Most builders I talk to find pricing jobs complex and difficult. If you have tried it on your own, you already know this.
But because I have a few quantity surveyors in my team who love working with builders, we had a go at simplifying the steps, to make the process clearer.
That’s when we designed the Perfect Pricing Process. It’s what our experienced QS team use. It’s what YOU can use.
It goes like this…
PLAN – first up you need to know your own business overheads.
Off-Site Overheads include things like - What does it cost you each year to open your doors? How much does your yard lease cost? Your vehicles? Your office Administrator (even if that is your wife!)?
You don’t have to work this out point by point (although that helps! That’s the advanced move), you can ask your accountant to provide this figure. And how many builds or jobs per year can you spread that cost over? And finally, how much profit do you want to make for the year?
That’s the salary for you, the business owner, who has taken all the risk and done the running around of keeping it all going. What is your take home profit you are looking for? We can’t give you either of those figures, because they are different for everyone.
PRICE – This is where we consider the job in front of you.
Start with all the on-site overheads (also called P&G). Is this site just round the corner or is it a remote holiday house in the Sounds? Are there tricky aspects? What will you have to provide for your guys on site to work here and what will that cost? What kind of skips or rubbish removal will you need?
MEASUREMENT – get yourself a materials take off that is accurate and realistic.
You can measure up your own schedule of quantities, hire a professional (QS) to do it or adapt an estimate from a supplier. But for goodness sake, don’t assume the estimate is perfectly accurate.
Now consider the labour for this job. As Quantity Surveyors, we apply a labour constant to every single piece of material and add them up for the total labour required on the job. We can then apply the different labour rates to it – you might have a team of apprentices or a team with a lot of experience and the wage rates to match.
You need to be able to adapt this to your team.
PRESENT – Before you give the quote over to the client, you have to get your tags and clarifications right to protect yourself. You need to be clear about what is included, and what is NOT. You need to specify which version of the plans you priced from.
Be clear about where you have used estimate figures and where you have priced more meaningfully, like when the client hasn’t chosen their kitchen yet so you pop in an estimate and record your assumptions…
If you would like to know more call Paul on Ph. 027 238 1866 or email : paul.watson@redqs.nz
