Talk to any small construction business owner, and ask them the question: “What do you dread the most in your business? What is the one thing you wish you didn’t have to worry about?” 9 out of every 10 answers will be pricing up a job, whether it’s an estimate, quote for a client, or submitting a tender to the main contractor.
Why? Well it’s one of the most important tasks in a job, it dictates if you win the job and most importantly, whether you make a profit when you do. The problem is most tradespeople are not exposed to pricing until they own the business, we are not trained as apprentices to submit a tender, we are trained to barrow concrete, mitre an architrave or yell at the sparky for leaving a mess.
As tradespeople we know our trade, we know our tools and we get the job done. However, not many of us know our way around a spreadsheet, because pretty quotes and documents, numbers, margins, cost fluctuations and bidding for jobs are not how we want to spend our day. So we wing it, we stress about it, we put it off and ultimately it affects our business and, let’s be honest, our mental health.
So, I’ve put together a handful of best practice tips to help you better estimate, quote and tender for a job. A few gems to tick off on every job pricing so you can be more confident in winning jobs and making a profit at the same time. I’m not going to repeat all the other “best practice” articles out there on the internet, I’m going to present some more practical and simple tips so you can get the job done.
Always walk the site.
When in a rush to win a job or tender, you may consider pricing up the job based on a plan or even a conversation with the client. DON’T DO IT. There are so many hidden costs that can reveal themselves with a simple walk-through of the site. Consider the slope, access, proximity to material resources, power/water, ground condition, water runoff and any number of other factors that a plan can’t show.
If you have no way of getting to the site, make sure that you are sent a walk-through video, images and a full description from someone you trust. Even if this is not possible you can either factor in a percentage for contingencies or… let the job go.
Prepare for material and labour costs.
Material costs are going crazy with resource shortages and supply chain disruptions. In fact construction costs are rising at the fastest pace on record. So how can you price a job that requires 4-6 months to complete and factor in variable cost prices?
First, always be up to date with the current costs. If you are not using a construction management system, at a minimum prepare a spreadsheet (like the template I have prepared for you here) with all your key materials and sub-contract supplier costs. Most suppliers will be able to send you their prices in the same spreadsheet format so it’s easier to copy/paste. Make sure to ask. The relationship between your business and your suppliers is incredibly important. They are there for YOU so make sure to ask for what you need.
For labour, plan out who will be required on the job, their experience and rates and whether subcontractors will be required. Be as detailed as possible when costing labour, factor in overtime and try to source cost per unit (square or lineal metres, installed unit, etc) from similar sized jobs or projects to improve your accuracy.
Once you’ve completed the above, use these up-to-date prices to build your estimates, factoring in margin and wastage (we’ll get to that). Even with a bit of spreadsheet knowledge, you can get your cost sheet talking directly to a separate estimate sheet.
I know I know, you’re reading this and all you see is spreadsheets, sheet this, sheet that and you’re probably drifting off right? To my next point…
Spreadsheets for dummies
Just do it, it’s really not that hard, just a bunch of boxes on the screen that could make your life so much easier. Even as a stepping stone to getting into a more effective construction management system, it’s a great skill to learn and have in your tool belt.
So get comfy, grab your favourite beverage and take your time to go through the basics of using a spreadsheet. If you know someone who is a spreadsheet guru, use them. If not, you can find so many resources online, check out this 20-minute tutorial that will get you up and running: https://www.youtube.com/watch?v=k1VUZEVuDJ8
Plan the job schedule
On a high level, plan out when the bigger parts of the job can be done. Do you have other jobs on the go that conflict with the clients’ timeframe? Are your workers and subcontractors available or are they on other jobs? Do the seasons come into play (rain, snow, summer ground dry up, etc)? Any or all of these factors could affect your pricing or whether you can take on the job at all. Better to inform the client that your schedule does not allow for the work than to commit to a chaotic and destined to be delayed job. Also, be sure to check out how our NextMinute job management system works to help make your life easy.
Factor in the small things – they add up
A few simple things to consider when adding up your costs.
Margin: Will you apply a blanket % across the job or do you have variable markup depending on the material, labour or fixed cost item? You may be able to add a higher margin to a material you have surplus of but only on-charge a subcontractor. Make sure to use those new found spreadsheet skills to maximise your profits while presenting the most attractive price to the client.
Wastage: Many materials used on a job do not come supplied in the exact quantity required.Think: length of timber, bulk supply of fixings, cubic metres of concrete, etc. Use your past knowledge of typical wastage and/or your site measure, then apply the wastage % to your pricing. Back we go to that spreadsheet knowledge (or just use our NextMinute system). Wastage is not only an added cost, it also requires removal. Over time you will find a standard value that works for you against most materials.
Communicate professionally – and record EVERYTHING
Communication and record keeping is another one of those hideous requirements as you move from the tools to the office. When the proverbial hits the fan, when a project melts down due to whatever reason, having all of your ducks in a row cannot only save you time, it could save your business and reputation. That means, make sure you:
- Take initial pictures and progress pictures
- Communicate immediately with the client should there be a change in costing
- Make sure you’re clearly communicating with everyone on site, so that everyone is aware of timings and costings. That means regular check-ins with sub-contractors and your team.
You are going to need an email address. As your business grows, you will probably need a few addresses for the various people in the business that need to communicate with clients, suppliers, councils etc. What you may not know is that many email providers like Google Workspaces and Microsoft 365 also give you a bunch of other tools (including spreadsheets and file storage) to help organise all your admin stuff. And now that you are representing your business, it is best to create an email with your name as the domain (yourname@yourbusiness.com.au) – this will give you lots of benefits, two of which are looking professional and also ensuring you have access to ALL emails and files across your business. Looking professional is key to winning any job, so it’s worth doing, especially after spending hours upon hours pricing up a job.
Additional tip: When you send through that all important tender or quote, you can organise the email into “labels” – label each job and client so you can quickly go back and find all the correspondence for the job. Most emails have filters that will automatically do this for you but we will go over that next time.
If you discuss anything in person or over the phone, make sure you follow up with a confirmation email with all the details so you retain a record.
File Storage
Put your head, and your files, in the cloud. Cloud storage is like having all your stuff available all the time, no matter where you are. It usually comes free with your email and it’s super simple to use. So take all of those pricing documents off your desktop and save them in the “cloud”.
Just like email, you can make a folder for each job and throw everything related to that job in there, never to be lost. A good idea is to name the files in a way that you know what it is, like “job-3241-QueenSt renovation estimate.xls” and “job-3241-QueenSt variation 1.xls”
Formatting
A good looking tender document, quote, estimate or email is far more likely to capture the attention of the client. If it looks professional the client will already be thinking “quality” when they associate with you. Good news, the email account you signed up for will probably have a range of templates you can pick from, you can apply these to your spreadsheets, emails and documents. Too easy!
Finally, take the time to clear your inbox every day before it gets out of control. Make sure you keep your client informed of any changes or variations to the job. Request replies for approval and send out your invoices and claims on time. Spend 15 mins each day to save yourself a weekend of pain down the track.
Ask for help
This may seem like a lame “pro tip” but it will serve you well to remember that everyone makes mistakes. At a minimum get someone in your business or home to run their eyes over your estimate or tender. Maybe your maths is wrong, maybe you spelt the client’s name incorrectly or even worse forgot to change the template you copied from the last job. For a laugh, see how well the newest apprentice does, though chances are they are a computer wiz.
For a bigger job, you might want to employ the help of a professional, for example, a quantity surveyor could sense-check your all important tender to ensure you are protected from disaster. Better to spend a bit upfront and lose a job than lose everything on a job you misquoted that could send you into financial ruin.
Now, go get into those spreadsheets.
And here is the plug, there is a sweet middle ground between spreadsheets and outsourcing your pricing, and that is a fit for purpose construction management system. You need one that will accommodate complex jobs, resource pricing templates, communications, planning, scheduling and work in progress profit reporting. There is really no other system that ticks all of those boxes than NextMinute. Plus you get a FREE 14 day trial (no credit card required), why not get started now?
