT DON'T QUOTE ME ON THAT!"
Obviously Larry is using a rule of thumb of $8 sq ft*to give Joe a rough guestimate. We've all done this and Larry isn't wrong for doing it. This figure is going to give him an accuracy of ± 25%. Given the context, this method will certainly give your customer a starting point.
Joe sees Larry eight months later and says, "Hey Larry, do you remember that retail center I told you my friend wanted to build? Well, we have a preliminary design and I was hoping you'd take a look at it and give a good estimate on what we can expect to spend." "Sure, says Larry, give me a couple of days and I'll have something worked for you." When Larry gets back to the shop he spreads out the plans and works up a rough design-build estimate. He can use a format something similar to this:
Air Handlers...................$0.75* per CFM
Exhaust Fans..................$0.25* per CFM
Louvers..........................$20.00* per sq ft
Ductwork........................$9.00* per LF
We all know this isn't perfect but it is certainly closer that where we were. This process is going to yield you and accuracy percentage of about 15%. (We're getting closer) While we're being honest here, there are many companies who are basing their competitive bids using methods like these. People, if you're one of them, please stop. The risk is enormous and has caused the down fall of many new companies.
Finally, Joe calls Larry and says, " Larry I'm sending you an invitation to bid with a link to the drawings and specs on that retail center. If you would please give me a hard number that I can present to the owner." At this point Larry knows that he needs to come up with a detailed estimate that will reduce his margin of error. This can only be done by breaking the project down as extensively as possible. This method is going to show up in the form of accurate material count and most importantly labor hours. If you go beyond something as simple as a retail center then this will require even greater emphasis on a detail oriented estimate.
The general rule here is the more you break down the estimate the greater the degree of estimating accuracy. A corollary to this is the more unfamiliar you are with the item being estimated or the more complicated it is, the greater the need for break down is to minimize inaccuracy.
Some owners do all their own estimating but this can be a time consuming endeavor. Some companies have dedicated estimators if their organization is large enough to support the position. An alternative is to use an independent estimator, someone like, oh I don't know, Atlas Estimates, maybe. (please excuse the gratuitous self promotion)
We hope these tips will help you become more successful in bidding your next commercial project.
*(please feel free to use whatever number you feel is right)
“If you know the enemy and know yourself, you need not fear the result of a hundred battles. If you know yourself but not the enemy, for every victory gained you will also suffer a defeat. If you know neither the enemy nor yourself, you will succumb in every battle.”
This is a quote from Sun Tzu, the 5th century Chinese general and philosopher.
His advice about conducting war is equally applicable to our "Bidding Wars".
So often decisions are made to undertake a project based on the size and scope of the project or sometimes it can be based on a whim and when we do this we might as well throw darts at a board.
One good way to see if a project is a good fit follow these seven easy questions that we are all familiar with.
The next time you decide to bid a project, analyze, study and determine using these seven steps and hopefully it will help get you to a more profitable job.
Have you ever heard the old adage…”the more mud you throw at the wall the more that will stick.”? If you want to be busy just from a stance of keeping crews busy and increasing your aggravation, then this is the plan for you. It’s kind of like telling your clean-up batter to just swing at any pitch that looks good or your quarterback to just find somebody that looks open and throw it to him. Of course not, as the manager or the coach (i.e. owner, project manager or estimator) you are going to look at many different factors and call the play that you believe will give you the best chance to win. In today’s commercial HVAC industry we have to be better prepared and better planned.
Here are 3 tips we believe will help you not only win more bids but even more importantly become more profitable.
1. Only bid jobs you can do well and get a price you can make money on.
We all know that is easier said than done but with a little bit of reflection about your business and where you to go this can make a big difference and because of it you will:
a) Bid fewer jobs.
b) Increase the percentage of jobs you bid.
c) Increase your profit margins.
d) Improve the efficiencies in the work you do in the field which, again increases profitability.
e) Be in better position to absorb any losses that happen to occur through estimating on in the field.
2. Before bidding a project ask yourself the following questions…
a) Do you have the experience to perform the job?
b) Are we adequately setup in the shop, in the field and in project management to perform the work?
c) Can my mechanics do the work?
d) Will the project fit into my existing project schedule?
e) Do we have adequate cash flow, credit and operational funds to meet the projects demands?
f) Is the project reasonably located geographically?
g) Is the project too big?
DEVELOP AN EFFICIENT SYSTEM, THEN USE IT: Fundamental Rules for Mechanical Estimating and Project Bidding Part IV
This part ties in nicely with our previous post and is equally important. One of the worst things that can happen is to have worked on putting an estimate together for an upcoming bid only to come up on bid date and realize you forgot an addendum or an alternate bid.
Having an efficient system in place can help prevent stress, mistakes, bids lost to competitors or even worse, bids won at a financial lost. These systems will have slight differences based on a company's focus and given any system can always be tweaked form time to time in order to become more efficient or as a company grows.
I know you're probably thinking; great just what I need another system to develop, implement and, worst of all, enforce, but here are some of the benefits and advantages you can reap:
Atlas Estimates is available to work with your company to ensure you are submitting the best bid possible.
STANDARDS EQUALS CONSISTENCY: Fundamental Rules for Mechanical Estimating and Project Bidding Part III
I'm sure we've all, at some point in time, watched a golf game. Every golfer who makes it to the professional level has one thing that is unique to them while at the same time makes them the same as all the other competitors on the course...their swing. It's easy to see that every golfer has their own approach, address, back swing, stroke and follow through. While the fundamentals are all the same each has their on little things that work for the individual and help them to be successful.
The one thing they all have in common is consistency. No matter how different their nuance or idiosyncrasy may be they all try to duplicate the things that have made them successful in the past.
As HVAC professionals we have to try and do the same thing. It is vital that a consistent set of figures for materials, labor, subs and suppliers be established in order to compete with confidence. Bear in mind also that this has to be done at the company level, not at the individual estimator level. Like notes on a musical scale, once the figures are set and put into action, everyone will be on the proverbial, same sheet of music.
Atlas Estimates is available to work with your company to ensure you are submitting the best bid possible.