Labor + cost

[NewToTheBuisness]

Hello, I have a question. I just started doing small home projects and someone that I know asked me how much would it cost if I finished his basement for him and built him a deck. I was wondering if there was a way for me to calculate the cost of the materials and add in the cost of labor and give him an estimate for the project. That would be of great help to me. Thank you.

[Rich]

The first thing to remember is to get a full scope of work first. Make sure you know if he wants a redwood or pressure treated deck. Do they want 2x4 firring in the basement or 2x2...
Anyway once you get that it's just a matter of doing a quantity survey of materials. How many 2x4's will you need... how many nails... how many sheets of drywall and the mud to tape it off?
Take what you think it will cost you in labor and add the materials cost to it. Now give yourself a profit for knowing how to do all those things and you have yourself an estimate.

[Rich]

I am in the process of writing a series of articles on estimating - but it probably won't be done in time for your project. Maybe the next one though :)

[grumpydasmurf]

Rich forgot to say after you do a material survey always add 10% for waste and scrap.

[mjpliv]

Find out who is going to be responsible for the construction debris or any demolition work that has to be done. Depending where you are located, tipping fees at the dump can get pretty steep.

Make sure you know who will be paying that bill - you or your friend.

Also find out who will be responsible for applying for and paying for any necessary permits.

[Rich]

Rich forgot to say after you do a material survey always add 10% for waste and scrap.

I assume that's what a quantity survey is.. material.. all material including scrap / waste. I'll usually add different percentages depending on the project and the material that I'm taking off. For instance if I'm taking off framing materials and they want 13' walls with timberstrand studs I'll add a bunch more material than if they wanted 12' walls. As I can cut a 24' timberstrand in 2 and get all the material - but with 13' walls I'll have 5' waste for each stud as I have to buy 18' material (all that's available in this area are 18', 20', and 24'). Of course then I would put in an alternate material as an option for them to save some money (14' df).

[NewToTheBuisness]

Thanks for the help

[roger g]

What I'm finding out doing my own renovations is that the little things are surprising me with the costs. Nails, screws, drywall tape, hinges, pull knobs and thelist keeps going. Thhings I didn't even think of in pricing.
Another thing I have never been able to get right and I mean never is how long a job is going to take to do. It;s like my eyes are bigger than my belly. I'll be working away at something and stand back to see what is left to be done and make a guess as to the time. WRONG!! Everytime! I even guess at the time THEN ad another 50% just because I'm always wrong and Again I'm wrong. Not even close. I've been doing this for years and I've never got it right.
YEars ago when I was doing service for some major appliance companies, we used to get paid a set rate for fixing diffent problems. I asked one company how they arrived at their figures. They said they got thrree service reps to do a job and then they averaged the time. Sounded fair but in fact wasn't reality. The 3 service guys fixed a known problem with available parts all done on a large warehouse floor. Finding a problem sometimes takes much longer than fixing it. You may have a truck full of parts but invariably the part you need is not in the truck. FIxing something greasy, dirty and wet in Mrs Smiths million dollar pure white decorated house is not a warehouse floor.
What I'm saying is that every job is different with many unforeseen problems and time waisting situations. Looking back at some jobs and wondering why it took so long ( I do that a lot) you tend to forget the time it took to figure out how to do the problem because once you have done that the fix was quickly done.

roger

[Tom R]

Looking at it in a 'positive light', more knowledge is gained in what goes wrong (these are things you tend 'not to forget'). I've been in business 25 years and feel 'fortunate' that by now I've made just about every mistake twice! Keep pluggin', every mountain has a 'downhill' side.

[roger g]

I've been at this type of stuff a lot longer than 25 years and you are right about making mistakes. I actuallly enjoy a challenge on something I had never done but it's the time I can never figure out. Even the things I've done over and over. Mind you, no job is exactly the same no matter how often you have done it. Some people are good at estimating time better than others. I'm bloody lousy

roger

[Tom R]

Sorry Roger,

I'm new to this forum, and wasn't aware of your background. I'm 'lousy' at the 'time' estimation, too. It seems like the 'small' jobs are the most unpredictable. An 'addition' I can estimate within a few days, but a 4-day job seems to take 5 or 6 everytime. I think part of the reason is that with an addition if there's a holdup there's always something else to jump on, whereas with a small job, you're usually in 'one mode', a holdup usually means a 'run' to the store.

[roger g]

Hi Tom
Gee, don't be sorry. I didn't mean anything. I was just saying that even with my years of doing all sorts of things I'm dislexic(?) over timing. Even one day jobs. Either that or I'm as slow as molasses in January
Everyone knows something I don't :D

roger

[mjpliv]

With regard to your surprise about the cost of the "little" things involved in construction work - you have have found out how the building supply companies make their money. Most people will walk into the store and haggle over things like the price of a sheet of plywood or 50-60 2x4's. And most people will walk away satisfied that they recieved a 5% discount. If you want to save real money, get a quote on the whole project, including as many incidentals as you can think of. Sure, try to get the 5% on the major items but go for 15%, 20% or event more on some of the incidentals. Do not buy small quantities of nails. If the retailer makes 30-35% on a 50 or 25 pound box of nails, imagine how much he makes selling them by the pound. Its not like you will never need another 3-1/2" nail or a 2-1/2" nail again if you happen to have 6 or 7 pounds left over.

[Tom R]

Good points, and yes, I agree, I always buy the 50lb. boxes.

[mjpliv]

To Tom R,

When you are posting a response to a topic in this forum, there are no right or wrong answers, mearly opinions. Don't be too concerned about treading on other people's toes. Its all about an exchange of ideas.

Case in point, I am sure that roger g is well aware of the cost savings in buying in bulk. But this thread might be read by 1000's of people over the life span of the posting so ever little tidbit of info is alright. There is no such thing as having too much information.

By the way, the "nails" post was just an example. Try to buy everything in bulk or case lots. Ever count how many door knobs or pairs of hinges there are in a house. Negotiate a better price on your moldings rather that worrying about an additional 2% discount on insulation.

Trust me, the retailer does not have much profit margin on the staple building products like sheeting, lumber, insulation or roof shingles. In a lot of cases they may have no profit margin what-so-ever and have to rely on factory rebates that are based on thier annual purchases.

[mfinley919]

Newtothebusiness - here is what I would do in your shoes.

Since there is no way for you to really estimate the actual costs here with no experience to know what is going to go wrong, or what you miss until you miss it the safest and smartes thing would be to do a fixed labor and actual cost + for the materials. This will keep both of you friends and be win/win for you both and allow you to do this job with the assurance that you won't do it for free, and your friend will be protected too.

I would sit down and figure it out the very best you can. Come up with a dollar amount of your labor based on how many hours you think it will take from start to finish and multiply that times a hourly rate you are comfortable with. Example : 200 hrs total x $20.00 an hour = $4000 for labor. Then come up with your best estimate for all materials,then add 15% more just in case. Better to pad a bit on the estimate to your friend and come in lower when done then the other way around. Example: $3500 in materials x 15% = $4025.

Then tell your friend that the best way to do this is I can do the work for a fixed labor rate of $4000, I am estimating that the materials will come in at $4025. Tell him you are new at this and the $4025 is a best guess, but the good news is that if it costs more he is just paying the cost of the materials, whether you were doing it for him or he was doing it himself, he would still have to pay the difference.

This is a safe way for you to do the job and protect yourself and not gouge your friend. When you are done you can look back at your records and see where you missed something so you know next time.

[mjpliv]

You might want to consider doing your first few jobs "cost plus". This would mean working for a little bit lower overall margin, but you are both protected. Your profit would be a set percentage of the overall invoiced costs, including your own wages and, if negotiated, milage.

This also gives you an opporunity to gain knowledge in the cost of things and the length of time it takes to complete a task. Take maticulous notes and analize the hell out of each job. Then you will know how much it cost to build a foot of exterior wall, install a door, shingle 100 square feet of roof, etc.

[Ben Thayer]

Just a quick tip, whenever a job calls for digging a footing dig a "test" hole or two. Nothing is worse than getting behind the eightball on day one.

[colonial carpentry]

the cost of building a ''straight up-no special effects '' wood deck in cleveland ohio is as follows Material roughly around 6 bucks a square foot of deck space.Labor=around 5bucks a square foot +or- .that covers posts deck and simple railings.

[bayoudonnie]

I have been lucky enough to price out jobs as time and material. All of my work comes from referrals. It never fails that once I am on a job, the job grows with added, "While you're here can you?" With time and material quotes the customer knows what he/she is paying and will cut me loose when they are ready. It screws up my scheduling, but, again I am lucky in that execpt for emergency situations my customers are willing to wait.

[rookie]

Rich, you said in your first post to add a profit for knowing how to do the work. I thought thats why people pay sometimes rediculous labor costs for. I was under the impression that when you pay someone $50 dollars an hour(just an example) to do something its because he knows how to do a job that not many people know how to do. You don't see burger king employees making $50 dollars an hour because just about anyone can do what they do. You do pay an electrician $50 an hour because there are very few people that have the knowledge and skill to do that work. So, it seems to me that the average Joe is already paying the professional for his knowing how to do the work when they pay the high labor costs. I'm certainly not trying to insult any of you guys...am I totally out of line here? I think your average consumer would be a little hacked off to know that the person they hire to do a job adds extra profit to their bill just because they know how to do the work. Again, thats why they pay the high labor costs to begin with. What do you think?

[Rich]

hahaha.. for me to employ somebody that makes 15 /hr I have to charge about 25+ / hr to the client. What that covers is
Base wage
Benefits
Payroll Administration (accountant)
General Liability Insurance
State Unemployment insurance
Federal Unemployment
Workmans Comp insurance
Medicare
Social Security
Health Insurance
Employers have to match what the employee pays in for State and Federal unemployment, medicare, and social security. So the wage I charge you has nothing to do with making more profit - it has to do with keeping people employed.

[Rich]

If I'm doing T&M then I'll add my profit and overhead to my labor charge. So that 25/hr goes up to 33-34/hr as I'm not charging profit and overhead as a lump sum.

[bkrahmer]

This isn't meant as an insult to plumbers or electricians, but... The reason that plumbers and electricians make $50 an hour is not because of their 'knowledge and skill'. IMO, it's because of the rediculous licensing requirements. Either trade could be taught in a 6-month vo-tech program. Again, this is MHO.

[giddonah]

amen brother.

[Rich]

Don't even get me started talking about unions and what they do to labor rates of plumbers and electricians.
What I am trying to point out to rookie is that "knowledge and skill" has nothing to do with a wage rate (in any trade) unless it's a labor only or T&M contract where I would add P&O on top of a burdened wage.

[rookie]

Point well taken. I can certainly understand a business owner having to set a price to cover all of the expenses that he incurs. Add the profit to cover those expenses and not for "knowing how to do the work" as you originally said. That was my point.

[Rich]

You're still not getting it.
I'll try to give you a formula for the 3 situations..

Everything Except For Labor Only or T&M:
Labor (Burdened Wages as described above) + Materials + Subcontractors + Overhead + Profit = Contract Value
In this situation Overhead is to keep my business running properly and Profit is my companies rate for knowing how to coordinate and put everything in place correctly. Labor is only burdened wages as described above.

For T&M:
Labor = Burdened Wages + Overhead + Profit
Contract Value = Labor + Materials
Here the labor gets the regular burdened wage plus a percentage for overhead and a % for profit which results in a higher wage rate. Materials are then documented and added to the value in an additive manner as the total value isn't known.

For Labor Only:
Labor = Burdened Wages + Overhead + Profit
And in this situation I take my burdened wages and add in a rate for overhead and a rate for profit. Again an inflated wage rate to cover my federal responsibilities and my overhead to keep my business in operation and a profit because I know how to do all the stuff required to get the job done.