Estimating Large Residential Developments

 

Tract3We would like to share a post that we previously responded to on Mike Holt’s forum. Click here to view the entire thread.

Question
“I’m looking at going into wiring new residential developments. Do any of you know of any websites or have any information as to how I can bid on these large developments? Any help would be appreciated”

Our Answer
Toll Brothers, Pulte Homes and Centex are some of our customers. They are typically good to work for. Their superintendents are usually qualified and know how to run a smooth project. We usually don’t have any major problems with payouts.

Large tract projects have certain benefits. When you bid on a project, you are actually bidding on a lot of homes. You can sell one job and have work for a multitude of years.

The key is that you really need to be confident that your estimate is correct. You have to know what your true costs are. To win these type of projects, you need to go in on your base bid very, very tight. It is the cost of admission.

You will make your margins in the options that the home buyers select. You will need to provide the builder with a standard option price list that contains the standard options that a home buyer will add to the base model. Our margins on options ranged between 60 to 360 percent. It’s really an illusion. It’s a matter of taking the prices as high as you can while keeping them under the point of pain. It’s not taking advantage of the home owner. They are either going to pay for it in the base price or in options. Since the builder is more interested in being able to keep the base price of the homes low, it is expected that you are going to make higher margins in the options.

If possible, you need to help the sales people with selling electrical options. We provided them with electrical option catalogs that they give to the home buyer. This makes a HUGE difference in revenue.

You also need to keep in mind that these projects consist of a hand full of models that will be built over and over again. Because of the repetitive nature, your crew will become very fast at the rough. Also, when your crew finishes work at a certain lot, the next house is just right down the street. This helps minimize down time. You can also keep your van on site. This reduces your fleet cost. We utilized small trailers that we backed up to the house. The tools and material are right there. If you give two of your employees keys to the trailer, work can still continue if your foreman can’t make it to the job.

You can make good money on tract projects. It’s just a different way of thinking.

You asked about how to estimate these types of jobs. We actually developed our own estimating program. It turned out so good that we decided to offer it to other contractors. The program is called TurboBid. (www.TurboBid.net) Mike Holt has sent out numerous newsletters regarding TurboBid. You can download the free trial and judge for yourself. We have also made the electrical options catalog available through our website.