Bidding jobs

[CwbyClmr]

I have been told that bidding a job is a hit or miss learning experience and there are some obvious items to take into consideration such as labor, time and so on. But is there some kind of formula that works better than others more times than not.
I've bid quite of few jobs in the past year that I've advanced to a position to do such a thing. But I sometimes question if I could have come out better in the end.
Any suggestions?

 

[kkottemann]

My formula is:
labor+Fuel+Dumpfees+%equiptment note+%insurance+$amount based on degree of difficulty+%of profit you expect to clear on job= bid price

do not forget to factor in rentals if crane is needed. What I mean by %equipment note and insurance is that you need to factor in a small amount to cover the costs of such things based on the amount you owe verses how many days a week you run it. In other words you need to cover the cost of owning and operating and insuring your equiptment.

 

[CwbyClmr]

Bidding

I think thta one thing I usually forget is my dump fees and mileage. I usually don't figure in %equipment. I just pay those bills out of pocket when they come. Maybe that needs to change!!!

 

[kkottemann]

If you are working everyday it is pretty easy to figure out, but when times get lean it is nearly impossible to do. you need to put that in if you can, think of it as a rental fee to the customer. If the customer had a bucket truck, chipper and stumpgrinder for you to use, wouldn't that change the price of your bid? All that stuff is the reason my prices are what they are and if you jobs are not covering the costs of equipment then you really do not profit.

 

[John Paul Sanborn]

You need to know what yo need to get before you know what you need to ask. That is your starting point for hourly rate.

The easiest way for a startup to figure it is to break the year down into a workday calander.

there are 365 days in a year, but there are 104 weekends.
365-104=261. You cannot count on working every weekend, so do not budget them in. Count them as gravy, or makeup days for budgetary purposes.

Everyone needs vacations, so take out 14 days for that. You're down to 247.

Major holidays, let's say there are 6 with 2 days each off for 12 days to take us to 235

Sick days and equipment downtime...Sickdays will include you, the help, your family and their families since any of them can toss a day in the trash. 5 days per year per man on a 3 man crew bringgs you to 210.

Weather depends on your region, but 10 days per year is conservative.

200 working days.

Another way to look at it is to say you get 4 good working days a week for 50 weeks (scheduled vacation) and you have 200 days again.

All other days in the week are bonus or make-up deppending on where the budget is for the week/month/year.

If you need 50k to make expences, that is 1000 per week (noctice I like easy math?) or $250 per day to break even. If you figure an average day is 6 hours you need $42 per crew-hour on average before you start to go into the black for the day.

Now many people say they work 8 hours a day, maybe 10 (every day??) how much is setup, travel and closing up shop? Where does the maintinance get paid? Production hours have to pay for those things, unless you can find a way to figure it in.

Many people will figure in one way travel, or even both ways (portal-to-portal). That's easy, but on small jobs that could price you out of the deal.

If the help is on the clock for 40 hrs a week, the budgeted production hours need to reflect that.

(60-42)*6= 108

If you bill out at 60, then you have 108 for proffit on the average day, or 21600 per annumn.

Most climbers can accuratly estimate the time to do the in-tree work. Often where they fall short is cleanup and debris removal times. Length of drag, area of raking, how "dirty" the tree is. (e.g. honey locust takes a lot more time to rake up then a silver maple), will it take more then one load to remove all debris....

 

[CwbyClmr]

Wow

Ok, Thanks! All of that makes sense when you break in down like that. I'll have to some math and try it out on my next few jobs.

 

[John Paul Sanborn]

Go over some old ones.

Remember my numbers are hypothetical, except for the 200 day financial calandar.

 

[kkottemann]

I never did like math, but my teacher was right when she said I will need it some day.

 

[windthrown]

Bidding jobs...

When working the construction and landscaping trades some years ago, I came up with a formula that worked for me over time. Calculate all the labor and costs and then double it. There is no way to consider all the time and costs and uncertainties that may arise when dealing with people and jobs. Unless you go with time and materials, you can lose your butt by an underbid. Over time 2x was about the right factor to use, be it construction or landscaping or whatever. I never figured out exactly why, but that even held true when I did huge labor cost bids in the aerospace industry.

I also had factors for sizing up the customers. If there was a Mercedes or Porsche in the driveway I would pad the bid by 10%. You can say what you want about ethics and all, but in reality these people usually have more money to spend and do not care as much about the costs. They just want the job done and done right. In the end I got more business from these people than any others. The ones that always want to chisel you down on the price are not worth working for in the long run.

The other thing I learned about doing bids and jobs is that 90% of success is just showing up to do the work after you do a bid. I got a LOT of work after previous bidders failed to show up to do a job, or bollacksed it up and left.

 

[chinch bug]

profit

Okay, I think calculating costs is fairly easy but how do you guys decide on profit? Windthrow says to double your bid so I assume you are working on %100 markup if you estimated your costs right?

Do any of you have an hourly rate? For example: 4 hours * $100 = $400 All jobs bid by the hour?

I am new to this and seem to bid too low too often.

 

[CwbyClmr]

Double my labor costs? Is that like if I have a crew of two guys, not including myself, and I'm paying them a total of about $30 an hour, I should charge $60 an hour?

 

[CwbyClmr]

Do any of you have an hourly rate? For example: 4 hours * $100 = $400 All jobs bid by the hour?

I found that charging an hourly rate usually scares the customer when you give them an hourly rate. I usually calculate labor and what I want to make per hour then depending on the job and difficulty I multiply that by how long I think it will take. Most times I'm good others, well, not so much.
Earlier someone mentioned the % of equipment payment and insurance payments added into the bid. I am going to start figuring that into my bids.

 

[chinch bug]

set costs

Just curious. When you guys figure out your set costs on a daily basis, I would like to see them. For me, I figure just over $200/day before labor. Kinda high but I am getting started so I am spending more on advertising and new tools. Than number should slowly come down over time.

 

[begleytree]

I found that charging an hourly rate usually scares the customer when you give them an hourly rate. I usually calculate labor and what I want to make per hour then depending on the job and difficulty I multiply that by how long I think it will take. Most times I'm good others, well, not so much.
Earlier someone mentioned the % of equipment payment and insurance payments added into the bid. I am going to start figuring that into my bids.

not using a set hourly rate scares me. its not what I want to make, its about what I have to make.
we have a set minimum rate for the small jobs that take under an hour.
and our set hourly rate insures that we make the money we need when we are working. it also streamlines the bidding. rate X estimated hours + special equipment if needed (boom truck, 4 wheeler, ect)= job price. my pay per hour is in the hourly rate, and not based on what I feel like on a given day.
-Ralph

 

[ddhlakebound]

Ralph, thats exactly how I've been bidding jobs, but the problems im running into are bids to low for extensive rigging/higher liability jobs, and sometimes bids to high for easy climb and section, or fell/cleanup jobs.

Do you adjust your hourly rate depending upon the difficulty/liability?

Also, if you don't mind, what is your minimum to be on site for the quick easy jobs?

 

[John Paul Sanborn]

Ralph, thats exactly how I've been bidding jobs, but the problems im running into are bids to low for extensive rigging/higher liability jobs, and sometimes bids to high for easy climb and section, or fell/cleanup jobs.

Do you adjust your hourly rate depending upon the difficulty/liability?

Also, if you don't mind, what is your minimum to be on site for the quick easy jobs?

I'm not getting what you're saying. If it will take extensive rigging time that should be figured into the bid amount. If you need to bring in one extra man on the ground for rigging/cleanup, it should be figured in.

How I figure dificulty/liability is how much I want/need the job. Then I increase the proffit margin accordingly. If in talking to people who I get the feeling will be difficult, I may bump up the price by an extra crew hour or two.

If people want to bargin, I ask what part of the job do they want to take on, fine raking, wood removal, turf repair (I can go high-impact vs low impact).

On big jobs where I may not have much contact, or I've a big "dont need it" factor built in, I will put a clause " Price stated is for a low impact, clean job. Cost reductions may be available if the client wishes to perform some or all of the cleanup."

One big mistake new contractors make is in leaving wood they do not specify that the logs will be left where they lie, or piled in the work area not stacked.

As for working for more well to do people and the ethics, i go the other route. I discount for people of limited means.

On regular clients (I differentiate client from customer as the client is a revolving account) where I know they will want to talk, such as the lonley old ladies I've done small bushes for, I've added in some time to walk the yard and listen to them.

If the tree is an easy fell/chip, it should be your base rate. These jobs are ones where you nickle and dime yourself to death.

It should take .75 crew hours, you have a 3 man crew.
60x(3x2.25)=135

If it you waste 15 min on the job you've lost .75 billable man hours or $45.

then add in the half hour travel to the job that's another $90 billable.

Onr thing I've done on small jobs, especially if they are in the normal area of operations, is to have an "at my conveniance" clause so I could pick them up on the way home.

Small tree/shrub jobs I've sold for a given month so I can group them together and maybe do them on a Saturday morning.

Another good tool is to add a few small trees/shrubs to a bid you are doing as seperate line items, or "at no extra cost" sometimes it makes a job eaiser to reduce shrubs, or you can quick prune a crab while the crew is cleaning up, pick prune a foundation juniper so it looks less unruley...If we take the 200 day rule of thumb, and average $100 more per job for half those days...100x100=10,000.

 

[begleytree]

I couldn't have answered the question any better myself, JPS.
more technical=more time. and sure, potiential problem clients have a charge added on, bringing an extra guy, add an extra hour or so to cover his pay.
are you understaffed, or overstaffed? both can price you out of work. you have to find your balance. for me, its me and 2 guys. one guy and its too slow, and 4 ppl on the job just get in each others way, slows you down too.

few things too, if you're getting every bid, you're too cheap.
too high on easy stuff, bid closer, and if needed, let the scraps fall. you dont need every job. JPS's formula pointed out (if followed) that you don't have to work everyday, or every week to cover the expenses and profit.
I probably use smaller numbers of days/weeks than jps does. I figure 30 hrs a week, 45 weeks a year.
second, if you are going to lose money or not make any money doing a job, you definately don't want it. you won't make money sitting home, but you aren't out losing money either, or working for your health.

my minimum charge and hourly rate? not on a public site. PM me and we can talk about that.

don't forget to add in your equipment cost of replacement. at the end of the term, that truck has had to buy itself, plus make the difference (inflation) in cost of another truck. and thats just breaking even.
a few hours pouring over bills, and numbers will get you your hourly rate. I bet you will be supprised how far off you really are. $5 an hour, for 30 hours a week, for 45 weeks a year, is $6750. your hourly rate is the most important thing you will figure. that rate, if off slightly, when projected through the year, can be a big amount. if the rate is right, bidding will come with experience, imo. underbid slightly, and make it up. but not too many times, or you're back to broke again. that $5 and hour example is $563 a month. whats your fuel bill a month? that $5 gets real important when looked at correctly. now consider being off $25 a hour.
-Ralph

 

[CwbyClmr]

Maybe I mistated about the hourly rate. What I don't do is give the customer an hourly rate, I myself use an hourly rate to start with and if that particular job is harder of longer and I feel (as the only climber) that it will be harder i will compensate myself appropriately. I don't however decide based on how I feel or how many bills are stacking up.
I am finding through this thread, as I mentioned earlier, that although I am on the right path I am still missing a few things, i.e. insurance, mileage, etc. I do see how being off a little for a long time can make huge problems.
I am currently understaffed and I end up eating alot of time doing work too slowly. I have about four different guys that I can call on a regular basis, the problem there is that they all have jobs and depending on their off day is when I can get one or two to help out. I don't have enough business to give a guy what he needs to feed his kids fulltime, yet.

 

[M.D. Vaden]

No matter how much you think you need to make for income, or how many days you will work, a pruning project averages out to be worth only so much.

Is it a $1500 removal?

It's an art of matching your lifestyle to the pay availability in this line of work.

If a job is only worth $1500 by a typical skilled professional, I won't often go in at $2000 unless I know we're at the apex of the peak season when tree services are barely available even for estimates.

I know what I want to make, or need to make.

I know what a project is worth. So I coordinate my work, help, personal expenses and techniques to meet in the middle.

But my most basic priniciple is to always show the estimate as a SINGLE figure.

Then nobody can get bent out of shape by how much is made per hour.

It also simplifies decisions for customers. They only have to compare a single figure - the final bottom line.

When available - almost always for me - if a Certified Arborist can be on the job, I list that in the estimate / contract proposal form.

 

[CwbyClmr]

You mentioned as a Certified Arborist, how much does that add to your value.
I am a member of the ISA and soon hope to get my climbers certification and then on toward the CA.