It All Comes Down to Dollars and Cents
It’s week six of learning the Building a Better Proposal system. As time consuming as learning new things is…Gene is beginning to see the benefits this proposal system will provide.
Just like building a house uses repeated actions to reduce the need to think about how to do things, this proposal system does the same thing when bidding construction projects.
As they settle in and begin the meeting, John tells Gene, “Let’s take a quick look back at what we’ve covered so far. We started by asking ourselves some foundational questions. Next, we discussed the common mistakes contractors make when doing bids. Then we went over the system and its parts. The last couple of weeks we’ve worked on gathering information and turning that info into a Scope of Work. Today, we’re going to start working on Pricing the Project
Communicating a clear description of the project is achieved with the Scope of Work. Accurate pricing is equally important to avoiding misunderstandings.
Poor communication will cause heartache, poor pricing will cost you money.
Open the Worksheet template. This blank Worksheet is where you will paste the information from the Data Base as it relates to each of the specific tasks of the project.
The Worksheet template has six different options for overhead and profit ranging from 20% overhead and 10% profit to 40% overhead and 20% profit. You can use whichever of the six options works best for you on the specific project you’re working on.
Typically, larger projects, i.e. new construction, large renovations, remodels, or large additions will use smaller percentages, while small projects will use bigger ones. You can use whichever works best for you. These percentages can be adjusted after you have finished the pricing if you want them increased or decreased. These documents can be modified with custom percentages as well.
Open the Data Base and prepare to copy the appropriate content into the correlating cells of the Worksheet of the project you are working on. Use the previously written Scope of Work to determine which of the categories specific to the project need to be copied from the Data Base and pasted on the Worksheet.
If more than one item for a specific task is needed, for example shingles, synthetic underlayment, and metal flashings, these individual items will be entered separately then added together to create one price for roofing.
You can add as many additional rows as you need, just be careful to keep the formulas intact by filling the content of the existing row to the new ones.
Determining which tasks should be inserted into the Worksheet is the next step.
Most of the tasks on the Data Base have options; determining which to use will depend on the specifics of the project. For example, how is the excavation, trenching and landscaping going to be done…with a skid loader, mini excavator or by hand?
Once it’s determined which methods, actions or materials are to be used for a specific project, copy the pertinent cells from the Data Base and paste them to the Worksheet.
After the pertinent information from the Data Base has been placed on the Worksheet it’s time to…
Enter the quantity of the work to be done.
Fill in the quantities needed to do the work for each item listed on the Worksheet. This may be in lineal feet, square feet, square yards, cubic feet, cubic yards, or numbers of pieces. Once this is completed for all the categories, you’ll have a price for each task of the Proposal!
This system offers a consistent repeatable process for preparing accurate proposals and is the difference between making money or losing money on construction projects.”
John looks at Gene and asks, “Well, what do you think?”
“Well, I thought my head was spinning before today…now I’m getting dizzy.”, Gene replied with a grin.
“I know it seems like a lot, but it really isn’t once you get started using it.” John says reassuringly. “Experiment with it this week. Call if you have any questions. Next week we’ll bring everything you’ve learned together into a proposal ready to be presented to the customer.”
Construction projects are consistently more profitable when you’re intentional with the dollars and cents.
Previous posts in this series:
What is “business clarity” and how do you find it?
What Does it Take to Build a Successful Construction Company
It’s Time for the First Meeting
Being Aware of Bid Mistakes is the Best Way to Avoid Them
Constructing a Building is Better with a Plan, a Proposal is No Different
Do You Want to do a Good Construction Proposal?
What is a Construction Scope of Work and Why Do You Need One?